An employer may find great benefit in using casuals: greater flexibility, no benefits other than superannuation (in certain circumstances), just a degree of casual loading on the hourly pay.
However, changes introduced to the Fair Work Act in March 2021 now give casual employees the right to be moved to permanent employment.
Essentially, a person in casual employment who has worked regular casual hours for a period of 12 months (6 months with some awards), may apply to become a permanent employee. The employer can only refuse this on reasonable grounds, including:
- It is foreseen that within the next 12 months the casual employee’s job will cease to exist, or the hours will be significantly reduced.
- Agreeing would require a significant adjustment to the hours worked.
- Any other reasonable grounds based upon foreseeable circumstances.
What is considered casual vs. permanent employment?
Permanent employment may be either full-time or part-time.
A permanent full-time employee will:
- Work a minimum of 38 hours per week
- Have leave entitlements, including annual leave, sick leave, carer’s leave, long service leave, and potentially compassionate and parental leave
- Be covered for worker’s compensation and all entitlements under their award
- Be entitled to notice of termination, and likewise, will be required to give notice of leaving
A permanent part-time employee will be similarly employed, with a regular expectation of hours, and will receive all the same entitlements, but on a pro-rata basis for hours worked. The difference is that the hours worked will be less than 38 per week.
Casual employment may at first glance be confused with permanent part-time, but there are significant differences.
Casual employees do not expect or gain regular hours, being generally employed on an as-needed basis. They do not receive the benefits outlined above (superannuation being an exception under certain conditions). As recompense for not having predictable hours, and not receiving accrued leave and other benefits, they are paid a higher rate of hourly pay, commonly known as casual loading. This is normally in the region of 15-25%, though variances are common.
Further, casual employees are not required to give notice of leaving, nor are their employers required to give notice of employment termination. This provides employment flexibility, but the price is potentially uncertainty for both.
A stitch in time…
It is important that employers and casual employees work through the process together for the greater good: for the employer, the business, and the employee. It can be a win-win situation.
Failure to comply with this new process can have significant cost implications for employers. At worst, courts may find an employer to be liable for unpaid benefits including accrued leave backdated without limit to time or amount, and with penalties.
This costly exercise is totally avoidable with the proper clarity and understanding that results from sound legal advice. It is vitally important that employment contracts are properly crafted at the outset to reflect the current legislation, and that both employer and employee understand their rights and obligations.