There have been plenty of changes in relation to casual employment over the past few months with more changes just recently announced by the Federal Government.
Firstly, the Government has amended the Fair Work Regulations to provide assistance to employers against ‘double-dipping’ claims made by casual employees who are paid a casual loading and then later claim permanent entitlements. This change took effect on 18 December 2018 and applies to employment periods before, on or after 18 December 2018.
Secondly, the Government has announced that it will modify the Fair Work Act to provide regular casual employees with the right to request conversion to permanent employment. This change has not yet been made and will first require legislation to be passed.
New Fair Work Regulation – shield against ‘double-dipping’ claims
The Federal Government has varied the Fair Work Regulations to state that employers in certain circumstances are able to claim that casual loading paid to an employee be offset against any NES entitlements owing to an employee where the employee was incorrectly classified as a casual.
The change is in response to the much-publicised decision of the Federal Court in Workpac v Skene in August 2018. The Skene decision was discussed in our October Employment Update and found that an employee engaged as a casual and paid a casual loading was in fact a permanent employee and was entitled to paid annual leave.
Minister O’Dwyer has stated that the Skene decision contemplated offsetting of paid casual loading against NES entitlements owed. She states the new regulation expressly recognises this and provides clarification of existing general law rights to offset payments and will prevent employers having to pay employees the same benefits twice.
O’Dwyer has also stated that the new regulation is complementary to her recent intervention in the current Workpac v Rossato proceedings where she has also sought to clarify the ability of an employer to offset entitlements owed against paid casual loading. These proceedings are discussed in our November Employment Update.
The new Fair Work Regulation applies where all of the following criteria are met:
- an employee is employed by an employer on a casual basis;
- the employee is paid a casual loading that is clearly identifiable (for example by correspondence, payslips, contracts or industrial instruments) as an amount paid to compensate them for not having an NES entitlement (such as personal or annual leave);
- despite being classified by the employer as a casual employee, the employee was in fact a full-time or part-time employee for some or all of their employment for the purposes of the NES; and
- the employee has made a claim to be paid an amount for one or more of the NES entitlements they did not receive.
Under the new regulation, if all the above points are satisfied the employer can make a claim to have the casual loading paid to the employee taken into account in determining any amount payable to the employee in lieu of the NES entitlements. It will then be up to the court to decide whether to apply an offset and the amount of that offset.
The regulation is intended to apply if the employee has been mistakenly classified as a casual.
As mentioned above, the regulation took effect on 18 December 2018 and applies to employment periods before, on or after 18 December 2018. Note that although the regulation has been introduced it may still be subject to Parliamentary review.
Potential future changes to the Fair Work Act – casual conversion
The Federal Government has announced that it will modify the Fair Work Act 2009 to provide regular casual employees the right to request conversion to permanent employment. This change has not yet been made and will first require legislation to be passed.
This right already exists in modern awards (see our Alert here) with Minister O’Dwyer stating that ‘it is only fair that the same right is extended to other casuals…”, being those not covered by an industrial instrument such as an award.
With only a limited number of parliamentary sittings next year before the expected Federal election in May it is unclear when the changes, if any, will be made.
Take-away’s for Employers
- The newly commenced regulation provides clarification for employers that they can claim an offset for casual loading paid against a claim made by a casual employee for unpaid NES entitlements. However, there are a number of limitations to this. Firstly, all the criteria in the regulation as discussed above must be met. Secondly, the regulation is only intended to apply if the employee has been mistakenly classified as a casual and there has been no intention to avoid NES entitlements. Thirdly, the Regulation only provides for an employer to claim an offset and it will be up to the court to decide whether to apply an offset and the amount of that offset.
- The regulation will not stop casuals from claiming they are permanent employees but may prevent double-dipping if employers can offset casual loading paid against any entitlements owing.
- In light of the regulation, all employers need to review their contracts and other employment documents on casual arrangements, including referencing the casual loading.
- The foreshadowed changes to the Fair Work Act in relation to casual conversion have not yet been made. We will keep you updated on developments on this as well as any other changes in the casual employment space.
Aitken Legal can assist with queries in relation to the new regulation, claims by casuals for permanent entitlements and any other employment law related matter.