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Casual employees are no exception to the general principle that having an employment agreement with employees is smart business. A casual employment agreement proactively clarifies key terms such as confidentiality, intellectual property, the rate of pay and termination notice. In turn, this may assist with reducing the risk of disputes. It also may assist with responding to underpayment claims where a casual employee claims they are in fact permanent and are therefore entitled to have been paid permanent entitlements, such as annual leave and sick leave. The employment agreement may assist with defending such a claim, including with respect to the value of the underpayment. This article provides a brief summary of: 

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

What is Casual Employment?

Whether an employee is casual rather than permanent will depend on each particular set of facts and the substance of the relationship, rather than what the parties choose to call it.

For example, the employment could be permanent even if both you and your employee refer to it as casual employment.

True casual engagement should include:

  • irregular, unpredictable and intermittent work;
  • a mechanism for casuals to accept or decline shifts at will; and
  • a lack of advance commitment to the period of work.

On that basis, there are some terms in a casual employment agreement which are specific to the nature of the engagement and different to permanent employment. In addition, a casual employment agreement is typically less heavy handed than a permanent agreement.

Termination

The nature of casual employment means there is no obligation for the: 

  • employer to offer shifts; and
  • employee to accept shifts. 

The termination clause should acknowledge that the employer is under no obligation to offer any shifts. In effect, doing so would bring the employment to an end. The termination clause should also provide for a short notice period, such as one hour’s notice, so the employer can terminate during a shift by putting the employee on notice that the shift will end in one hour.

Casual Loading

To compensate them for not receiving permanent entitlements such as annual leave and personal leave, casual employees receive a 25% casual loading. This means they receive 25% more than a permanent employee at their level. In the employment agreement, it is crucial to separately identify the 25% casual loading from the permanent rate of pay.

This is because if you classify an employee as a casual but they later successfully argue that they are a permanent employee and bring a claim for payment of permanent entitlements, you can offset the casual loading against any amounts owing.

This is because if you have paid a casual employee casual loading, they should not be able to ‘double-dip’ by also claiming an entitlement to leave if they turn out to be a permanent employee. This can significantly reduce your liability. It can also be useful to expressly confirm in the agreement that you will pay the 25% instead of permanent entitlements.

Intellectual Property

Casual employees may create valuable intellectual property for the business. Therefore, it is important to assign the intellectual property from the employee to the business. Intellectual property may include: 

  • marketing collateral for a marketing employee;
  • code for a software engineering student; or 
  • client information for an administrative assistant. 

The intellectual property clause should:

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

Confidentiality

Casual employees may be privy to information which is of commercial value to the business and that is confidential. 

For example, they may have access to client lists, marketing plans, inventions and business plans. 

The confidential information clause should:

  • clearly define confidential information and acknowledge its commercial value;
  • oblige employee to not disclose confidential information;
  • oblige the employee to only use confidential information for the business’ benefit; and
  • create an indemnity.

Rate of Pay

Casual employees are generally covered by modern awards because they are often more junior employees. Accordingly, they are less likely to be excluded from award coverage because their duties are managerial or because of the seniority of their role. Most industry and occupational awards include junior classifications. If they are not covered by an industry or occupational award, the employee may be covered by the Miscellaneous Award 2020. This award excludes senior employees but covers most junior employees who slip through the cracks of other awards. On that basis, you should consider: 

  • whether an award covers the employee; and
  • which award and corresponding rates apply.

Generally No Restraints

Another difference between casual and permanent agreements is that casual agreements do not typically include restraint of trade provisions. In short, restraints 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 interests.

Key Takeaways

It is important to have a casual employment agreement to set out the terms of employment as well as to defend a claim where an employee argues that their employment was in fact permanent. You should cover some key terms regardless of the nature of the employment, such as confidentiality, rate of pay and intellectual property. Others are specific to casual employment, such as termination and casual loading. If you need help drafting an employment contract tailored to your business, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

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