The Full Federal Court in Workpac Pty Ltd v Rosatto  FCAFC 84 on 20 May 2020, prompted calls for urgent legislative review because it threw into uncertainty the status of casual employees and the right to seek compensation for underpayments.
In a timely response designed to avoid uncertainty and minimise such claims, the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 contains a new statutory definition of what constitutes “casual” employment and relief from underpayment claims from employees incorrectly classified as casual to stop “double-dipping”.
“Casual employment” is now defined.
A person is a casual employee if;
- an offer of employment made by the employer is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work;
- the employee accepts the offer on that basis; and
- the employee commences employment as a result of that acceptance.
To determine whether, at the time the offer is made, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work, only the following considerations will apply:
- whether the employer can elect to offer work and whether the employee can elect to accept or reject work;
- whether the employee will work only as required;
- whether the employment is described as casual employment; and
- whether the employee will be entitled to a casual loading or specific rate of pay for casual employees under the terms of the offer or any applicable Award or Enterprise Agreement.
What was offered and accepted??
Importantly, the question of whether an employee is a casual is to be assessed on the basis of the offer of employment and the acceptance of that offer, not on the basis of any subsequent conduct by the parties. This will have the effect of reversing the full Federal Court decisions where the offer of employment was made on the basis of casual employment but the subsequent conduct of the parties was deemed to be the employment of a permanent nature at law.
A casual who commences employment as a result of the acceptance of an offer of employment remains a casual employee until a casual is converted to permanent employment under new rights of conversion to permanent employment or the employee otherwise accepts an alternative offer of permanent employment.
However- there is a new statutory right for a casual to make a reasonable request to convert to permanent employment.
No More ‘Double-dipping”
Casuals are usually paid above an award rate as a “trade-off” against entitlements otherwise afforded to permanent workers.
Underpayment claims by casuals
What should see an end if not a great reduction to claims for underpayments by casual employees, a Court must now make a mandatory set-off of any casual loading amount paid by the employer to a “regular” casual employee who later claims underpayments as a result of being incorrectly classified as a casual and claims entitlement to:
- paid annual leave;
- paid personal/carers leave;
- paid compassionate leave;
- payment for absence on a public holiday;
- payment in lieu of notice of termination;
- redundancy pay.
Any underpayment claim may be reduced by a proportionate amount paid by the employer attributable to each of those entitlements claimed where the casual rate of pay loading is stated to be compensation for the particular entitlements.
Recommendation for Employers using Casual employees
- Immediately conduct an audit of all current casual contracts of employment.
- Make sure that they do meet the new statutory definition of casual employment.
- Ensure that any appropriate loading amount is clearly and separately identified as compensation for specified entitlements.
How can we help?
We can help you in the following:
- Review your workforce employment contracts and work practices, and assess your exposure and risks.
- Preparation of carefully drafted employment contracts that:
• remove as much doubt or scope for mischaracterising the relationship
• permit a set-off of any paid loading
- Assist with any restructuring of your workforce.
If you have concerns in relation to casual employees in your business, please contact Michael Sing to discuss how we can help on 07 3009 8444.