There have recently been two important changes to the law regarding casual employees:
- casual conversion – the right for certain casual employees to request that their casual employment be converted to permanent employment; and
- “deemed” permanency – a return to the traditional view of the Courts that a casual employee will be “deemed” permanent in certain circumstances.
If you employ one or more casual employees, these changes could affect you.
Read on for an overview of the changes and practical tips for complying with the new law.
Casual conversion
On 1 October 2018, 85 modern awards were amended to include new casual conversion provisions that grant casual employees additional rights.
The new provisions entitle a “regular casual employee” who:
- has worked a regular pattern of hours over a period of at least 12 months; and
- could continue to work those hours as a permanent part-time or full-time employee without significant changes,
to request their employer to convert their employment to permanent part-time or full-time.
An employer that receives such a request from a regular casual employee must consider that request and may only refuse it on reasonable grounds and after consulting with the employee. The provisions prescribe what will be considered “reasonable grounds”.
If an employer refuses a request, it must provide the employee with the written reasons for that refusal within 21 days after the date on which it received the employee’s request.
The new provisions also require an employer to provide all of its casual employees (whether “regular casual employees” or not) with a copy of the provisions relating to casual conversion in the applicable modern award:
- within the first 12 months of the employee’s first engagement to perform work; or
- if the employee was employed as at 1 October 2018, by 1 January 2019.
“Deemed” permanency
Employers of casual employees (and those in the labour hire industry) should also take note of the recent decision made by the Full Court of the Federal Court in WorkPac Pty Ltd v Skene [2018] FCAFC 131.
In that case, the Full Court confirmed that an employee described by his employer as a “casual” was in fact a permanent employee because he had a long-term commitment from his employer to continuing and indefinite work.
The employer (WorkPac Pty Ltd) set its roster a year in advance and so the employee (Mr Skene) knew his shifts from week to week on an ongoing basis. His work was regular and systematic.
The Full Court accepted the common law view that in order to be a casual, an employee must have an irregular work pattern with no advance commitment to that work being ongoing and the work should be intermittent and unpredictable.
That approach had widespread implications because by reclassifying Mr Skene as a permanent employee, he got access to a number of important statutory benefits that only apply to permanent employees, such as paid leave, notice of termination and redundancy pay. He was to receive these benefits notwithstanding that he had been the recipient of a casual loading as a casual employee over an extended period.
Accordingly, if a casual employee is deemed to be permanent after several years of employment, his or her employer may be faced with significant claims for back-pay of unpaid permanent employee entitlements (including previously unpaid leave entitlements).
However, there is some scope to off-set such payments against amounts paid to the employee above their award entitlements.
WorkPac Pty Ltd v Skene has caused such concern amongst employer advocates and the Federal Government that there are ongoing matters before the Court and a threat by the Commonwealth to initiate legislative amendments to neutralise the decision in that case.
What should you do in response to these matters?
If you employ casual employees, we strongly recommend that you:
- review any modern awards that apply to your employees to determine whether the new casual conversion provisions appears in those awards;
- if required, advise your casual employees of their rights to request you to convert their employment from casual to permanent by the applicable deadline;
- have systems in place to review any requests received, undertake the consultation process required and, if necessary, refuse those requests on acceptable grounds;
- review the arrangements you have with your casual employees to determine whether those employees might actually be permanent employees;
- consider how you might alter how you engage casual employees, including the regularity and predictability of their work, to minimise the risk that they may be “deemed” permanent;
- ensure that the casual loading portion of a casual employee’s wages is clearly identified in the employee’s employment agreement and pay-slip; and
- ensure that your employment agreements contain suitable off-set provisions that may enhance your ability to argue that a casual employee who is “deemed” permanent has already received part or all of their permanent employee entitlements.
As the law relating to casual employees continues to come under close scrutiny by unions, the Fair Work Commission and the Courts, it is crucial that you implement measures to reduce the risks to your business arising from the engagement of casual employees.
For more information contact Leonie Kyriacou at l.kyriacou@pigott.com.au or Nigel Salmons at n.salmons@pigott.com.au or call (02) 8251 7777.
This article is intended to provide general information in summary form on a legal topic, current at the time of publication. The contents do not constitute legal advice and should not be relied on as such. Formal legal advice should be sought in specific circumstances.