The recent decision of the Full Bench of the Federal Court in Workpac v Rossato has seemingly sent shockwaves through industry with many claiming that it is the end of casual employment as we know it. Back in January 2019, we wrote a blog on the subject of managing casual employment in light of a previous decision of the Federal Court (Workpac V Skene) and legislation by the federal government in response to that decision plus the insertion of casual conversion provisions in many modern awards – you can access that blog here.

This latest decision adds one new dimension in that it steps around the government’s legislative response on a technicality – the Full Court found that providing a casual loading in lieu of paid leave entitlements did not satisfy a claim for the actual paid leave entitlements (ie in both payment and time off). However, the key issue at the centre of all of this is “what is a casual employee?” In both Workpac cases, the employees were engaged on fixed back to back rosters which had been set up as much as twelve months in advance for total periods of continuous employment of two and a half years or more. The Courts found in each case that those are not the characteristics of casual employment and that you don’t make someone casual just by calling them casual. It is difficult to reasonably argue with that view.

We also need to have regard to the particular circumstances of those cases where people had worked on labour hire for the same host on a fixed fly in fly out roster for a couple of years. These decisions have significant ramifications for labour hire firms and their clients but not so much for those employers with true casuals. What it does mean is that employers have to categorise people according to the true nature of the employment relationship. If it is continuing employment with a forward commitment and a regular and systematic pattern of hours of work, it is, according to the court decision, not casual employment. So, what do you do if you have employees who are nominally engaged as casuals but have worked for you for some time and will continue to do so on a regular and systematic pattern of hours of work?

#1 Action Ignore all of those legal and other advisors who are telling you to disrupt your people’s lives by regularly varying their hours to avoid a regular and systematic pattern of hours of work that might create an exposure. That is just a sure way to lose good people and not a smart business decision. Instead, consider what the real employment relationship is with each of your people and recognise that contractually – if they are not really a casual, offer them conversion to full-time or part-time. You may well find that some will prefer to keep the casual loading rather than convert in any case.

#2 Action Ensure that you understand and apply the casual conversion provisions in the relevant award or enterprise agreement. We encourage you to do that proactively by advising casual employees in writing of their options in relation to conversion to full-time or part-time or remaining as a casual, telling them what each of those options mean for them and giving them the choice. They don’t become eligible until they have been with you for 6 or 12 months depending on the award. If the employee isn’t covered by an instrument that has a casual conversion provision, just apply the same principles so that everyone is treated equally and you can demonstrate that you are ensuring fairness in your employment arrangements.

#3 Action Review your casual employment contracts and, if you don’t have any, get some. They should deal properly with the following items:

  • The amount of the casual loading component in the rate of pay should be clearly and separately identified from the ordinary time rate on which it is based.
  • The benefits (eg paid leave entitlements, paid public holidays, notice of termination and redundancy) that are compensated for and set off by the casual loading should be detailed. If the Award is not explicit about that, ensure that the contract is.
  • You might also need to protect against double dipping by having what is called a “claw back clause” so that, in the event that a casual employee should be deemed not to be a casual and to therefore have a valid claim to any of those benefits, that cost can be set off against casual loading already paid during the entitlement period.
  • There should be a provision regarding casual conversion to full-time or part-time employment as reflected in the relevant award and requiring an employee election at the appropriate time as requested by the employer.
  • There shouldn’t be any provision which would be inconsistent with the concept of casual employment eg providing a notice period for termination which is longer than a day.

If you take people on seasonally and normally employ them as casuals, that is OK as long as you comply with the casual conversion provisions in modern awards. Equally, there is nothing to stop you from employing them on a full-time or part-time basis as temporary employees who get paid leave entitlements, paid public holidays and notice of termination rather than a 25% casual loading. If you need any assistance in addressing the issue in your business, please feel free to contact us for assistance below.