Under the Fair Work Australia’s guidelines, casual employees:
- have no specific hours of work
- works irregular hours
- have no sick or annual leave payments
- may terminate their employment without notice unless notice by registered agreements, award or employment contract is required
Casual employees are entitled to:
- Casual loading – casual employees are entitled to have higher rates compared to part-time and full-time workers as they do not obtain benefits such as sick or annual leave payments.
- Two days’ unpaid carer’s leave
- Two days’ unpaid compassionate leave per occasion
- Five days’ unpaid family and domestic violence leave per year, no accrual period required
On 20 May 2020, the Federal Court confirmed that long-term casual employees who have worked regularly and with predictable hours should be entitled to leave payments.
In Workpac v Rossato, it was held that if a casual employee works in systematic and regular hours over predictable periods of working time, they are entitled to:
- Personal leave
- Compassionate leave
- Public holiday payments
The Court further mentioned that if the nature of work of the casual employee is similar to a permanent employee, then security and entitlements will be granted. Therefore, it is the nature of the employee’s work which is the primary consideration, rather than their ‘casual’ status.
The decision of Workpac was appealed on 17 June 2020, and it remains to be seen whether the decision of the Federal Court will be upheld. In the meantime, the information about casual workers’ entitlements on Fair Work Australia’s website will be followed unless the High Court of Australia overturns the Federal Court’s decision.
What does ‘Double-Dipping’ means?
One of the issues before the Federal Court was the question of “double-dipping”. Because casual employees do not obtain any leave and other entitlements, they are entitled to have higher rates in their casual loading, which is calculated based on their awards and agreements surrounding the job. The rates generally equate to 15-25% of the casual workers’ normal hourly rate.
However, the decision in Workpac has stated that, as long as the employee works regular and systematic hours with predictable hours of working time, the casual employees can retain their casual loading, and are entitled to claim leave entitlements. Therefore, the issue of ‘double-dipping’ of casual employees arises where the decision in Workpac allows the casual employees to receive the leave entitlements for which they have already been compensated for by being paid a casual leave loading.
How does this affect employers?
There are fears that employers may be reluctant to hire casual employees due to the decision in Workpac. Moreover, the decision may potentially affect the cash flow of businesses who are already facing financial difficulties due to COVID-19.
The ruling in Workpac may override some terms in your casual employees’ contracts. For instance, if the terms of the contract stated that casual employees are only entitled to ‘casual loading’ and no leave entitlements, then the ruling will override this term.
In Workpac, the Court ruled that despite the terms of the contract, the nature of the casual employee’s work were considered to be akin to those of permanent employees (working regular and predictable shifts). Therefore, we suggest that it is vital to consider the casual employee’s contract and whether they work ‘regular and predictable hours’ as there is a possibility they may be entitled to paid leave entitlements.
Employers may consider placing employees on permanent contracts to avoid double-dipping (that is, to avoid paying both leave entitlements and casual loading). Alternatively, if the employee’s nature of work is unpredictable or irregular, hiring the employee on a casual basis may be the best option.
Workpac’s appeal to the High Court will be heard in 2021, and it is most likely that a decision will not be handed down until the second half of the year. However, it is essential to consider your employment contracts with casual employees.
The team at Midwinters Lawyers are ready to assist you with all your legal matters specifically as they relate to matters involving employment law.
