Employers who Incorrectly Classify Employees as Casual Could be Responsible for Back Paying Entitlements.
There have been new developments in the Fair Work Amendment (Casual Loading Offset) Regulations 2018 in which employers who incorrectly classify employees as casual instead of full-time or part-time could be responsible for back paying their staff (FairWork). This regulation came into effect on the 18th of December 2018.
This decision has been made due to the recent court case in which an employee who was treated as a casual and paid a casual loading, was in fact entitled to annual leave as he worked regular hours and was expected to continue working with the company (Workpac v Skene  FCAFC 131).
So, what does this mean for employers who hire casual employees?
Many employers think this new development could be seen as ‘double-dipping’ in casual loading payments and paid leave entitlements. This poses a huge financial risk for businesses who hire casuals if they don’t classify them correctly. However, the Casual Loading Offset Regulation outlines that employers can make a claim to have casual loading payments to casual employees taken into account when working out the entitlements owing for the relevant National Employment Standards (NES) entitlements.
An employer can make a claim to have the casual loading payments made to the employee taken into account when working out the entitlements owing to the employee when:
- The employee is employed as a casual
- The employee is paid a casual loading which is an amount that is clearly paid to compensate the employee for not having one or more entitlements (relevant to NES) such as annual leave or sick leave
- The employee was in fact working as a full-time or part-time employee for some or all of their employment despite being classified by the employer as a casual
- The employee has made a claim to be paid for one or more of the NES entitlements that they didn’t receive for some or all of the time they were incorrectly classified as a casual
Employers and business owners can often make the mistake of incorrectly classifying their full-time or part-time employees as casual employees and although you pay casual loading payments to staff, this may not save your business from financial risks.