Casual employment is a hot topic at the moment. This is due to the:

  • relatively recent addition of casual conversion clauses in modern awards; and 
  • recent court decisions potentially allowing for casual employees to receive permanent employee leave entitlements.

As an employer, it is critical that your casual employment contracts outline the correct clauses. This article describes the types of provisions you should include in your casual employment contracts.

Type of Employment

It is essential at the outset that you confirm with the employee that this is a casual employment position. The characteristics of casual employment are typically that the employee:

  • has no guaranteed hours of work;
  • will usually work irregular hours;
  • has no sick or annual leave entitlements; and
  • can have their employment ended without notice, unless notice is required by a registered agreement, award or employment contract.

Remuneration

You must expressly identify that the employee will be given a 25% casual loading. Casual loading compensates casual employees for entitlements they do not receive as a permanent employee, like: 

  • annual leave; or
  • sick leave.

It is best practice to clearly outline that you have allocated 25% extra pay, rather than just specifying the hourly rate to which you may have already added 25%. 

For example: 

  • Ordinary Hours = $20
  • 25% Casual Loading = $5
  • TOTAL Pay Per Hour = $25

If you ever face a dispute where an employee claims they are a part-time employee, not a casual employee, the court will look at whether you clearly identified their casual loading in monetary terms. Here, if your employee is found to be really working part-time, the casual loading may be set off against annual leave entitlements. 

For example, if the casual loading added up to $20,000 over one year and the annual leave entitlements were $20,100, then the court could offset the two.

Modern Awards

Modern awards set out the minimum pay requirements for employees within different industries. A modern award will cover your employees if:

  1. they work in an industry or business included in the award; and
  2. the award covers your employees’ job classifications; and
  3. they do not work in a job or industry that the award excludes.

If a modern award applies to your casual employees, you must ensure that you are meeting the payment requirements set out in the award.

Offset Provisions

If the modern award applies to your business and you are paying above the award, you may want to include an offset provision in your employment contract. Here, you can pay an all-encompassing hourly rate to your employees to offset the payment you must pay on weekends.

For example, you are not strictly complying with the award and are paying an hourly rate of $30, rather than the $20 rate specified in the award. Here, if you do not want to pay additional loadings and instead have them captured in your all-inclusive wage, then you should clearly outline this in the employment contracts.

You may also need to tell the casual employee which award they are under. To satisfy this notification obligation, you could include this information in your letter of offer or employment contract.

Casual Conversion Clauses

Nearly all modern awards have adopted a casual conversion clause. This allows casuals with 12 months’ service working regular shifts to request that they convert to part-time or full-time employment.

You must provide your casual employees who are covered by a modern award with a copy of this conversion clause within their first 12 months of employment. You can refuse the conversion request, provided that: 

  • you and the employee have discussed this first; and
  • there are reasonable grounds for your refusal.

For example, you may be able to refuse a conversion request if the employee has not been working consistently over the past 12 months. You may also be able to deny the request if there will not be enough work for them over the coming year. 

You must provide the employee with your reasons for refusal in writing within 21 days of them making the request. If an employee disagrees with the decision to refuse the request, they can apply for the Fair Work Commission to hear the dispute. 

Termination

Technically, the casual employment terminates at the end of each shift. You should clearly outline this within the casual employment contract. 

Therefore, you should not confuse the arrangement by including lengthy notice periods for termination, which would typically be included within full-time employment contracts. This is not the nature of casual employment.

Return of Equipment or Material

At the end of their employment, your employees should typically return their uniform or any equipment they used for the role. You should clearly outline this in the employment contract. You may also wish to include a confidentiality clause within the contract that requires casual employees to return any material they have received during their employment.

Key Takeaways

Casual employment is very different from permanent part-time or full-time roles, especially regarding employee entitlements. It is crucial to have your casual employment contract prepared to outline their employment entitlements. If you are paying above the modern award and do not wish to pay other entitlements, make sure to describe that this wage includes all other entitlements. FairWork can penalise you for not correctly paying and providing entitlements to casuals employees. If you have any questions about having a casual employment contract prepared, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Rowan ONeill

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