This week has seen another landmark Australian Industrial Relations case handing down a decision that confirms risk for employers that employ casuals, specifically those with regular and predictable shifts.
In summary the case found that a casual miner employed by labour hire company WorkPac, who had regular and predictable shifts was entitled to permanent employee benefits. Until there is a successful appeal it now represents the state of the law and leaves employers who have regular, ongoing casuals potentially exposed to owing paid leave entitlements.
The case determined that WorkPac could not use the extra casual loading to set off that liability as has been thought from recent previous cases. WorkPac argued that this would amount to ‘double-dipping’ of the 25% loading and the paid benefits but the Federal Court disagreed and also knocked back the suggestion that the employee should forfeit his casual loading.
What does this mean?
This raises that an employment contract and what is agreed at the point of recruitment, is NOT the sole basis for determining the nature of the employment. Rather the actual pattern of work and whether an employer can choose to offer employment on a day, with the employee having the ability to choose whether to work, were all significant factors (regardless of what is in the employment contract).
According to Fair Work:
The difference between a casual and a full-time / part-time employee is that full and part time employees have ongoing employment (or a fixed contract) and can expect to work regular hours each week. They are entitled to paid sick leave and annual leave.
Casual employees, employed under a large number of Awards, have the right to request conversion to full or part time hours after 12 months of service, where they have worked a regular pattern of hours on an ongoing basis.
An employee must also agree to converting to part time or full-time employment.
Currently Fair Work are reviewing this case decision and the impact it has on their definition, so at this point there is uncertainty for employers. Particularly those who have regular casuals who choose to stay casual, does this leave them open for a claim in the future?
Whilst there appears to be potential for significant risks to employers who have regular casuals, there may be specific features of this case that are particular to a less widespread subset of casual employees. In this case, the employer was a labour hire firm and the employee;
- worked highly structured shifts and rosters
- in a FIFO mining environment
- with repeated contracts over three and a half years
- that provided firm advance commitment.
These were all decision-making factors but critical to this case was that it again references employees who work predictable regular shifts. This confirms the lingering risk that has been at play in Courts over the last few years, of claims for underpayment and/or breach of the National Employment Standards.
Being only a few days since the ruling, it isn’t clear as to whether this will be appealed in the High Court. The Government has also declared that it is open to changing the Fair Work Act if required, recognising the impact to business is significant, particularly during this current pandemic.
What Can I Do?
Some interim considerations around engaging casuals, that ensure current HR due diligence in light of previous findings and reduces the risk of a dispute around the nature of employment includes:
- Evaluating the risk to your business
- Assessing your current workforce planning and recruitment practices
- Assessing how your casual employees work in reality, primarily how are they rostered and is there a pattern to their work
- Starting a conversation with casual employees who work regular shifts and can be supported in a part/full-time role to see if they are interested in transferring to a part/full-time employee (can only occur with mutual agreement)
- Ensuring diligent HR documentation practices are undertaken, particularly clear employment agreements that state the nature of the employment and evidence that a casual’s hourly rate is inclusive of the casual loading payable
- Ensuring payslips separately identify the casual loading paid
- Consider any requests to convert a casual employee to part time or full time hours that you may have declined? Be aware that if in reality they are viewed as such, their entitlements may be payable, even if a casual loading has been paid, this may, or may not offset the amount.
If you would like advice around your specific business situation and HR needs feel free to complete the form below and we will be in touch.