Fair Work Amendment (Casual Loading Offset) Regulation 2018

Employers have been concerned about the recent trend where employees are paid as casuals and subsequently claim payments for entitlements such as paid annual leave and personal leave.

The Federal Government Fair Work Amendment (Casual Loading Offset) Regulation 2018 took effect on 18 December 2018.

The Regulation provides the following:

1. If a person is employed by an employer on the basis the person is a casual employee; and
2. The employer pays that person a loading that is clearly identifiable as an amount payable to compensate the person for not having one or more relevant National Employment Standards (NES) entitlements during the period (the Employment Period); and
3. During all or some of the Employment Period, the person was in fact an employee other than a casual employee for the purpose of the NES; and
4. The person makes a claim to be paid an amount in lieu of one or more of the relevant NES e.g. paid annual leave and paid personal leave;

The employer may make a claim to have the loading amount taken into account in determining an amount payable by the employer to the person in lieu of one or more relevant NES entitlements.

The Regulation became necessary as a consequence of the Decision of Workpac v Skene.

In that Decision,  the Full Court of the Federal Court (the Court) found that the NES dealing with paid annual leave excluded casual employees. The issue in the case was what is the meaning of the phrase “casual employees”?

Facts

Mr Skene brought a claim for payment of annual leave against Workpac. The facts of the case were as follows:

1. Workpac had employed Mr Skene as a dump truck operator from 17 April 2010 until 17 July 2010 and then again from 20 July 2010 to 17 April 2014 at Coal Mining Operations Essentials Queensland.
2. Workpac contended that Mr Skene was a casual employee and he was not entitled to annual leave and the remainder of the entitlements he claimed under an Enterprise Agreement which existed or under the NES.
3. The Full Court upheld the primary judge’s decision finding that Mr Skene who was described as a casual but worked a regular roster set a year in advance was a permanent employee. As a consequence the employee was entitled to be paid annual leave, both under the NES and the Enterprise Agreement which applied to his employment.
4. The Court’s approach was that essentially, in order to be considered a casual, an employee must have no firm advance commitments as to the duration of their employment or the days (or hours) worked. The Decision left open the capacity of an employer to set off the liability for leave or other benefits against the casual loading when the loading was expressed as identifiable.The Regulation ensures that that option is clear and available to employees.

All employers engaging casuals should review their employment agreements and arrangements as follows:

1. Confirm you are properly classifying your employees and properly identifying any loading which is being paid including stating the percentage or amount of the loading.
2. Review how you engage casual employees including the system of work and work practices, e.g. how far in advance is the rostering?
3. Review your rostering and in particular conduct a review of whether or not there is a casual work pattern’s unpredictability and intermittency.
4. Consider where appropriate offering full‑time or part‑time employment and/or changing work arrangements.

Casual employees do not receive the same benefits as permanent employees including:

1. Paid annual and personal leave;
2. Parental leave and related entitlements (unless a “long term” casual);
3. Compassionate leave;
4. Notice of termination;
5. Redundancy pay; and
6. Public holidays.

Instead, they receive a casual loading, typically 25% of their base rate of pay.

If you wish to have your contracts reviewed in light of this Decision and Regulation please do not hesitate to contact a member of our Workplace Relations team on 4760 0100.