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In mid-2020 we detailed the ruling in Workpac v Rossato concerning casual workers and how it could affect your business.
In 2021, the law continues to quickly adapt around this topic, so it’s time for an update.
As a business owner, it is important that you are up to date with the law around casual workers.
Let’s break it down.
Why All The Fuss? A Quick Re-Cap
In May 2020, the Court held in the case of Workpac v Rossato that if a casual employee works regular and systematic hours with ‘predictable periods of working time,’ they are entitled to:
- Personal leave
- Compassionate leave
- Public holiday payments
The Court held that if a casual employee’s nature of work is similar – if not identical – to that of a permanent employee, leave entitlements should be honoured.
Here, it was determined that focus should not be on the label of your ‘casual’ worker but rather on the objective nature of their job.
The ultimate intention of this decision is that ‘casual’ workers who work regular and systematic hours will be awarded with the security and entitlements that come with permanent work.
On 17 June 2020, Workpac applied for special leave to appeal the Federal Court’s decision in the High Court of Australia.
The Current Law
At present, Fair Work Australia states that a casual employee:
- Has no guaranteed hours of work
- Usually works irregular hours
- Doesn’t get paid sick or annual leave
- Can end their employment without notice
- This is unless notice is required by a registered agreement, award or employment contract.
Currently, casual workers are entitled to:
- ‘Casual loading’
- This is a higher rate than part-time and full-time workers receive, because casual workers are not entitled to benefits such as sick leave and annual leave
- 2 days’ unpaid carer’s leave
- 2 days’ unpaid compassionate leave per occasion
- 5 days’ unpaid family and domestic violence leave (in a 12 month period)
- Unpaid community service leave.
All of the above is the current law. This is what currently applies to your business and its casual employees.
This would have been expected to change following the initial decision of the Rossato case, however on 4 August 2021, the decision was overturned.
So, what does this mean?
What Is The New Position?
It was decided that Mr Rossato was not entitled to paid annual leave, personal leave and compassionate leave under the Fair Work Act.
In summary, the initial decision held that if the nature of your casual employment was similar to that of a permanent employee, you could ask for the same entitlements as them.
However, the new decision is that a casual employee will not be entitled to the same things as a permanent employee, no matter how similar the roles are.
This is the current law around casual workers and their entitlements, so it’s important that you are aware of your obligations as an employer.
What Else Do I Need To Know?
The Court also held that when you determine the nature of someone’s employment, you must consider the express terms of an employment contract. This means you should look at your formal agreement between the employer and employee, rather than the conduct performed within their role.
More specifically, the Court outlined that the test used to determine whether an employee is employed on a casual basis is “whether there was a firm advance commitment as to the duration of the employee’s employment or the days (or hours) they will work.”
This is consistent with the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 handed down by the Federal Government in late 2020. As of 26 March 2021, this is enforceable legislation.
What Is The Right To Casual Conversion?
‘Casual conversion’ is where the ‘casual’ employee has a choice to convert to a permanent work status (such as a full/part time employee) if they have worked a regular pattern of hours on an ongoing basis for 12 months.
S 66B(1) of the Fair Work Amendment Bill says:
An employer must make an offer of part-time or full-time employment to a casual employee if:
- The employee has been employed for a period of 12 months
- During at least the last 6 months of that period, the employee has worked a regular pattern of hours on an ongoing basis.
Are There Any Exceptions?
Yes.
In accordance with s 66C of the bill, if there are ‘reasonable grounds’ for not making an offer, then it is not required to be made.
‘Reasonable grounds’ include:
- If the employee’s position will cease to exist in the 12 months after not making the offer
- If the employees hours of work are expected to significantly reduce in that period
- The employees work days and hours will significantly change during that period
- Making the offer would not comply with a recruitment selection process required by law
This means that the Bill expects employers to assess what the next 12 months of the employees employment will entail and determine if any exceptions apply to preclude the offering of permanent work.
The Bill avoids the risk of casual workers ‘double dipping.’ The reason being is that it allows employers to off-set any paid casual loading against future claims for permanent benefits.
As this is a Bill, it is not yet enforceable legislation. The legislation is expected to be voted on in mid-2021. Until then, the current law mentioned above still applies.
Summary Of Proposed Reforms
- ‘Casual’ workers who work a regular pattern of hours on an ongoing basis for 12 months will be presented with the choice to engage permanent work (part-time or full time) by their employer.
- This choice is also known as the ‘casual conversion right’ whereby your employee has the opportunity to convert from a casual employee to a part time or full time employee. This is a result of working a regular pattern of hours on an ongoing basis for 12 months.
- If your employee decides to take up the permanent role, they will be afforded leave entitlements and other benefits that come with part time or full time work.
- S 66C allows for exceptions to the ‘casual conversion right’, balancing the interests of both you as the employer and your employee.
- The Bill avoids risk around ‘double dipping’ allowing employees to off-set any paid casual loadings against future claims for permanent benefits.
- The Bill is now converted into enforceable legislation
- The overturned decision in Rossato means that casual workers will not be entitled to the same things as permanent employees, despite any similarities in the nature of their work.
What Now?
It is important that you and your business are always up to date with laws around casual workers and entitlements.
It could be a good idea to review your current casual workers working hours to ascertain which employees may fall into the category of obtaining the ‘casual conversion right.’
If you have any questions, you can reach out to our team for a free, no-obligations chat at team@sprintlaw.com.au or 1800 730 617.
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