Have casual workers been granted annual leave?
News headlines recently stated that casual workers have won the right to paid leave following a decision in the Federal Court. As usual, the devil is in the detail.
The past few months have presented some significant challenges both to employers and employees, particularly those in casual roles. The recent case before the Australian Federal Court has, however, raised questions about whether or not Australians in casual employment have the right to paid leave.
At present, there is no global change granting Australian casual workers paid leave. The case however, highlights the long running problem of determining over time, who is a permanent staff member and entitled to paid leave and other benefits, and who is a casual worker entitled to a casual loading.
The Case: WorkPac vs Rossato
In the WorkPac v Rossato case, WorkPac, a specialist mining and engineering labour hire company, employed Mr Rossato as a casual worker across six consecutive employment contracts for a continuous period of approximately three and a half years. Over that time, Mr Rossato was paid a casual loading of 25% of the minimum rate of pay payable under the Enterprise Agreement, which was in part, paid in lieu of leave.
Mr Rossato worked every shift he was rostered for except where he was given approval to take rest and recreation, and when his partner was airlifted to hospital.
In its decision, the Federal Court found that Mr Rossato was a permanent full-time employee across each of his contracts and entitled to his accrued leave entitlements and payment for the public holidays where he was rostered off work. WorkPac was unable to reduce the liability owing to Mr Rossato by the casual loading paid to him over the course of his contracts, with the court noting, "There is a superficial attraction to the notion that something given in substitution of an entitlement has an equivalent value to the entitlement itself and is therefore of the same character."
Each of the contracts signed by Mr Rossato contained a declaration headed "Casual or Maximum Term Employee." However, the court reiterated the observation that, "agreements by which people are engaged to work are typically partly written, partly oral and "partly left to evolve by conduct" as time goes on." That is, what the employee signs up to does not necessarily define what the employment relationship becomes.
A Path from "Casual" to More Permanent Employment
The WorkPac v Rossato case does not generally award casual employees paid leave entitlements but it does highlight the problem that can occur over time where the nature of the employment arrangement changes from casual to a more permanent arrangement.
Recognition of this pathway from casual to permanent employment is now a part of many Modern Awards. The Fair Work Commission's updates to Modern Awards rolled out across this year include a Right to request casual conversion clause that enables a long-term casual worker to request permanent employment. The employer can refuse that request but only on "…reasonable grounds and after there has been consultation with the employee."
The pathway also has political impetus with the Prime Minister's recent 'JobMaker' speech at the National Press Club nominating the issue as one of the five working groups for negotiation.
In brief: Types of Employment
What types of employment exist in Australia? Here's a high level overview of what different types of employees may exist:
- Permanent employees – full-time or part-time. Benefits include paid leave, notification on termination, redundancy where applicable, and on 12 months continuous service, parental leave, right to request flexibility, and access to unfair dismissal.
- Casuals - has no guaranteed hours of work or commitment of work in advance, does not have to accept work on offer, usually works irregular hours, doesn't get paid sick or annual leave, can end employment without notice (unless notice is required by a registered agreement, award or employment contract). Is entitled to a casual loading, and unpaid carer's and family and domestic violence leave.
- Long-term casuals - a casual employee employed by the business on a regular and systematic basis. There is a commitment to ongoing work (the employer has not made it clear that they should not have an expectation of ongoing work). Long-term casuals have the same entitlements as casual workers except they are also entitled to take parental leave, request flexible working arrangements, and access to unfair dismissal.
- Shiftworkers - an employee who works shifts and gets an extra payment for working shift hours. Generally, Awards or agreements have a specific definition of what a shiftworker is and the conditions that apply. Refer to the relevant Award for the definition of full time, part time or casual employees.
- Fixed term contract – same entitlements as permanent employees but the employment relationship is for a fixed period. Where the contract is continually renewed, disputes may arise as to whether the employee is a permanent employee.
- Independent contractor – Generally, contracted to the business to produce a specific result for the business (as opposed to hours worked). Operates autonomously to the business, is generally financially self-reliant, and chases profit (that is a return on risk) rather than simply a payment for the time, skill and effort provided.
Refer to the Fair Work Ombudsman for clarification of your specific scenario.
JobKeeper's impact on employee entitlements
To be eligible for JobKeeper payments as a casual employee, the individual had to be a long-term casual at 1 March 2020. Casual employees do not qualify unless they meet this condition. For some employers, JobKeeper has ensured that there is now a clear definition of some employees as a long-term casual where JobKeeper payments have been paid.
Long term casuals have additional entitlements to casual employees providing for parental leave (and a guarantee of their job or an equivalent on their return from leave), and the right to request flexible arrangements.
Need more guidance?
Speak to your Client Manager on 02 9957 4033 for more information about how Jobkeeper and its employment-related impacts may affect your business.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.