Casual Employees: mitigating the risk of a retrospective claim

Many employers have a number of employees who fulfil different roles within their organisation, from full time permanent to part time and casual employees. Often, employees may commence with an organisation as casual, with unpredictable, seasonal or fluctuating hours depending on the needs of the business and the employee. However, as time goes on, some casual employees do in fact have regular hours of work, despite their casual employment.

In a recent decision (WorkPac v Rossato) the Federal Court of Australia confirmed that labelling an employment contract as “casual” doesn’t automatically make them a casual employee. The key take away from the decision is that a casual employee is someone whose work is inconsistent, irregular or short term. Casual employees whose work doesn’t fit that description can now make a claim that they are or have been a permanent employee and are therefore owed the appropriate entitlements. This recent decision confirms that employers cannot rely on paying casual loading to avoid or set off a liability to pay entitlements.

It is important for employers review all their casual employee arrangements, especially those 'long term casuals', as this will impact on your obligations according to the Fair Work Act 2010.

A long term casual is an employee who, over a calendar period of at least 12 months, has worked a pattern of hours on an ongoing basis and could perform the same work as a permanent employee without a significant adjustment being required. The employee remains a casual employee unless their employment relationship changes with the employer, so that there is a mutual commitment to provide ongoing work on an agreed pattern of hours. The casual employee continues to get their casual loading regardless of how regularly they work or how long they work.

There are significant risks to organisations who retain long term casual employees, particularly if the employee can be deemed to work regularly and systemically, with a predictable work schedule – such employees are increasingly likely to be determined permanent employees with entitlements to paid leave. The risk will be increased where the employee has not been appropriately managed or has not received clear communication regarding their option to transfer to permanent employment status.

We recently had a client whose casual employee made a retrospective claim for permanent employment entitlements, due to the implied nature of their long term casual work patterns. How can you avoid this?

If your casual employees have been working with your business in a regular, ongoing pattern of work, then the first step is to have a discussion with them about their employment status.

If both parties agree to transfer the employment status to permanent, a new permanent employment agreement will need to be issued. From the date that this document is signed, the employee will no longer be a casual but be a permanent employee and receive the relevant entitlements.

Often the employee will say, “thanks for the offer, but I want to stay casual, I want the casual loading, and I like the ability to decline shifts to suit my family needs.” In these cases, it is critical that you formally document the fact that you have provided the opportunity for an employee to transfer to permanent, and they have declined. This will serve as the employee’s reaffirmation of the casual arrangement and could provide a reference point for the employer, should the employee attempt in future to be retrospectively categorised as a permanent employee. However, this step on its own is unlikely to satisfy the court that a casual employment relationship existed.

An employee that opts to remain casual needs to be aware that by accepting the casual loading, they forego the opportunity to make a retrospective claim for permanent employment entitlements.

To be seen to be compliant, employers should ensure that the roster includes a statement to casual employees that all working hours and shifts are subject to change and may be declined by the employee. This rostering arrangement is a good practice for reinforcing casual employment and maintaining a strong pool of resources and skills. As good practice, the rostering system should be set up to allow staff to bid for available rosters. The employers should confirm to casual employees that each shift is accepted in isolation from previous shifts.

A suggestion is that employers should schedule a discussion with their long term casual employee every 12 months. At this meeting, the agreement for the employee to remain casual should be confirmed in writing.

At any time after 12 months, a casual employee may request in writing to transfer to permanent. An employer’s grounds to refuse the request must be based on facts or reasonably foreseeable business reasons to not be able to transfer to permanent employment.

Although, we generally think of casual employees as one staffing group, it is critical to delve further and identify your long term casuals. We encourage our clients to proactively approach casual staff to discuss their employment status, do not sit back and wait. This encourages positive engagement with your employees and reduces the risk of a costly retrospective claim.

WorkPlacePLUS can help you meet your employer obligations and mitigate the risk of costly claims. For more information, please contact us today.

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