Under the Fair Work Act 2009, a casual
employee may be classified as a permanent employee – and therefore be eligible
for annual leave, sick leave and other entitlements – if their work is regular,
consistent, predictable over a period of time and is likely to continue into
the foreseeable future. A “reasonable period of time” could be anything
more than six months.
Why has this changed?
The Fair Work Commission (FWC) has revealed that it has seen an increased number of unfair dismissal claims lodged in recent times; seeing a spike of 60% on the numbers compared with this time last year. The main influencing factor is COVID-19, with an increasing number of employees being made redundant or terminated.
Unfortunately, with the unemployment rate so high, it isn’t as simple as falling into another job quickly, the market can’t keep up with the demand. This results in the unemployed now looking for other opportunities for sources of income and in some cases, it means a claim against their former employer.
That being so, SME’s need to be compliant across all areas of their business in the employment relations space. Ideally, you would engage a HR professional to complete an audit on your processes and procedures to minimise your risk. Even the basis of employment is a hot topic as we’ve seen highlighted in the courts of late.
Take the case of Workpac v Rossato, the decision was handed down on the 20th of May 2020 in a landmark case that sets a precedent for how casual employees are legally viewed under the Fair Work Act 2009. In this case, it illustrated that simply by making reference to a casual employee in their employment contract does not constitute legally that they are in fact engaged under those terms. The classification of an employee’s status of employment is determined more importantly by the nature of the engagement.
According to the FWC, a casual worker does not have a firm commitment in advance from an employer about how long they will be employed for, or the days (or hours) they will work. A casual employee does not commit to all work an employer may offer. In the above case, Rossato was employed for three and a half years and his work was classified as ‘regular, certain, continuing, constant and predictable’ therefore exposing the true nature of his employment which was deemed permanent.
In the Federal Court ruling, it was determined that, under the Fair Work Act 2009, a casual employee may be classified as a permanent employee – and therefore be eligible for annual leave, sick leave, and other entitlements – if their work is regular, consistent, predictable over a period of time and is likely to continue into the foreseeable future. A “reasonable period of time” could be anything more than six months.
There is no doubt that the decision could have significant implications for Australian employers that engage casual employees. It is also at the forefront of the governments' minds with Scott Morrison announcing last week that casual employment matters will be on the agenda for the industrial relations reform.
What can I do?
There is a couple of actions that you could be completing now to ensure you are acting within the legislation. If you require additional assistance to support these tasks, we are here to help, our HR compliance checklist can also assist with your review.
- Review existing casual contracts and agreements to ensure they have the appropriate set-off clauses;
- Review the FWC legislation to determine the definition of a casual vs permanent/part-time employees and ensure you are within the guidelines. Use additional caution when reviewing long-term casuals and ensure they do not meet the criteria of regular, certain, continuing, constant and predictable working arrangements;
- Review and monitor your casual workforce: employment arrangements may change during employment and if a casual is no longer a casual, consider converting their employment status to permanent to mitigate any potential exposure (particularly where a casual employee is covered by a modern award containing a casual conversation clause);
HR Audit & Workplace Compliance Risk Checklist
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Jen is our HR super-star of Trekk Advisory. She has a Bachelor in Business (Human Resource Management) & is a certified member of the Australian Institute of HR. She operates from our Brisbane office, and enjoys a good thriller or fantasy novel in her down-time.