Last week’s Federal Court decision in Workpac v Rossato has the potential to be game-changing for businesses employing long-term casuals.
What does the decision mean for businesses?
In summary, the Court has ruled that long-term and systematic casuals, who work on a predictable, regular, and continuing pattern are entitled to permanent employee benefits such as accrued Annual Leave, Sick Leave, and Redundancy Entitlements.
To understand the court’s decision, it’s important to understand the context. Workpac is a labour-hire firm which employed the employee in question at a mine in Queensland. The employee, Mr Rossato, was employed as a casual and his contract got renewed numerous times over three and a half years.
The court found that he was, in fact, a permanent employee even if his contract said otherwise and was therefore eligible for permanent employees’ entitlements.
What about the casual loading?
The obvious argument against this decision is the ‘double-dipping’ situation: surely the 25% casual loading is there to compensate for annual leave, sick leave and other entitlements that casuals don’t get, right? Well, according to this decision, no.
More to come
But don’t just rush and start paying your long-term casuals Annual Leave just yet. The Federal Government has indicated that they will examine the decision and what this means for businesses. It is estimated that 1.6 million workers are regular and systematic casuals and this could cost businesses $8 billion in back pay of annual leave.
There is also the potential eventuality that Workpac will appeal this decision, so stay tuned for more information.
So, what do I do now?
If you employ regular and systematic casuals in your business, we suggest that you contact us for specific advice, and we’ll work with you for a solution. Each business requires customised advice and no recommendation will work for every business.
As a minimum, however, you should review your current employment arrangements and identify if you have any long-term casuals that could be converted to permanent employees.
We list here the three common mistakes often seen when it comes to hiring casuals:
- Hiring a casual employee without an employment contract: A casual is still an employee, even if they work only a few shifts a year. They still require a contract outlining terms and conditions of employment.
- Not regularly reviewing your workforce: Once you employ a casual and if the shifts start to become regular, you might want to review the arrangements. Is the work regular enough to convert the employee to part-time or even full– time? What do the casual conversion clauses say in the award your employee is covered under? What conversations do you have with your employees when they refuse a shift? All these considerations are important when it comes to determining whether the employee is a true casual or a regular and systematic casual. If the employee is misclassified, the business is at risk.
- Believing that a permanent casual is a thing: The Act does not define casual employment. It is left to the Courts to interpret what a casual is and what it is not. Over time, the Courts have ruled that casuals who have worked long term in the business attract different entitlements, but this recent decision potentially create liabilities for business. Therefore, correctly classifying casual employees is paramount.