The not so casual employee

Australian Industrial Relations legislation has provided casual employees with a 25% casual loading  to compensate for paid sick and annual leave, redundancy and other entitlements, but this has now been challenged by an unprecedented Federal Court decision, followed by updates to all Modern Awards.

In WorkPac Pty Ltd v Skene the court clarified there was no uncertainty or irregularity in the patterns of work Mr Skene was performing, as he had received a roster that outlined his next 52 weeks’ worth of work. As a result Mr Skene was awarded all benefits a permanent employee would receive, due to the regular nature of his work and predictable work hours.

With approximately 25% of Australia’s workforce comprising of casual employees and the outcome of this case in the forefront of many employer’s minds, questions begin to arise around the validity of each casual’s employment and the additional entitlements they may be due.

Who is a “valid” casual?

Unfortunately, despite the legislation surrounding an employment relationship, there is no one-size-fits-all definition of a casual employee.

The Fair Work Commission defines a casual employee as “not having a firm commitment in advance from an employer about how long they will be employed for, or the days (or hours) they will work”.  However, industry definitions of casual employment have morphed from the original intent of a casual employee into something significantly different. If we were to take a cross-section across all industries, it would not come as a surprise to find casual employees working the equivalent of full-time hours with the expectation their employment will continue for the foreseeable future.

Though specific details need to be considered on a case-by-case basis, generally, casual employees:

  • Have no guaranteed hours of work;
  • Usually work irregular hours;
  • Aren’t entitled to paid sick or annual leave; and
  • Can end employment without notice, unless required by a registered agreement, Award or employment contract.

What does this mean for your business?

From 1 October 2018, all Modern Awards contain a clause for casual conversion which outlines the process casual employees may follow to convert their employment to full or part-time.

Whilst wording in each Modern Awards may differ, the basis for converting from casual to full or part-time employment remains the same:

The Casual employee must have

  • been employed for a period of 12 months;
  • worked a pattern of hours on an ongoing basis of the 12-month period;
  • a pattern of hours expected to continue into the future with no significant changes; and
  • requested conversion to full-time or part-time employment in writing.

While the introduction of casual conversion clauses in all Modern Awards will impact every organisation that currently employs or is considering hiring casual employee/s, specific industries such as retail or hospitality, who typically have higher proportion of casual employees will be most affected.

What action must you take?

As an employer you must:

  1. Provide all casual employees with a copy of the relevant clause from the applicable Award within the first twelve months of commencing employment.
  2. Recognise that you cannot terminate and re-engage an employee to avoid their conversion request, nor can you simply refer the request either.

You may however, refuse the request on reasonable grounds if the conversion would result in significant adjustment to the employee’s current hours of work, or if it is reasonably foreseeable that the employee’s current position will cease to exist within the next 12 months.

Now, more than ever, organisations who hire casual employees will need to consider the implications upon their business operations and implement sound workforce planning to determine irregular and ongoing staffing requirements.