Employing “permanent” casuals: what are the benefits and risks for your business?

Posted by October 14, 2016 | Articles, Contracts, HR Advice & Support | No Comments

By Nicholas Parkinson, Lawyer

Traditionally, a casual employee was an employee who had no guarantee of continuing employment with their employer and whose hours of work were irregular or uncertain. However, this is not necessarily the case. According to recent research from the Australian Bureau of Statistics, 41% of casual employees are guaranteed a minimum number of hours’ work each week by their employer, 47% of casual employees’ income does not vary from one pay period to the next, and 62.5% of casual employees usually work the same number of hours each week.[1]

For businesses who are looking for flexibility in their operations, there are a number of advantages in engaging employees on a casual basis rather than permanently. Firstly, employers are not required to offer casual employees work, which is a distinct advantage during quiet periods or tough market conditions. Secondly, casual employees are not entitled to annual leave, paid personal leave, notice of termination, or redundancy pay, although they are entitled to be paid a “casual loading” of 25%. Thirdly, casual employees face some hurdles to bringing claims for unfair dismissal, to accruing long service leave, to being able to request flexible working arrangements and to taking parental leave, for example where they are engaged intermittently.

However, engaging “permanent” casuals can be a risky business. If employees are inappropriately classified as casuals, they may be able to bring claims against their employer for breaches of Modern Awards or the Fair Work Act 2009. They may also be able to claim that their employer has misrepresented their workplace rights. In these circumstances, employees will be entitled to seek compensation as well as penalties of up to $54,000 against the employer for each breach or misrepresentation.

Whether your business can properly engage casual employees on a permanent basis is likely to depend on the Modern Award that applies to your employees. Modern Awards are industrial instruments made by the Fair Work Commission that establish the minimum pay and conditions for employees in a particular industry or occupation.

Importantly, Modern Awards often set out how employers can engage casual employees. For example, the Cleaning Services Award 2010 provides that:

Casual employees may only be engaged to perform work on an intermittent or irregular basis or to work uncertain hours or to replace a weekly employee who is rostered off or absent.

On the other hand, and by contrast, many Modern Awards (for example, the Manufacturing and Associated Industries and Occupations Award 2010) provide that an employee will be a casual employee if they are “engaged and paid as such”. This means that an employee covered by the Manufacturing Award will be a casual employee if:

  • the employer and employee agree that the employment is “casual” at the start of the employment; for example, by making this clear in the employee’s employment contract; and
  • the employer pays the employee a casual loading.

If these 2 criteria are met, then the employee is likely to be properly regarded as casual even if the employee works regular and systematic hours.

However, casual employees who work regular and systematic hours may be entitled under the applicable Modern Award to become full-time employees after completing a period of continuous service.

To discuss how we can help you to improve your employment contracts or company productivity, contact us on 08 92884000 or visit our website www.mdclegal.com.au/employment-contracts for more information.

[1] Australian Bureau of Statistics, Characteristics of Employment, Australia, August 2014, Table 5.1 Employed Persons: Selected employment arrangements–By status of employment in main job–By sex

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