There is no general definition of a casual employee. This makes it tricky for employers to understand their rights and obligations, and classify staff correctly to avoid any future claims. In particular, it makes it all the more important to answer the question: “are my employees casuals?”

This article will provide you with guidance on whether your employees are casuals, and what this means for your business.

Determining Whether Your Employees are Casuals

If an award or enterprise agreement does not cover your employees, the common law characterisation of a ‘casual employee’ will apply. The ‘common law’ means the decisions that courts have made in previous cases.

The courts have been reluctant to provide a concrete definition of a casual employee. However, there are a number of factors you can consider when determining whether a casual employment relationship exists.

 

Indicates a casual employment relationship Indicates a permanent employment relationship
You pay them hourly rates. You pay their wages as a salary.
The employee has worked for you for less than 12 months. They have worked for you for longer than 12 months.
The employee works inconsistent hours. For example, they may work Monday-Friday, 9am-5pm one week, but only work on Tuesday 12pm-5pm the following week. They work consistent hours.
The employee works according to a roster system. You can publish the roster with little notice (i.e. on a weekly basis, or with a couple of days’ notice).

They do not work to a roster system. Or, if they do, they know their exact days and hours well in advance.

 

You and the employee may not reasonably expect ongoing work availability. You and the employee will reasonably expect ongoing work availability.
Notice is not required by the employee before the employee is absent. Prior notice is needed by the employee if they are going to be absent.
The employee has been told of the casual nature of the role. The employee has not been told the role is of a casual nature.
You do not have to pay the employee leave, such as annual leave and personal leave. You have to pay the employee leave, such as annual leave and personal leave.

 

When asking yourself “are my employees casuals?”, it is important to determine the nature of work performed and consider the entire relationship between you and the employee.

Entitlements of Casual Employees

Permanent and casual employees have different entitlements. It is important to keep these entitlements in mind when employing casuals, to ensure you know the rights of both yourself and your casual employees.

Your rights Casual employees’ rights
You do not have to pay them annual leave or paid personal leave.

You may have to pay casual employees under a modern award an additional casual loading of 25%. This loading is on top of the minimum rate of pay.

This means that if the minimum rate of pay is $18.00 per hour, you may have to pay an additional loading of 25%, making the employee’s minimum rate of pay $22.50 per hour.

You do not have to give them the same period of notice as specified in the National Employment Standards (NES). The employee has access to unpaid compassionate leave and unpaid carers’ leave of two days per occasion.
You can terminate the employee with one hour’s notice, unless otherwise specified in their employment agreement or the relevant modern award. They can request to become permanent employees after 12 months of regular and systematic work. We will discuss this further below.

 

Casual Employee Leave Entitlements

Although long-term service can be an indicator of a permanent employment relationship, some casual employees are long-term casuals who may work regularly and systematically. If this is the case, and those employees have a reasonable expectation of continuing employment, they will be entitled to:

  • unpaid parental leave of 12 months, provided you have employed them on a regular and systematic basis for at least 12 months; and
  • an unfair dismissal claim once they have served the minimum employment period of 6 months, unless you are a small business with fewer than 15 employees (in which case, the minimum employment period is 12 months).

Requests to Become Permanent Employees

Importantly, some casual employees under various modern awards may have a right to request permanent employment.

If they wish to make such a request, casual employees must show:

  • that you have employed them for a minimum of 12 months; and
  • that over the 12 months, they have worked a pattern of hours on an ongoing basis without significant change. They must be able to continue on this basis under either full-time or part provisions of the award.

As their employer:

  • you must tell every casual employee that they have the right to request permanent employment. This has to happen within 12 months of their initial engagement, regardless of whether they become eligible or not to make the request; and
  • you may refuse the employee’s request on reasonable grounds.

Implications for Employers

As an employer, you must take care when engaging employees on a casual basis. Failure to correctly classify an employee and pay them accordingly may result in a penalty against you under the Fair Work Act 2009 or the applicable modern award.

These penalties may cost up to $54,000 for a corporation and up to $10,800 for an individual. Furthermore, failure to correctly classify and pay an individual could result in the employee making underpayment claims against you. The Australian Taxation Office may also bring claims for failure to withhold the correct tax.

Key Takeaways

As an employer, you need to know the answer when you ask yourself: are my employees casuals? You do not have to pay casuals leave like you do with permanent employees, but you may have to pay them a casual loading of 25%. Casual employees who have regularly worked for you over a period of time may also be able to take additional leave or request to change to permanent employment.

If you need additional advice on employee entitlements, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

Lindsay Zeloof
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