Casual employee classification has been subject of uncertainty for employers and has resulted in considerable litigation over the years where casual employees have claimed that they should receive entitlements as a permanent employee, particularly when the employee worked regular and predicable shifts over a long period of time.
On 4 August 2021, the High Court of Australia handed down a landmark decision in WorkPac Pty Ltd v Rossato [2021] HCA 23 which now clarifies the definition of a casual employee and the test that is to be applied to casual employment. In this case, the High Court confirmed that a feature of casual employment is that there is no firm advance commitment for work and determined that the test for whether a firm advance commitment exists is to be based on the employee’s contract of employment, rather than on expectations for future work or the permanency of rostered hours.
This decision is a great result for employers, who can now confidently rely on a written contract of employment which expressly states the nature and scope of the employment relationship as casual, even where the employee’s employment is ongoing over a lengthy period.
There has also been the recent (as of 26 March 2021) introduction of the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 which has inserted a definition of casual employee.
According to the Act, a person will be a casual employee of an employer if an offer of employment is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work. To determine whether a firm advance commitment of continuing work exists, the relevant considerations are whether the employer can elect to offer work and the employee can elect whether to accept or reject work, whether the person will work as required according to the needs of the employer, whether the employment is described as casual employment, and whether casual loading is paid to the employee.
The Act allows an employer to set-off any casual loading paid to an employee if that employee makes a claim and is found to be entitled to permanent entitlements. The Act also sets out the circumstances where an employer must offer permanent employment to a casual employee.
What can an employer do to ensure a casual employee cannot claim permanent entitlements?
Employers should ensure that every employee has a written employment contract or offer of employment that clearly states whether the employee is employed on a permanent or casual basis.
Employers should be mindful of the circumstances where they may be required to offer (or the employee may request) that the casual employee is converted to permanent status.
We have a dedicated team of lawyers who are experienced in drafting employment contracts, providing employment advice to employers and employees, and acting in employment disputes. If you would like any assistance or advice in this area of law, please contact us on (02) 9525 8688 or email wmd@wmdlaw.com.au.
