In our last blog, we talked about the changes coming to casual employment as of 26^th August this year.   This time, we are taking a look at one of the key elements of casual employment that underpins the definition and will assist you when assessing an application from an employee who wishes to convert from casual to permanent. 

Regular and systematic

The key phrase we are considering here is ‘regular and systematic’ and how that applies to casual employment. I promise we are going to keep this short and sweet!

‘Regular and systematic’ implies that there has been some sort of repetitive pattern or plan to the employment.   Basically, it means that there is an assumption that the work is ongoing and will continue with some form of pattern.  That pattern may set days each week based on an ongoing roster, or it can be different days but there is regularity to the hours they work (i.e. you employ them for 20 hours per week in an ongoing manner).

There’s nothing wrong with employing casuals with their employment evolving into something that becomes ‘regular and systematic’.  Business needs change, workflows shift or you may simply have a casual employee that is great and they are delivering value to the business.  Such changes are the reason casual employees have the legal right to the casual conversion pathway.

Keeping casual employees, casual

However, if you want to keep casual employees as casuals and avoid any claims for paid leave then you need to:

• Be sure there is no commitment to any ongoing work

• Check that your casual employees are working a variety of days and shift lengths so that no regular pattern of work is established.

• Ensure that the 25% casual loading is applied.  Be specific about this within the employment contract by stating the base rate as well as the loading that will occur.

• Include an offset clause in your casual employment contracts that states that the casual loading specifically offsets any entitlement to paid leave

Casual scenarios

For example, Jane is a casual employee at a warehouse picking and packing.  She knows that every Tuesday she will work an 8 hour shift and she will also pick up another day later in the week for a further 8 hours.  Jane has been employed by the warehouse for 14 months in this manner.  Jane earns a higher hourly rate than her colleagues as she received the casual loading that is designed to offset paid leave entitlements that permanent employees receive.

A clear pattern of work can be established here as Jane is being rostered every Tuesday AND she is working 16 hours every week.  There is ongoing work, and it is clear that the business could continue utilising Jane’s skills as a permanent employee without any significant changes.  Jane will have the right to apply for casual conversion and has a good chance of having it accepted by the employer.  If the conversion to permanent is approved, Jane will reduce her hourly rate as the casual loading will be removed and she will begin to accrue paid leave entitlements.

Neil is also working in the same warehouse, but he only comes in intermittently, such as when a large order comes in unexpectedly or a permanent employee takes leave and the business needs another pair of hands to deliver to a client.  He might work 5 days in one week but then won’t be offered work for another month at which time he only comes in for 2 days.  There is no pattern or roster for Neil and no set hours or promise of upcoming work by the business.   He receives a casual loading on top of his base hourly rate.

Neil could apply for casual conversion but the business would have the right to refuse his request as there is no regular or systematic pattern to Neil’s employment.  The business would be protected from a successful Fair Work claim of unpaid leave as he doesn’t meet the criteria of regular and systematic employment and he also receives a casual loading on the base hourly rate – something that is clearly outlined in his employment contract and on his pay slip.

Casual employment - the challenge

But wait.. there’s more to this….

Leanne is employed on a casual basis and has been for 6 years. She works the same 20 hours every week, and sometimes picks up an additional shift as well. Leanne has been offered the opportunity to move to permanent part time employment by the business on several occasions and she has refused on each occasion, enjoying the higher rate of pay she earns as a casual, plus, she enjoys the flexibility of being able to say no to a shift if she wishes. Leanne’s husband becomes very ill and she needs to take care of him for the next few months. They will have no income as her husband isn’t working and Leanne is not entitled to any paid leave. Leanne decides to make a claim for paid leave to the Fair Work Commission by declaring she is a permanent employee because she has done the same twenty hours per week, regularly and systematically, for 6 years.

1. The employer does not have an employment contract in place stipulating that her pay includes casual loading, nor does it specify that the higher rate of pay is to offset leave entitlements. It is likely that the Fair Work Commission would find that she is a permanent employee and would be entitled to accrued leave entitlements to be applied for the whole of her employment.
   
   
2. The employer has a very clear employment contract in place which steps out the base rate, casual loading and an offset clause that if the Commission was to find that she was a permanent employee, that the casual loading payments made would offset any claim for paid leave. Even if the commission found her to be a permanent employee, the casual loading payments would mean that little to no back pay would be required, even though she may now be considered a permanent employee moving forward, with a reduced rate of pay and the ability to accrue paid leave entitlements.

It is a minefield and it’s important that you have the right protections in place to avoid employees being able to ‘double-dip’ in situations like this.

As an employer, you need to be aware of any changes relating to how casual employees are being utilised within your business and appropriately manage and respond to any casual conversion notifications (as of 26^th August).  As we move from one pathway to the new casual conversion process if you are unsure of your obligations, or you need help in defining employment status for any of your team, please contact HR Staff n’ Stuff for support.