At long last some much needed clarity around the meaning of “casual employment”.
During my 22 years working in the law, employers have always been at risk of an employee, whom they had engaged and paid as a casual, maintaining at some later time that they were actually a permanent employee under the common law… and therefore entitled to annual leave, personal leave, etc.
A Decision of the Full Bench of the Fair Work Commission (FWC) handed down just last week provides much needed certainty about the meaning of “casual employee” under the Fair Work Act (FWA).
The FWC essentially held that when an employee is covered by a modern award or a registered agreement, and those instruments provide a definition of “casual employee”, then that definition applies… not the common law.
Most modern awards contain a definition of “casual employment” with the same core criteria – that the employee was engaged and paid as a “casual”, and specifically paid a casual loading (set at 25% in all of the modern awards, subject to transitional arrangements).
The FWC held that the FWA contemplates such arrangements being long term by, amongst other things, containing a definition of “long term casual employees”, which includes employees “employed by the employer on a regular and systematic basis”.
Impact on Employers
This Decision provides employers with greater flexibility around the engagement and termination of employees covered by modern awards or registered agreements, and who are engaged and paid as casuals, whether or not they really are casuals according to common law principles.
The payment of the loading allows the employer to cover such things as personal and annual leave, notice of termination and redundancy when making payment to the employee at the end of the pay period.
Tip for Employers
All modern awards require employers to inform employees (some say in writing) of the terms of their engagement, and in particular whether they are to be full-time, part-time or casual. Therefore, to satisfy this requirement and ensure there is no dispute about the nature of the engagement, we recommend that at the very least you document the arrangement by way of letter confirming that:
“you will be engaged as a casual employee in accordance with the award. Your hourly rate of pay will be $X plus a loading of Y%. Casual loading is paid instead of annual leave, paid personal/carer’s leave, public holidays not worked, notice of termination, redundancy benefits and the other attributes of full-time or part-time employment”.