A recent Federal Court ruling has determined that some casual workers may be entitled to leave payments. 

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

The Federal Court has recently confirmed that long-term employees who work regular and predictable hours should be entitled to leave payments. 

In the recent case of Workpac v Rossato, it was held 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.  

The focus here is on the objective nature of your employees’ work, as opposed to the ‘casual’ label. 

The intention is that ‘casual’ workers who work regular and systematic hours will be awarded with the security and entitlements that come with permanent work

This Federal Court decision was handed down on 20 May 2020 and, since then, Workpac applied on 17 June 2020 to the High Court of Australia seeking to appeal the decision. However, this process is likely to be significantly lengthy. 

Unfortunately, this means businesses probably won’t gain certainty any time soon as to whether this decision will be upheld.  

Until the High Court of Australia reviews Workpac’s application, the information about casual workers’ entitlements on Fair Work Australia’s website remains correct.

Why Are People Saying This Is ‘Double-Dipping?’

This is because, ordinarily, casual employees are often given extra pay in the form of ‘casual loading’ (typically around 15-25% more than permanent employees). This is to compensate for the fact that they don’t get leave and other entitlements.

However, the Federal Court in Workpac v Rossato stated that, so long as the employee works regular and systematic hours with predictable periods of working time, the casual employee  is entitled to keep their casual loading, and also claim leave entitlements.

What This Means For Business Owners

1. Casual Contracts

Despite the terms of your casual employees’ contracts, you may still be required to pay leave entitlements if they work regular and predictable hours. 

Your contract may state that your casual employee is only entitled to ‘casual loading’ and no leave entitlements. The ruling in Workpac v Rossato overrides this. 

The Court ruled that, despite what your contract may say, casuals are to be considered permanent employees based on the nature of their work. 

In light of this, we’d suggest that you consider your casual employees’ work with regard to the nature of the work and whether they are working regular and predictable shifts.

In the case that your employee’s contract is a casual contract but they work ‘regular and predictable hours’, it is important that you are aware of the possibility of being required to pay leave entitlements. 

We understand that, as a business owner, this may create financial difficulty. 

Now may be a good time to reconsider your casual contracts where work hours are regular and predictable.

You may consider putting these employees on more permanent contracts to avoid paying both leave entitlements and casual loading. 

It is unclear exactly what will eventuate from Workpac’s application to the High Court, and this uncertainty will remain for some time. 

In the meantime, we suggest any business who employs casuals speaks with a lawyer to assess your unique situation. 

Our team is here to help you. 

2. Employing Casual Workers

Following the decision in Workpac v Rossato, there are fears that business owners will be hesitant to hire casual employees. 

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. So long as the casual employee remains working unpredictable and irregular hours, you will not have to pay leave entitlements. 

The decision made in Workpac v Rossato can potentially affect cash flow, especially for businesses already facing financial difficulties due to COVID-19. 

If you find yourself in this situation, we suggest that, when hiring a casual employee, you maintain the true nature of a casual position. This means the employee: 

  • Has no guaranteed hours of work
  • Usually works irregular hours
  • Doesn’t get paid sick or annual leave
  • Can end the employment without notice (unless notice is required by a registered agreement, award or employment contract)

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. 

Moving Forward

There are many possible ways this could play out, as it is a very politically charged topic.

Labour unions are urging that the decision made in Workpac v Rossato is upheld. The opposition government also supports the decision, claiming that it will increase job security, especially in light of COVID-19. 

Alternatively, Workpac suggests that enforcing the recent Federal Court ruling will potentially expose businesses to up to $8 billion in back pay. 

There are currently talks that the Morrison Government is seeking to legislate in this area; overruling the decision made in Workpac v Rossato. However, this is all yet to be confirmed. 

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, you may be obliged to pay both casual loading and leave entitlements (depending on the High Court’s decision).
  • As a preemptive measure, it’s a good idea to review your casual employees’ working hours and determine if they are regular, systematic and predictable.
  • Following this, you should consider converting casual workers that work regular and predictable hours into permanent staff.

We understand the financial stress and uncertainty this may cause business owners, especially those who are already in a difficult economic situation. 
If you have any questions regarding these potential new casual laws and how they could affect your business, 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.

About Sprintlaw

Sprintlaw is a new type of law firm that operates completely online and on a fixed-fee basis. We’re on a mission to make quality legal services faster, simpler and more affordable for small business owners and entrepreneurs.

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