The good news for employers is that with the recent passing of the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2021 there is a new statutory definition of what constitutes "casual" employment and relief for underpayment claims from employees incorrectly classified as casual to stop "double dipping".
1. The new definition of what constitutes casual employment
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.
In determining 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, regard must be had to only the following considerations:
- 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.
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 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.
The new statutory right for a casual to make a reasonable request to convert to permanent employment will be the subject of a further e-bulletin when details are finalised.
2. Underpayment claims by casuals
The new provisions will require the Court to make a mandatory set off of any casual loading amount paid by the employer to a "regular" casual employee who later claims to have been incorrectly classified as a casual and is entitled 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.
The Court must reduce the underpayment claim by an appropriate proportion of the loading amount paid by the employer attributable to each of those entitlements in all the circumstances or if the loading amount is specified as compensating the employee for a particular entitlement then that entitlement.
What action does business need to take?
- Employers should check and update current letters of engagement used for casual employees to ensure that they conform with the new statutory definition of casual employment.
- Employers should ensure that the appropriate loading amount is separately identified as part of the remuneration for the casual employee as compensation for the specified entitlements.
Members of our Workplace Relations and Safety Team can assist with a review of the current letter of engagement used for casual employees and advise on any likely exposure to underpayment claims under the new legislation which will operate retrospectively for the benefit of employers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.