The Australian employment environment was rocked last year following the Federal Court of Australia decision in Workpac v Skene  FCAFC 131.
In short, this decision found that employers who incorrectly classify employees as casual instead of full-time or part-time could be responsible for back paying various entitlements under the National Employment Standards (NES).
An immediate cry went up that this was effectively allowing ‘double-dipping’ for casuals to receive their casual loading (to cover not receiving the benefits of a permanent employee) while then claiming for entitlements such as annual leave for example.
Given the impact this decision presented, the government was quick to offer support to business through the Fair Work Amendment (Casual Loading Offset) Regulations 2018.
How does the regulation work?
(taken from the Fair Work Ombudsman website)
The new regulation applies where all of the following criteria are met:
- an employee is employed by their employer on a casual basis
- the employee is paid a casual loading that is clearly identifiable as being an amount paid to compensate the person in lieu of entitlements that casual employees are not entitled to under the NES, such as personal or annual leave
- despite being classified by the employer as a casual, the employee was in fact a full-time or part-time employee for some or all of their employment for the purposes of the NES
- the employee has made a claim to be paid for one or more of the NES entitlements (that casual employees do not have) that they didn’t receive for all or some of the time that they were incorrectly classified as a casual.
If all of these points are satisfied, 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 for the relevant NES entitlements.
BUT….to help support this claim, employers should ideally be in a position to demonstrate it was explained to the employee what the casual loading covers.
What should you do?
Now’s a great time to consider reviewing your casual contracts of employment and payslips to take advantage of the level of protections afforded by the regulation.
- Payslips: clearly identify the casual loading as a separate amount in each pay
- Contracts: ideally provide a breakdown of the casual’s ordinary hourly rate and the applicable casual loading paid to them. It should further confirm that the casual loading is paid to compensate for one or more of the relevant NES entitlements that casual employees are not entitled to. Where a revision of a contract is not possible, a written letter outlining these understandings is also an option.
If you have any queries as to whether your current contract would help defend a claim by a casual, we encourage you to contact one of the team to undertake an easy and quick review. For our clients already signed on to our great monthly retainer service, this is completely free (and already taken care of).
NOTE: this regulation should not be seen as a get-out-of-jail-for-free card. Every care should be taken to correctly classify the employment relationship at the commencement of employment… and then over time as a casuals’ workload and access to other provisions like Unfair Dismissal change.
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