When ‘casual employees’ are not ‘casual employees’
A recent discussion of the Full Federal Court found that an employee engaged and paid as a casual was not in fact a casual and was entitled to annual leave.
In this article we analyse the decision and the indicia for determining whether an employee is a casual and provide some guidance for your future dealings with your staff.
When engaging staff, pharmacy owners will often need to consider whether to engage staff on a casual or permanent basis.
Engaging staff on a casual basis has its benefits, for example:
- Casuals are not entitled to paid annual leave or personal/carer’s leave.
- Casuals can be terminated without notice, unless notice is required by a registered agreement, award or employment contract.
- If business is slow, pharmacy owners can reduce the hours of casual staff on an as needed basis.
However, just because the employment agreement states that an employee is casual does not necessarily mean that the employee is, in fact, a casual employee.
Defining casual employment
On 16 August 2018 the Full Federal Court considered this issue in the case of WorkPac Pty Ltd v Skene.
In this case, the court held that a casual employee was entitled to paid annual leave because the true nature of his employment indicated ongoing employment.
In this particular case, the employee claiming the leave entitlements worked a 7 days on/7 days off roster which was regular and predictable.
Amongst other things, the following facts were of particular relevance in this case:
- The roster was set 12 months in advance.
- The work was continuous.
- The work did not fluctuate.
- The hours of work were regular and certain.
According to the Court, the question of whether a person is a “casual employee” is determined by a number of indicia, including the regularity of work patterns, certainty of work, continuity of service, intermittency of work and its predictability.
For employment to be categorically characterised as casual in nature, the availability of work must be short-term and not ongoing, and the employer’s need for further work to be performed by the employee in the future should not be reasonably predictable.
Indicia relevant to determine the nature of the employment
The above mentioned case is a stark reminder that there is a fine line between casual employment and permanent employment.
As is common, in this case, the employee’s contract classified him as a casual employee and provided for him to be paid a flat rate per hour, which was expressed to include “a loading in lieu of leave entitlements”.
The employee in this case was required to submit timesheets and was paid by the hour. His contract even provided for termination by one hour’s notice.
The employer argued that it was accepted practice in industrial law that if the employer and employee agreed to classify and pay the employee as a casual that was determinative.
Nonetheless, the court considered that substance prevailed over form and found that his employment was not casual in nature.
In addition to the factors considered in the above mentioned case, there are also several other factors a court will likely take into account when determining the true nature of an employment relationship.
These may include:
- Whether wages are paid for hours worked or on a regular weekly/fortnightly/monthly basis (a salary). Wages for varying hours worked are more consistent with casual employment.
- The period of engagement. The longer the employee has been employed, the less likely it is that the employee would be classified as a casual employee.
- The amount of work performed each week. An employee working full time is less likely to be a casual employee.
- The consistency of the hours. The more consistent the work hours, including starting and finishing times and days worked, the less likely it is that the employee would be classified as a casual employee.
- Whether and how much notice an employee needs to give before taking leave. Generally speaking, notice and, in particular, advance notice is inconsistent with casual employment.
- Whether the employee was notified that the employment was of a casual nature (irregular, unlikely to be ongoing). If they weren’t informed, they are less likely to be a casual employee.
It is noteworthy however that no one of the above mentioned factors is determinative.
Furthermore, under the Pharmacy Industry Award:
- consistent with the above, a casual employee is an employee engaged as such and who does not have an expectation or entitlement to reasonably predictable hours of work; and
- all employees deemed casual by this Award who have an expectation or entitlement to reasonably predictable hours of work will be converted to permanent employment.
What pharmacy owners should do in order not to get caught
Pharmacy owners should take the following steps:
- Generally engage casuals on a short term and not ongoing basis.
- Ensure that contracts for casuals are carefully drafted by competent and experienced legal professionals and contain appropriate set off provisions.
- Consider now and regularly thereafter whether to convert casual employees, who do not have the ‘essence of casualness’ that is discussed above, to permanent part-time or full-time arrangements (including consistently with modern award obligations). This now needs to be an ONGOING process; AND
- Implement where possible the payment of casual loading as a separately monetary amount rather than paying loaded rates or at least separate casual loadings on payslips.
It is of utmost importance for pharmacy owners to seek legal advice if there is any uncertainty in respect of the catagorisation of any of the employees of the pharmacy business.