By Sean Melbourne
If you’re wondering whether your casual staff are really casual, you’re not alone. A recent court ruling has cast doubt on whether longer-term casual staff are in fact permanent employees. The difference can be significant. If an employee who you thought was casual is deemed to be permanent, they become entitled to the benefits of permanent employees. With a lot at stake for businesses, we break down what you need to know to help get this right.
Things have changed
We’ve known for some time that working regular, generally inflexible and certain hours can lead to some casuals being classified as permanent. However, employees who were employed on a casual basis and received the requisite casual loading were generally accepted as being casual. The Full Federal Court’s recent judgment in WorkPac Pty Ltd v Skene has now raised questions over what makes an employee a casual.
Even if the relevant award or your employee’s contract states that they’re casual, they may not be. The payment of a 25% casual loading may also not be determinative. Instead, the Court will look at the overall working arrangements and determine whether the employee works more like a part-time or full-time employee.
What’s important in determining whether your staff are casual or permanent is the pattern of their working arrangements. Do your casual staff engage in work that is:
- Regular – your employee’s shifts are frequent
- Certain – their shifts don’t tend to vary week-to-week or change at the last minute or
- Ongoing – neither you or your employee expect that the current working arrangement will cease in the near future
If you answered yes to any of these questions, this is a good time to take a look at your longer-term casual employees and determine whether they could become entitled to the benefits of permanent employees.
What are the characteristics of a casual employee?
If you’re unsure about whether your employee is in fact casual, consider the following factors. Casual employment is likely to be characterised by:
- No ‘firm advance work commitment’ in respect of your employee’s length of employment, including the shifts they work.
- No ‘firm advance commitment’ from you, as an employer, as to whether your employee’s work will be consistent and ongoing.
- Generally ‘irregular work patterns’ that are uncertain and unpredictable from week to week.
What will happen if a casual employee is deemed permanent?
If a casual employee is deemed to be permanent, they will become entitled to the benefits that a part-time of full-time employee gets. This includes personal/carer’s leave, annual leave and long service leave. They will also be entitled to redundancy pay if they are made redundant. If it is found that they have been permanent for some time, these benefits will need to be back paid to the employee. This can result in large liabilities for employers and underscores the importance of getting it right with your casual employees.
Can my employees ‘double dip’ on entitlements?
Previously it was thought that an employee’s casual loading would offset any entitlements they have to permanent entitlements like personal leave or annual leave. However, the WorkPac decision found that that this may not be the case. The WorkPac decision opened up the possibility for employees to be entitled to permanent entitlements at the same time as receiving a casual loading.
This is obviously an absurd result, and there has been talk of this being overturned on appeal, or legislative changes being made to fix the issue. However, as yet this has not occurred so the findings in WorkPac apply.
What do employers need to do now?
If you have casual employees that have been working for more than 6 months, you should review your arrangements closely to determine whether there is any possibility of them being deemed to be permanent employees. If there is any doubt, it’s worth seriously considering transitioning them to part-time or full-time status. While this may be inconvenient for some businesses, you need to weigh this against the risk of having your casual employees deemed permanent in the future, and the additional costs (including back-pay) that that may entail. Often it is worth biting the bullet now to avoid a hit in the future.
We know that each business is unique and that each employee’s situation is different, so there will be different needs for different businesses. If you are in any doubt don’t hesitate to get advice from an employment lawyer about your situation. It could save you some big headaches in the future.
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Source Legal’s team of employment lawyers is ready to help you. If you need advice, get in touch with Sean Melbourne on email@example.com. We know legal costs can be a worry for business, so at Source Legal we only work on an agreed-price basis. That means you’ll know up front what your legal spend will be.