The rate of casual employment in Australia has increased markedly over the last decade. This is probably because it is considered “cheaper” to employ casual staff. For several years, industrial commission decisions have backed this trend, holding that it is sufficient for an award worker to be described as a casual and paid a casual loading even if they are effectively working full time hours.
Recently however, the Federal Court has overturned this line of thinking. Consideration of what makes a worker “casual” has largely been returned to its common law roots. So, the defining element of casual employment is its uncertainty. This is why casual employees receive a casual loading and don’t receive many of the entitlements of permanent employees. If it is not known from week to week whether an employee will be needed or how many hours of work they will be needed for, then their employment is usually casual in nature. If a person is going to be needed to work the same hours at the same times for an indefinite period, the employment is usually not casual. As the old adage goes, “it’s not rocket science”.
Employing casual staff on a permanent basis is often a false economy in any event. Casual employees receive a loading to make up for the lack of security and absence of annual leave and paid casual leave. They may not get paid annual leave or personal leave but they have similar entitlements to permanent employees to paid long service leave and unpaid personal/carers/compassionate leave and parental leave. They also have unpaid jury and emergency service leave rights. Casual employees can also often bring unfair dismissal claims and have the same workplace protections and discrimination rights as permanent employees. This means that the same standards of fairness will apply to many casual employees as permanent employees and a similar degree of caution should be exercised in deciding to terminate employment.
In addition, most industrial awards now incorporate provisions allowing casual employees to elect to convert to permanent status after a certain period of time.
In order to minimise the effects of a claim to retrospective paid leave and permanent wage entitlements, employers should ensure that standard employment agreements include a “setting off” clause which allows a casual’s higher standard hourly rate of pay to be taken into account in calculating whether there is an underpayment of entitlements. However, the lesson is that employers should consider their genuine business needs from the outset before making an employment decision and whether to classify a certain job as “casual”.
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