Long-term casuals: what you need to know
Employers should review their current arrangements with casual employees while reform legislation is being debated before Parliament.
The issue of employing long-term casuals has become increasingly prominent in Australian workplaces in recent years, with award-specific obligations introduced for employers and employees in 2018 to address the associated complexities.
Despite this, ongoing difficulties are being felt in the Australian industrial relations landscape.
It is for this reason that the federal government held round-table discussions in 2020 to address key industrial relations issues, which included a lack of clarity around the legal definition of casual employment.
At the time of writing, legislation is being debated in Parliament to introduce sweeping reforms via the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020.
One of the primary aims of this bill is to ensure that all parties (eg, employers, employees, employer and employee associations) have a clear and concise understanding of the legal definition of casual employment and corresponding conditions.
Given the currency and significance of this issue, the team at the HR in Practice service thought it pertinent to remind members of their existing obligations in the Health Professionals and Support Services Award 2020 (HPSSA).
This award applies to the majority—if not all—of employers and employees in private practice in Australia (excludes unincorporated entities in WA).
What is a casual employee?
As per the HPSSA, a casual employee is one engaged on an hourly basis other than as a part-time, full-time or fixed-term employee.
They can be engaged to work up to and including 38 ordinary hours per week, with a minimum engagement period of three hours per occasion.
The primary attribute that distinguishes casual employees is the 25 per cent loading they receive, which is intended to compensate them in lieu of the paid leave entitlements of permanent employees.
Although not explicitly enshrined in law, it is commonly understood that casual employees are engaged on an as-needs basis and shouldn’t have any guarantee nor expectation of ongoing work.
This is implied by the reference to casual employees being engaged on an ‘hourly basis’.
What has made this issue prominent?
Complications have arisen in recent years for those employees who are engaged as casuals but work for their employers on the same or similar days, at the same or similar times, for the same or similar number of hours each week, and have done so for an extended period of time.
There has been an increasing opinion that these types of engagements do not align with the true nature of casual employment and that, in some cases, employers have been engaging individuals this way to avoid paying leave entitlements and to make terminations easier.
There have been several recent high-profile cases—namely Workpac v Skene (2018) and Workpac v Rossato (2020)—where the Federal Court assessed the relationship between employer and employee and determined that the individuals were not truly casual employees, despite their employment contracts saying so.
This resulted in adverse outcomes for these employers and sparked concerns among employers and employer associations that legal precedent is being set.
As with any legal proceedings, an important factor influencing the Federal Court’s decision is the individual circumstances at play.
For this reason, it is critical employers in the physiotherapy industry understand that these particular cases do not necessarily dictate what would happen if their business were to encounter a similar problem.
That said, it is important for employers to consider how these decisions may impact their casual workforce and make decisions if or as required.
The current HPSSA allows regular casuals to request their employment be converted to permanent employment. A regular casual is defined is one who has worked a consistent pattern of hours which, without significant adjustment, they could continue to do as a permanent.
Whether or not they can convert to full-time or part-time employment will depend on the number of weekly hours they have regularly been working as a casual.
A tricky question
A difficult question has arisen regarding long-term casuals who don’t wish to convert to permanency. Although the desire to remain casual is theirs, this cannot guarantee there may not be risks for employers later.
For this reason, we recommend two key strategies to mitigate risk with long-term casuals:
- periodically offer the opportunity for regular casuals to convert to permanency in writing (ideally, every 12 months)
- list the 25 per cent casual loading an employee receives as a separate item on their payslip.
These two actions will protect an employer insofar as reasonably practicable from future risk.
For instance, if a casual alleges they should have been treated as permanent and they demand leave entitlements retrospectively, the two listed actions could form part of an employer’s defence that they have complied with the law by:
- clarifying the intention of both parties with regard to the employee’s employment status
- compensated the employee financially with the casual loading.
It is important to highlight that we cannot confirm how courts and/or industrial tribunals would view these actions (ie, we cannot guarantee they would entirely mitigate risk). However, we believe these to be the best tools given our current framework.
Looking to the future
The legislation currently before Parliament is seeking to insert a tighter definition of casual employment into the Fair Work Act as well as casual conversion provisions for award-free as well as award-covered employees.
As the situation progresses, the team at the HR in Practice service will ensure members are kept in the loop. Until then, we recommend employers review their current arrangements with casual employees in line with the information given here.
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Disclaimer: The material contained in this publication is general comment and is not intended as advice on any particular matter, nor should it be relied on as a substitute for legal or professional advice. Wentworth Advantage Pty Ltd expressly disclaim all and any liability to any persons whatsoever in respect of anything done or omitted to be done by any such person in reliance whether in whole or in part upon any of the contents of this publication.
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