WARNING: If you employ casual staff, it is crucial that you understand how recent updates in legislation and case law will impact your business.
Read on to find out more about the changes and speak to us today to ensure you don’t get caught out later.
CASUAL CONVERSION LEGISLATION
UM…PARDON? WHAT LEGISLATION?
Under a Model Term that came into play on 1 October 2018, employees working on a casual basis can request that their role be converted to a permanent position if:
- They have worked regular hours (being an average of 38 per week) for at least one year; and,
- Without significant adjustment, they could continue to perform as a full time or part time permanent employee.
This process is called ‘casual conversion’ and the request must be made in writing.
Employees who work less than 38 hours can also ask to be converted to a part-time role if they work a “pattern of hours”.
BUT, I’M THE BOSS… WHAT IF I SAY NO?
Under the changes, employers can only refuse an employee’s request if there are ‘reasonable grounds’ for doing so. These must be based on fact and employers must discuss these with their staff member.
Examples of ‘reasonable grounds’ include that it would require a ‘significant adjustment’ to the casual employee’s hours of work to engage them as a full-time or part-time employee.
If the employee does not accept the employer’s reasons, this will constitute a dispute which may be referred by either party to the Fair Work Commission.
…AND IF I SAY YES?
If a request is granted, it must be discussed and recorded in writing and will begin at the commencement of the next pay cycle.
It’s important to note that the changes do not create an obligation for an employer to offer permanent employment to eligible casual employees – it just means the request can be made!
HOW WILL IT AFFECT MY BUSINESS?
It is important for employers to remember that, generally, most casual employees want the 25% higher loading and therefore, want to be employed as casuals. Here, they won’t request conversion, and the actual impact is probably not going to be as significant as the Unions and media would have us believe.
BUT, businesses must ensure compliance with the obligations where required as the result of non-compliance may include significant penalties.
A PIVOTAL COURT RULING: WorkPac Pty Limited v Skene
In addition to the legislative changes, the recent finding by the Federal Court in WorkPac Pty Limited v Skene  FCAFC 131 (WorkPac), means it is imperative to review your casual employment practices for potential liabilities AS SOON AS POSSIBLE.
Here, the court found that an employee of a labour hire company was, in fact, a permanent employee even though he was described as a casual in his employment contract.
The finding was based, amongst other things, on the fact that the employee had worked a regular roster set at the beginning of the year and, therefore, that his classification as a ‘casual’ was wrong.
The employee had enjoyed the higher wage loading that comes with being classified as a casual, but had not been entitled to things such as paid annual leave that permanent employees receive.
The Court’s finding that he was a permanent employee meant that he was entitled to be paid for these previously missed entitlements – and this is where things get really worrying for employers.
Generally, these unpaid entitlements would be set off against the ‘casual’ loading that he had received BUT, in this case, it was not clear from his employment contract what the applicable loading was or that he was, in fact, paid a higher wage in lieu of the unpaid entitlements.
As a result, the employee was effectively able to double dip, and WorkPac were forced to pay both the casual loading AND reimbursement for the unpaid entitlements.
Yep. That’s gotta hurt.
WHAT SHOULD YOU DO NOW?
Employers with casual employees should:
- Have their current employment contracts reviewed, as the templates need urgent changes to be made
- Have their current processes reviewed in light of these changes
- Provide all casual employees with a copy of a Model Term (this includes all current casual staff)
We can assist in lightening the load of these increased obligations by reviewing your casual employment contracts and practices to ensure you are compliant and don’t face a similar fate to WorkPac.
In this changing landscape of employment law, the cost of getting it wrong is so much greater than the cost of getting the right advice from the team at Aspect Legal.