Momentous decision affects casual employment: What businesses need to know.
Employers need to be across the recent changes to casual employment as announced by the Full Federal Court. These changes bring significant implications to the employment of casual employees across Australia. 

The main points are:

  1. If an employee has a regular and predictable pattern of work with an expectation of ongoing engagements, they are likely to be classified as permanent rather than casual.
  2. Where an employee commences employment with irregular hours under a casual contract, the casual can morph into a permanent employee during the course of the employment relationship.

The case

These changes are linked to the findings of Workpac Pty Ltd v Skene. The Full Court found that Mr Skene – a labour hire employee who had been engaged as a casual to work a roster of 7 days on, 7 days off – was entitled to annual leave entitlements on termination of his employment, even though he had signed a casual employment contract and at all times was treated as a casual by his employer.

This case recognised that if an employment relationship has a level of certainty, regularity and predictability about the hours to be worked, then this is inconsistent with being a casual engagement.

Casuals definition

Employers utilise casual employees for many different reasons. Given the Workpac decision, employers are encouraged to review their current pool of casual employees to determine which employees would be considered to be employed on a regular and systematic basis.

Key legislation such as the Fair Work Act 2010 under Section 12 defines long term casual as follows:

“This is an employee at a particular time that is a casual employee and the employee has been employed by the employer on a regular and systematic basis for a sequence of periods of employment during a period of at least 12 months.”

Despite this definition, the application of this legislation at common law is taken on a case by case basis in determining the meaning behind “regular” and “systematic”.

Morphing into permanency

Additionally, the Full Court’s decision has another concern for employers. Even if an employee is engaged as a casual but over time the characteristics of the relationship change, then the employee’s position can morph into a permanent position.
The court found that:

“an employment which commences as casual employment may become full-time or part-time because its characteristics have come to reflect those of an ongoing part-time or full-time employment”

Casual employees in the Modern Awards

The Modern Award Review in 2017 saw major changes to casual employees covered by 85 of approximately 122 modern awards. These changes mean that a long-term casual employee can now elect to convert to full-time or part-time employment depending on the number of hours they regularly work.

The employee can now additionally request conversion to part-time or full-time employment if they have worked a regular pattern of hours for a period of 6 to 12 months. Importantly, this is dependant on which Modern Award the employee is covered by.

Employers who employ people under the Awards affected can refuse the casual employee’s request on reasonable grounds, including:

  • It would require significant adjustment to the causal employees hours of work to accommodate them in fulltime or part time employment under the applicable modern award
  • It is known or reasonably foreseeable that the casual employees position will crease to exist
  • The employees hours of work will significantly change or be reduced within the next 12 months

What's next for employers?

The impact of this decision could be significant as regular or long-term casuals who are indeed permanent will automatically become entitled to:

  • Paid annual and personal leave 
  • Notice of termination; and
  • Redundancy entitlements

All employers need to be aware of the above and should review their casual workforce to determine whether any of their existing casuals are at risk of being considered permanent.

Contact Megan Maybury who leads our Payroll division on 02 49077222 or your principal adviser for more information.

Source references: NSW Business Chamber, Perform HR.

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