Casual decisions and Industrial Relations reform

Public news

Following two recent decisions against them in the Federal Court, labour hire company Workpac has sought special leave to appeal to the High Court following last month's momentous Rossato decision, which paved the way for casuals to claim leave entitlements. A ruling employers now estimate could expose them to more than $14 billion in back-pay. In indicating their intention to intervene in the case, IR Minister Christian Porter pointed out that casual employment was on the agenda for the IR working groups currently charged with overhauling the system, "with the goal of achieving certainty and fairness so employees receive their correct entitlements and business can be confident to legitimately use this form of employment to keep and create jobs".

The Federal Court found last month found that coal mining worker Robert Rossato, during his engagement on six consecutive employment contracts over almost four years to April 2018, was a permanent Workpac employee entitled to be paid annual, personal/carers and compassionate leave, plus payment for public holidays during Christmas shutdowns.

Workpac launched the Rossato case after a full Federal Court upheld the Federal Circuit Court's 2016 ruling that mine driver Paul Skene was an employee, despite Workpac engaging him as a casual.

"As I said at the time of the court's decision, given the potential for this decision to further weaken the economy at a time when so many Australians have lost their jobs, it may also be necessary to consider legislative options," Porter said.

Those legislative options may arise out of the current Industrial Relations reform proposed by the Federal Government, with five key working groups established to address areas of specific concern.

The MTA are actively involved in and particularly concerned about two key areas, being Award simplification and casual employment.

Options being considered for discussion in the Award simplification working group include a Small Business Award, and the inclusion of common provisions from the current Modern Awards into the National Employment Standards, allowing the Awards to focus on industry-specific issues.

The concerns about casuals fall into three key categories:

  • Clearly defining what a casual employee is in legislation, with employer bodies pressing for a clear definition that a casual is an employee who is engaged and paid as a casual. Sitting alongside this would be legislative clarification as to what, precisely, the entitlements are that the casual loading is intended to compensate for.
  • Where casuals are incorrectly defined and later found to be permanent employees, the ability to offset the casual loading paid against any accrued entitlements, thus preventing “double dipping”. While regulations were introduced to address this following the Skene decision, these were ineffective in the Rossato decision, indicating that a different approach is necessary.
  • The ability to provide for permanent employees with flexible work hours, a role currently filled by ‘permanent casuals’, due to the lack of flexibility in current permanent part-time arrangements. Additional flexibility in part-time employment may address many of the issues arising from the need for flexible work hours, and thus reduce the need for long-term casual employees.

Currently, and while the High Court appeal is being heard and the IR reform is proceeding, the MTA recommends that you review your casuals to avoid any long term casuals employed on a regular and systematic basis. If it is impossible to avoid these circumstances, then ensure you have terms of engagement or a contract clearly stating they are a casual and paid as such, and what that means (including that there is no guarantee of ongoing employment). You should also ensure you note the casual loading or casual rates on the pay slips, and if the casual conversion clause in the award applies, ensure that conversion is offered, and if declined, request the response in writing and keep a record.

If you are uncertain about how to manage your casual employees, or have concerns about possible claims, contact the Workplace Relations team on 8291 2000 or at wr@mtasant.com.au. This can be an excellent opportunity to review your contracts, pay slips and other employment documents, as well as your recruitment and engagement process, with a full HR audit.