Casual Employment Court Ruling – What Impact does this have on Your Business?

I’m not sure about you, but the words ‘unprecedented’ and ‘extraordinary’ are two of the most used in 2020 – and its only June. Lately, I’ve found myself working hard to avoid them and at the same time, being struck by their suitability when it comes to many recent events, including a case on casual employment.

Fires, floods, flu…and industrial relations

On May 20, the Full Court of the Federal Court made a landmark decision, placing at risk the employment status of casuals across the country.  If you are a business owner, and whether you have much interest in Industrial Relations (or not), the case of Workpac Pty Ltd v Rossato [2020] FCAFC 84, is likely to be the one that is hard to ignore, when and if, you engage casual workers.

The Facts

  • There are over 2 million casuals in Australia
  • More than 60% of these have been engaged for periods greater than 6 months on a regular and systematic basis
  • Casuals typically receive a 25% loading to compensate them for the insecurity of being ‘casual’ often ‘in lieu’ of leave entitlements, notice and even redundancy

The Findings

  • Having a written employment contract stating that the employment relationship is “casual” is not enough – all of the features of the employment relationship have to be considered
  • “a casual employee is an employee who has no firm advance commitment from the employer to continuing and indefinite work
  • The casual employment relationship indicators include: uncertainty, unpredictability, irregular work patterns, breaks in engagement, adhoc in every sense
  • In spite of Mr Rossato having been paid a 25% casual loading, Workpac was ordered to backpay Annual Leave, Personal Leave, Compassionate Leave and Public Holiday entitlements
  • The employment contract did not contain a specific offset clause and as a result, Workpac was unable to ‘offset’ the 25% loading already paid to Mr Rossato against the backpay order.

The Impacts

  • Many business owners enjoy the flexibility that comes with hiring casuals
  • This case reminds every business owner that if your casuals are not truly casual in the way they are engaged ie. irregular, adhoc, no expectation of ongoing work, then the risk toward your casuals being deemed permanent has significantly increased
  • The Australian Industry Group have suggested the cost for businesses forced to pay entitlements could potentially hit $8 billion.

What You Can Do Now

While this case is expected to be appealed to the High Court, now is the time to prepare and protect.

Take a look at any casuals you have employed and ask the following questions:

  • How long have they worked with you?
  • How regularly and systematically do they work for you?
  • Do they expect ongoing work?
  • Do they have a written employment contract?
  • Do you have a well written and specific offset clause?
  • Are they truly casual?

If there is any doubt about the casual status of any of your employees based on the above then take this opportunity to review the situation and make sure it is set up in the right way.

Written by Amanda Smith . June 04, 2020