Employer required to pay thousands in compensation to casual employee
A recent decision handed down by the Full Court of the Federal Court of Australia has resulted in heated discussion regarding long term casual employee rights. In WorkPac v Skene, despite being termed a ‘casual employee’ by his employer WorkPac, Mr Skene was found to be a permanent employee and awarded compensation (including interest) in lieu of annual leave entitlements.
Industrial relations-savvy employers have been considering what this decision means for their ‘long-term casual employees’, and how to protect themselves from a duplication of pay entitlements.
Casual employment means engaging employees on an irregular basis paying those employees a casual loading during their employment, but how do you avoid facing claims for backdated entitlements such as annual leave?
Ambiguity forced Australian Government to change regulation
In response to the queries and confusion from employers and unions, the Australian Government has passed a new regulation to the Fair Work Regulations.
Regulation 2.03A was inserted to clarify the offsetting of leave entitlements in casual loadings. The Regulation allows an employer to rely on the payment of casual loadings (given certain conditions are met) if a casual employee later makes a claim for entitlements under the National Employment Standards (NES).
Regulation 2.03A will apply if:
- the person in question was employed as a casual employee; and
- the employer pays the employee a loading amount that is clearly identifiable as an amount to compensate the employee for not having one or more relevant NES entitlements during the employment period; and
- during all or some of the employment period, the employee was in fact an employee other than a casual for the purposes of the NES; and
- the person makes a claim for an amount in lieu of one or more NES entitlements.
The Regulation will apply to employment periods that occurred before, on or after the 18 December 2018.
Knowing your rights and being in the right
So, what happens if one of your long term casual employees makes a claim for back payment of NES entitlements? As long all the criteria set out in Regulation 2.03A are met, you, as the employer, can make a claim to have the casual loading payments already paid taken into account when determining any amount payable to the employee in lieu of NES entitlements.
Employers have always had to keep abreast of changes to the Fair Work Act 2009 to ensure legislative compliance. In light of this new regulation, it is even more important for employers to identify clearly, and in no uncertain terms, that a casual loading paid to casual employees is to offset any entitlements under the NES.
Ensuring your payment records and employment contracts are clearly worded and unambiguous is crucial to managing your casual employees in accordance with the changing legal requirements.
If the thought of legislation, regulations and requirements makes you a little nervous take a look at our Doing Business in Australia page – MDC Legal can set you on track.
Casual employment Australia: rights still unclear
While this new regulation offers employers some protection from claims for backdated entitlements by employees who were incorrectly classed as casuals, it has attracted criticism. One criticism is that the protection is limited to having the casual loading taken into account by the courts. The assessment of the employment status (casual versus permanent) of an employee, and whether the casual loading should be applied to offset any NES entitlements, remains a decision of the courts. The issue of casual loadings with respect to entitlements under awards and enterprises agreements remains unclear.
This new regulation does not shed any light on the issue of ‘regular casuals’ that continues to raise concerns for employers after the WorkPac v Skene decision. As leaders in the field, MDC Legal has provided a useful decision summary and preliminary guide for employers.
As class actions begin to loom on this issue, employers should seek specialised advice regarding long term casual employee rights to minimise their exposure to potential claims. MDC Legal is a specialist employment and workplace relations law firm and we provide expert solutions through high quality, cost effective legal services.
By engaging MDC Legal to review your processes for engaging and managing casual employees, and to revise the language used around casual loadings in your casual contracts, you will be better placed to avoid costly complications relating to long term casual employee rights.