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As a small business owner, it’s important you are aware of your payment obligations to your casual employees.
The law is quickly adapting around this topic, so here’s the latest information you need.
The Current Laws Surrounding Casual Workers
Fair Work Australia’s current guidelines state 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 (unless notice is required by a registered agreement, award or employment contract)
Casual employees are entitled to:
- ‘Casual loading’ (this is a higher rate than part-time and full-time workers receive, because casual workers don’t get benefits such as sick leave or 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
What’s The Deal With Long-Term Casuals? The Recent Workpac Case
On 20 May 2020, the Federal Court held that long-term employees who work regular and predictable hours should be entitled to leave payments.
This was the case of Workpac v Rossato (Rossato) where it was decided 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 stated 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. However, Workplace applied on 17 June 2020 to the High Court of Australia seeking to appeal the decision.
What Is The Current Law Around This Issue?
On 4 August 2021, the decision in Rossato was overturned. 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.
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.”
What This Means For Business Owners
1. Casual Contracts
It’s important that employers remain up to date with the current laws around casual workers. As long as your contracts with your casual employees are clear around your casual work arrangements, and there is no ‘firm advance commitment of ongoing employment’, you should have no issues around this.
This is consistent with the current law that casual employees are not entitled to permanent employees’ entitlements, as the express terms of your employment contracts make it clear that they are not permanent.
2. Employing Casual Workers
When hiring an individual, it’s important that you assess the nature of the work they will be undertaking.
If the individual’s work hours will be systematic, regular and predictable, it’s worth considering employing them on a permanent basis as a part-time or full-time employee.
Alternatively, if their hours of work will be unpredictable or irregular, hiring the individual on a casual basis would likely be your best option.
Having a lawyer look over your situation can help your business understand its best options following this recent Federal Court decision. Our team of expert employment lawyers can help you through our fixed-fee packages, so get in touch here to learn more.
Key Takeaways
There’s a lot up in the air right now, but here are the basic things you should be considering as a result of this recent ruling:
- If your casual employee is working regular and predictable hours, and is doing similar work to that of a permanent employee, they will still not be entitled to permanent employees’ entitlements such as annual leave.
- An employee is considered ‘casual’ if such an arrangement is made clear in your employment contract through express terms.
- In determining whether someone is a casual employee, you should look at whether you have a firm advance commitment as to the duration of their employment.
If you’re unsure or having doubts about where your business stands or whether you’re compliant following this recent High Court decision, we’re here to help! Reach out to our team for a free, no-obligations chat at team@sprintlaw.com.au or 1800 730 617.
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