Over the years, we have fielded several calls which start along the lines of: “We would like to terminate X’s employment, he/she is employed on a permanent casual basis so we don’t have to pay anything, do we?” OR “X is a casual employee, working the same hours each week, and now they are claiming they are a permanent employee and entitled to annual leave, that’s not right, is it?” So, What makes an employee “casual” and why is it important?
The defining element of casual employment is its uncertainty. This is why casual employees receive a casual loading and don’t receive many of the entitlements of permanent employees. If it is not known from week to week whether an employee will be needed or how many hours of work they will be needed for, then their employment is usually casual in nature. If a person is going to be needed to work the same hours at the same times for an indefinite period, the employment is usually not casual. Because of the grey area that exists between these two extremes, the legislative trend in recent years has been to give casual employees many of the rights of permanent employees.
What do you need to know when employing a casual? Well, the first thing is that casual employment is not an automatic bar to an unfair dismissal claim (even though the minimum notice of termination and redundancy pay requirements do not apply to casuals). Casual employees can bring an unfair dismissal claim if their employment has been regular and systematic and they had a reasonable expectation of continuing employment. This means that the same standards of fairness will apply to many casual employees as permanent employees and a similar degree of caution should be exercised in deciding to terminate employment. Casual employment also has no bearing on the ability to bring discrimination or “adverse action” claims.
The second is that casual employees have certain statutory minimum leave rights, although not as extensive as permanent employees. The main differences are that casuals do not receive paid annual leave, paid personal leave or paid compassionate leave. Casual employees are entitled to:
- Paid long service leave;
- Unpaid personal/carer’s leave of up to 2 days per occasion;
- Unpaid compassionate leave of up to 2 days per occasion;
- Unpaid jury service leave;
- Unpaid parental leave if they have worked for the employer for at least 12 months on a regular and systematic basis and have a reasonable expectation of continuing to work for the employer; and
- Unpaid emergency service leave.
The third is that most industrial awards contain special provisions relating to casual employees (eg, casual loading and minimum hours of engagement) which employers need to comply with.
In order to minimise the effects of a claim to retrospective paid leave entitlements, employers should ensure that standard employment agreements include a “setting off” clause which allows a casual’s higher standard hourly rate of pay to be taken into account in calculating whether there is an underpayment of entitlements.
It is sometimes considered “cheaper” to employ casual staff because the perceived cost of paying and administering leave and other entitlements of permanent employees is avoided. This is often a false economy and it is important to consider genuine business needs from the outset in making a decision whether to classify a certain job as “casual”, not least because a conversion from casual to part time employment later in the employment relationship can be problematic.
Please let us know if there are any particular queries we can assist with.