The casualization of the workforce has been a big topic of late. For many small businesses, hiring casuals has become the systematic bulwark of their business. This is especially true in the retail, hospitality, cleaning, security, construction, logistics and mining industries.
But if you are hire casual workers in Australia, you may be in for a shock. Your casual workforce may no longer be casual.
Casual workers may be entitled to full-time benefits
Effectively, the full Federal Court (WorkPac Pty Ltd v Skene [2018] FCAFC 131) in August declared that an employee under a casual contract who is rostered to work full-time hours will be considered a full-time employee.
The implications are immense. If your casual workers are now considered full-time or part-time employees, then they are entitled to additional benefits such as annual leave, sick leave, and public holiday pay. Not only that, but in some cases your employees will be entitled to these full-time benefits as well as casual loading rates because the court deemed these not to be mutually exclusive.
The landmark court decision has the potential to shake up many businesses
In this Federal Court case, the court ruled that industrial instruments did not determine the definition of a casual worker. Rather, the conditions of employment are determined by the NES (National Employment Standards) above enterprise agreements, modern awards, or employment contracts.
From this, the Federal Court was able to assess the definition of casual employment. In essence:
- Casual workers are employees who have no clear commitment given to them in advance as to the duration or hours of their work.
- Casual workers are employees who have no clear commitment in advance about whether or how their work will continue.
- Casual workers are employees who face irregular, uncertain, intermittent, and discontinuing work patterns
- Casual workers are not to benefit from ‘double dipping’ by receiving the benefits of both annual leave and a casual loading rate. However, if a worker is defined under the NES as deserving of full-time/part-time entitlements, and you have (mistakenly) elected to pay them casual loading rates in your contract with them, then you could very well be liable to pay both.
How do I know if my employees are casual or full-time/part-time?
Both employers and employees will wish to get it right and see that the right benefits and pay rates are delivered. Employees in particular might worry as to whether or not they now are liable for additional payroll costs.
As your internal or external accountants or outsourced CFOs constantly assess your payroll, they now need to go beyond the usual tax and superannuation issues and ask themselves the following:
- What award covers your employees?
- How does this award define full time, part time and casual employees?
- According to the NES definitions of casual work (based on commitment, uncertainty, irregularity, etc), can your workers be defined as casual, full-time or part-time?
- What penalty rates currently apply to your employees?
- Are there other allowances or loadings that employees are entitled to because of their award or contract?
- What constitutes overtime?
The key is having a firm understanding or whether or not your employees are casual, full-time or part-time based on the NES, award, and agreement definitions, rather than relying on what you or your employees think is their current status.
You need to do this accurately in order to avoid a potentially difficult and painful audit from Fair Work. Quite often many accountants, CFOs and people in HR will bear the brunt of pay disputes when employees check their payslips and notice discrepancies, and this may increase after this Federal Court ruling. So you need to be fully aware of your employment position and the correct status of your employees.
Once you have established this, then you can draft accurate contracts that prevent confusion about whether an employee is casual or full-time/part-time. This will help avoid double dipping (the payment of both casual loading rates and annual leave benefits). At this point you can also confidently identify a means for identifying all future roles as casual, full-time, or part-time.
You may very well need expert help to get this right, whether you are an established Australian company or new to doing business in Australia. At Calibre, our Virtual CFO packages provide CFO expertise at affordable rates, and our Virtual CFOs are experts at ensuring your payroll and employment practices meet all current legislative and regulatory standards. Contact us below for a free consultation.
Important Disclaimer: Readers should not act solely on the basis of the material on this page. Items herein are general comments only and do not constitute or convey advice. Legislation and proposals of legislation are also subject to constant change. We therefore recommend that formal advice be sought before acting in any of the areas. This news article is issued as a guide to the readers. Calibre Business Advisory Pty Ltd and its associated entities disclaims any losses that may be incurred as a result of the reader undertaking any action based on this article.