It is important to understand if your casual employees are really casual. If you employ workers on a casual contract, in some circumstances, they might be considered permanent employees for the purposes of entitlements. This can occur even if you pay them casual loading.
A recent court case decision has ruled that some “casual” employees could be entitled entitlements. The entitlements include paid annual leave, personal leave as well as paid public holidays. In addition, casual loading cannot be able to be reclaimed by the employer.
This has been labelled as “double-dipping”. This is because casual employees can access casual loading as well as their entitlements.
This decision called the “Rossato decision” affects all businesses that employ casuals.
What is the Rossato Decision?
The Federal Court confirmed in May, that casual employees who work regular hours were likely to be considered permanent for the purposes of entitlements. This is regardless of what the employment contract outlines.
The decision came about as a result of the Workpac Pty Ltd vs Rossato court case. As a result, Workpac was ordered by the court to pay Mr Rossato. The payment included unpaid annual leave, personal leave, compassionate leave and public holiday payments that were owing. This decision was handed down on the basis that he would be classified as a permanent employee of Workpac.
Note: It is highly likely that this decision will be appealed in the High Court. In the interim, this decision is the law and it is important to understand how this will impact your business.
Why is it Called “Double Dipping” and how you can prevent it?
In the past, the 25% casual loading was given to casual employees in lieu of the entitlements that permanent employees received. However, employers feel that casual employees who receive casual loading in addition to entitlements are “Double dipping”.
It is impossible to prevent casuals from “double dipping”. By improving your understanding of the different employment status’ you may be able to avoid the situation for the future.
The Difference Between a Casual and Permanent Employee
A casual employee does not make any sort of commitment regarding their availability. This is agreed to on a shift by shift basis. The employer does not have to commit to providing ongoing work and the employer can terminate the employment by giving 1 hours’ notice.
A permanent employee is committed to the employer for a continuous period indefinitely and is subject to notice of termination rules.
A casual employee works on an irregular basis and has unpredictable hours of work. They typically work on demand and for short periods.
A permanent employee works regular and predictable hours.
A casual employee does not accrue an entitlement to paid annual leave and/or personal leave, nor are they entitled to a paid day off on public holidays.
In addition to the base rate of pay, a permanent employee will accrue an entitlement to paid annual leave and personal leave, and will be entitled to a paid day off when a public holiday falls on their usual work day.
A casual employee is usually notified of their hours as needed, often on short notice and is employed on an hourly basis.
A permanent employee typically has set hours of work that are known in advance.
A casual employee receives a casual loading on top of the base hourly rate of pay
A permanent employee receives a base hourly rate of pay or an annual salary.
Get in touch
Interpreting the award and employee classifications can be a challenge. Getting the right advice from the get-go can help you mitigate these risks.
The information contained in this blog is general in nature. If you are unsure about how this applies to you, feel free to contact us at VeiraMal Consulting. Our HR consultants will be happy to guide you through this.
VeiraMal Consulting offers a wide range of HR advisory services and packages to both employers and employees. You can view all our services and packages here.