There has been growing debate following the Federal court judgement on 20th of May in the WorkPac Pty Ltd v Rossato case, that determined a casual employee was entitled to claim leave and other entitlements usually only provided to a permanent employee. The decision meant that additional entitlements were owed to the employee on top of the casual rate paid at the time.
This has left many employers wondering if they will have to back pay their casual employees, and casual employees looking for clarification on their entitlements. At a time already filled with uncertainty, with unemployment rates increasing, this ruling could discourage businesses from taking on new employees as they attempt to rebuild.
Why are casuals seeking entitlements now?
Of course, the workplace laws are put in place to protect those vulnerable employees from being unfairly disadvantaged. Unions want to see casual employees receive the entitlements they feel that they should be getting – especially where employers may be labelling workers as casual, when in fact the position is a permanent one. This leaves casual workers without security and leave entitlements that they would otherwise have as a permanent employee.
This case has followed on from a similar ruling in 2018 and the outcome has been long awaited by industry groups and unions alike.
Does this mean casuals will be double dipping?
Yes. Employers are rightly concerned about employees double-dipping. Casual employees receive an hourly rate with a loading of up to 25% on their base rate of pay and this loading incorporates leave and other entitlements that casuals aren’t entitled to. This ruling has lead to multiple claims being made against bigger companies such as BHP Billiton, Hays Recruitment and Programmed.
What should employers do about their existing casuals?
While employers are concerned about the potential costs involved should their casuals claim back payment of entitlements, there are some steps you can take.
Ensure your employees are true casuals
Following last month’s Federal Court ruling, Fair Work is currently reviewing the characteristics it defines as determining a casual arrangement, however there are some key elements that distinguish a casual from a permanent employee. See our blog on the topic here.
Check eligibility for casual conversion to permanent position
Review the length of service and history of shifts for your casual employees. There was a significant Fair Work Commission ruling released in July 2017 that took effect from 1 October 2018, which provides casual workers the right to apply for permanent employment where they have been working regular systemic pattern of shifts for at least 12 months with their employer.
Check your award for obligations
Under many awards, Employers are required to offer a permanent position to their long term eligible casual employees. Employees are able to request this conversion, and an employer can’t reasonably refuse a request where the employee meets the criteria.
Not all casuals will convert to permanent employment
When offering a conversion from a casual to permanent position, it doesn’t mean the employer needs to provision leave and other entitlements on top of the casual rate. Generally, the permanent position will be paid at a base rate that excludes the casual loading. It’s important to also note that employees are not obliged to accept the offer to convert to permanent, however, in this process it is absolutely critical that offers, requests and agreements are all clearly documented and regularly renewed.
What’s next?
Need assistance managing your casual workforce? We work with clients across hospitality, mining and resources, medical, dental and community services, among many other industries, and we can certainly assist you to follow a clear process and reduce your risks of underpaying employees or having to back pay your casuals.