Towards the end of last year, there was lots of noise about Casual Employees!
There are 2 specific issues:
1. The Workpac Pty Ltd v Skene case which saw a regular and systematic casual, successfully apply to be considered permanent and win back pay, regardless of the fact that the employer had paid the casual loading. In effect double dipping – the employee was paid twice! This has resulted in a number of class actions and a response to the legal risks from the government.
2. The inclusion in 85 awards of Casual Conversion clauses, giving all regular and systematic casuals the right to elect to become permanent.
These two issues are closely related and require all businesses to reconsider how they utilise casual employment. We work with our clients, to review your current use of casual employment, mitigating the legal risks arising from the Skene decision and the new award terms.
Previously, if the employee was called a casual and paid a casual loading, they could legitimately be considered casual. The Workpac Pty Ltd v Skene case changed all of that. Now, the determination of whether an employee is a casual must be conducted by assessing “the real substance, practical reality and true nature of the relationship”.
A casual employee should have no certainty over their employment, and the relationship should have an “informality, uncertainty and irregularity” about the engagement.
Although an employee may be paid a casual loading, this does not determine whether the employment is casual.
Many of us, may employ casuals, who over time, become more regular and systematic. Our exposure to regular and systematic casuals increases our exposure to:
- paid annual and personal leave (accumulating for each year of their service)
- notice of termination; and
- redundancy entitlements.
On December 11 2018, the Australian government announced two proposals to address some of the key risks arising for employers from the Skene Decision, including a new Fair Work Regulation to address the ‘double dipping’ issue and extending the casual conversion rights to all employees by inserting it into the Fair Work Act, rather than just the current 85 awards.
On December 18, The Government published the Fair Work Amendment (Casual Loading Offset) Regulations 2018 (Amendment), addressing the double-dipping issue. This allows employers to make a claim to include casual loading payments made to an employee as an offset against NES, and other, entitlements owing to any employee pursuing a claim of underpayment as a true permanent worker.
However, there are conditions around this.
What should you do:
1. Book a consultation today with CIRCLE|Recruitment&HR to discuss areas of risks that you feel you may have.
Previously there were only casual conversion clauses in a few awards, such as the Manufacturing and Construction Awards, but these clauses have been rolled out to a further 85 awards.
These clauses affect employers who employ “‘regular casual employees”, defined as someone who has worked for you for 12 months, in a regular pattern of ongoing work, without significant adjustment, and who could continue as a part-time or full-time employee.
Within 12 months of your worker commencing regular casual employment or by 1 January 2019 for existing workers, you are required to provide your regular casual employee a copy of the casual conversion clause.
It is then up to your employee to request casual conversion. However, you must review the award that covers that specific employee, as if their award already had casual conversion clauses, your legal requirements may differ.
You do not need to agree to a request for casual conversion, but you must have sound business reasons.
The government is likely to extend this requirement to all workers, through the Fair Work Act, (NES) so these provisions may apply to even non award casual workers in the future.
What you should do:
1. Consult with CIRCLE|Recruitment&HR around options of offering permanency and how to document this offer, structure the wage aspect of permanent offers to facilitate business outcomes, record employee responses to your offer;
2. Ensure you are using our template for your Contracts of Employment for casuals, because our templates clearly identify, casual loadings as being paid in compensation for the absence of NES entitlements – a requirement if you wish to offset these payments against any future claims.
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