High Court clarifies casual employee classification

Posted By Chris Delaney / Uncategorised / No Comments

In early August 2021 The High Court has unanimously lower Court decisions in WorkPac Pty Ltd v Rossato, providing greater clarification around Casual employment.

The Fair Work Act 2009 (Cth) (FW Act) and modern awards, provide a 25% loading for Casual employees to account for the annual leave, personal leave, notice of termination and redundancy pay.

In Workpac Pty Ltd v Rossato and earlier Workpac v Skene the Courts directed Workpac to provide annual leave and personal leave on top of the 25% deeming the employees to be permanent – what became known as a “double dip”.

The High Court overturned Workpac v Rosatto and in so doing confirmed that the test for determining the “casualness” of an employee was whether there was a “firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work”.

Coupled with the recent changes to the Fair Work Act 2009 this decision provides far greater clarity for both employers and employees entering into casual work arrangements.

The new legislation regarding casuals commenced on 27 March 2021 and provides:

  • a definition for casual employees into the Fair Work Act 2009 (Cth) (FWA) for the purpose of entitlements in the National Employment Standards (NES);
  • a protection for employers from double dipping claims by casual employees who claim they were misclassified and are entitled to permanent employment entitlements;
  • the requirement for employers to give each casual employee a copy of the new Casual Employment Information Statement; and
  • an express obligation for employers to offer eligible casuals conversion to permanent employment, while also allowing eligible casual employees to make requests to convert to permanent employment.

Definition of casual employee 

A person will be a casual employee if they are:

  • offered employment on the basis that the employer makes “no firm advance commitment to continuing and indefinite work”;
  • the person accepts such offer; and
  • the person is an employee as a result of that acceptance.

This means that the determination of whether a person is a causal employee or not will occur at the point of offer and acceptance of employment.

The FWA also provides a list of considerations a Court must have regard to when determining whether a firm advance commitment to continuing and indefinite work exists:

  • whether the employer can elect to offer work and whether the person can elect to accept or reject work;
  • whether the person will work as required according to the needs of the employer;
  • whether the employment is described as casual employment; and
  • whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.

No more “double-dip”

In the event that a casual in receipt of the 25% casual loading is determined by a court to be a permanent employee, employers have the right to offset any “relevant entitlements” owed to the employee, to against the 25% casual loading, including:

  • paid annual leave;
  • paid personal/carer’s leave;
  • paid compassionate leave;
  • payment for absence on a public holiday;
  • payment in lieu of notice of termination; and
  • redundancy pay.

Casual Conversion

Under the FWA employers must make an offer to convert a casual employee to either full-time or part-time employment (depending on their regular work patterns) if the employee:

  • has been employed by the employer for 12 months; and
  • during at least the last six months, has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time or a part-time employee (as the case may be).

However, employers are not required to make an offer if there are “reasonable business grounds” to not do so.

Reasonable business grounds employers can rely on include:

  • the employee’s position will cease to exist in the period of 12 months after the time of deciding not to make the offer;
  • the hours of work which the employee is required to perform will be significantly reduced in that period;
  • there will be a significant change in either or both of the following in that period:
    • the days on which the employee’s hours of work are required to be performed;
    • the times at which the employee’s hours of work are required to be performed;

which cannot be accommodated within the days or times the employee is available to work during that period;

  • making the offer would not comply with a recruitment or selection process required by or under a law of the Commonwealth or a State or a Territory.

At employment the employer must give the employee a “Casual Employee Information Statement”.

What Employers should do:

Provide all casual employees with a new contract of employment that include at least the following:

a clause that specifically states that there is no firm commitment by the employer to offer continuing or minimum days and/or hours of work;

a clause that separately identifies the casual loading amount (e.g. 25%);

a clause that shows what the loading is for e.g. annual leave personal leave – as described in the legislation; and

a clause allowing the employer to set off the 25% casual loading against any award of leave provisions etc.

 

For more information contact the Workplace Relations Speicalists admin@workplacerelationsspecialists.com.au

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