Key Terms to Include in a Casual Employment Agreement

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Table of Contents

• What is Casual Employment?
• Termination
• Casual Loading
• Intellectual Property
• Confidentiality
• Rate of Pay
• Generally No Restraint of Trade Clause
• Key Takeaways
• Frequently Asked Questions

An employment agreement is the backbone of many employer-employee relations. In the context of casual employment, an employment agreement or contract can clarify the main terms and conditions of employment, including your employee’s entitlements to pay, obligations to keep information confidential and how your employee should handle your business’ intellectual property. In this sense, a casual employment agreement can reduce the risk of a dispute arising since both you and your employee are on the same page concerning their conditions of employment. To help you consider which terms to include in a casual employment agreement, this article provides a summary of: 

• casual employment; and 
• key terms to include in a casual employment agreement.

What is Casual Employment?

A casual employee is a person who:

• is offered employment with no firm advance commitment of regular work; and
• accepts the offer of employment on that basis.

In determining whether an offer of employment makes no firm advance commitment to regular work, consider whether:

• an employer can elect to offer the employee work;
• the employee can elect to accept or reject the work that is offered;
• the employee will work as required according to the needs of the employer;
• employment is described as casual employment; and
• the employee will be entitled to a casual loading.

Termination

The nature of casual employment means there is no obligation for you to offer shifts. Likewise, there is no obligation for your employee to accept shifts. 

For this reason, a termination clause should acknowledge that you are under no obligation to offer your employee regular work. In effect, not offering your employees shifts for an indefinite period can result in the end of their employment. 

A termination clause in the employment agreement does not require you to give your casual employees notice of termination. For example, an employer can easily terminate their casual staff upon giving one hours notice. This is different from your obligations concerning full-time and part-time workers, where you must legally give your staff notice of termination.

Casual Loading

Since casual employees are not entitled to annual leave and personal leave, casual employees typically receive a 25% casual loading rate. This means they receive 25% more than a permanent employee at their level. 

In your employment agreement, you should separately identify the 25% casual loading from the permanent rate of pay. This is because if you classify your employee as a casual but they later successfully argue that they are a permanent employee, you can offset the casual loading against any amounts owing as a result of their entitlements as a permanent employee. In this sense, you can significantly reduce your liability when making outstanding payments. 

Intellectual Property

Casual employees may create valuable intellectual property for your business. For instance, your casual employee might generate marketing material for your business, a unique code for your business’ software or collect client information for your business. Therefore, it is important that you retain ownership of any intellectual property created by the employees for your business. 

In this sense, your intellectual property clause should:

• clearly define intellectual property;
• assign ownership of all intellectual property to your business;
• create an obligation on your casual employee to do anything necessary to secure ownership of intellectual property; and
• waive your casual employee’s moral rights to any intellectual property.

Confidentiality

In addition to handling your business’ intellectual property, your casual employees may be privy to information which is of commercial value to your business. For example, your employee may have access to client lists, marketing plans, inventions and business plans which are highly confidential.

To prevent your employee from disclosing confidential information, your confidentiality clause should:

• clearly define confidential information and acknowledge its commercial value;
• oblige the employee not to disclose confidential information;
• oblige the employee to only use confidential information for the business’ benefit; and
• create an indemnity to ensure that you are compensated for your losses in the instance where your casual employee breaches the confidentiality clause. 

Rate of Pay

If your casual workers work on public holidays, weekends, overtime, or outside ordinary business hours, they may be entitled to extra pay or penalties. Ultimately, your casual employee’s entitlement to penalty rates will depend on which industrial instrument covers their employment.

For example, an award can specify that you must pay your casual employees who work overtime by:

• substituting the overtime penalty rates for casual loading;
• adding overtime penalty rates to the casual loading pay; or
• applying the overtime penalty to the hourly rate which has casual loading on top.

Given different awards and registered agreements will impose different obligations on you, it is important that you clarify the rates of pay for your casual staff and integrate these into their casual employment agreement accordingly. 

Generally No Restraint of Trade Clause

Another difference between casual and permanent agreements is that casual employment agreements do not typically include restraint of trade provisions. In short, restraints of trade prohibit employees from:

• working for a competing business; and
• poaching clients, suppliers or other workers from the employer during and after the term of the employment. 

Restraints are not always enforceable and they are generally less likely to be enforceable for casual employees. Employers may nonetheless choose to include a clause which:

• requires employees to work in the employer’s best interest; and
• prohibits employees from having conflicts of interest.

If you are thinking of including a restraint of trade clause in your casual employment agreement, it would be wise to seek legal advice to ensure the restraint is not unreasonable. 

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Key Takeaways

It is important to have a casual employment agreement to ensure that both you and your casual employees are on the same page with respect to their conditions of employment.  When it comes to drafting a casual employment agreement, you should outline your employee’s:

• entitlements to pay;
• rights with respect to your business’ intellectual property; and
• obligations to keep information confidential.

If you need help drafting your casual employment agreement, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page. 

Frequently Asked Questions