Recent Federal Court Case Decision regarding Casual Employees

04 Oct Recent Federal Court Case Decision regarding Casual Employees

Sales and Marketing

A recent decision handed down by the Federal Court of Australia may have negative consequences for employers who have incorrectly classified employees as “casual”.  The case involved an entitlement to annual leave under the Fair Work Act for an employee who had worked as a “casual” for approximately four years.

Employers can no longer assume that casual employees are not entitled to benefits afforded to other employees, particularly paid annual leave. Even if you are paying an employee casual loading (because you have deemed them to be casual), you may still be required to pay that employee full or part-time entitlements.

The question of whether a person is a “casual employee” is determined by a number of factors, including the regularity of work patterns, certainty of work, continuity of service, intermittency of work and its predictability.

For employment to be categorised as casual in nature, the availability of work must be short-term and not ongoing, and the employer’s need for further work to be performed by the employee in the future should not be reasonably predictable.

Whether an employee is casual will fall on the legal definition as defined by case law not in accordance with how the term is defined in modern awards and enterprise agreements.

The National Employment Standards (NES) has primacy over terms and conditions of employment provided by all other instruments, including an enterprise agreement, modern award or a contract of employment.  The NES set out minimum standards that apply to employment of employees and employers cannot “contract out” of these minimum standards.

Employers should take the following steps:

  • Generally engage casuals on a short term and not ongoing basis;
  • Ensure that contracts for casuals are carefully drafted and contain appropriate set off provisions;
  • Regularly review their workforce (including any labour hire workers who are also subject to the same rules) to assess whether there are any circumstances that might indicate that particular employees should no longer be categorised as casual employees this includes reviewing your current employment agreements and ascertain if the agreements reflect the employment status of each staff. It is common for staff to commence as casuals, and as time progresses, their role shifts into that of part-time or full-time employment;
  • Seek legal advice where there is any uncertainty about the categorisation of casuals.


Casual Conversional Clause

On and from 1 October 2018, many modern awards will have a new clause inserted into them.  The new clause will affect the rights and obligations of employers who employ people who work on a regular and systematic basis, as casual employees.

The new clause introduces the concept of a “regular casual employee”, being an employee who works “a pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to perform as a full-time employee or part-time employee”.

If a modern award which regulates your employees already contains a casual conversion clause, then these changes will not affect that clause.

The essence of the casual conversion clause is that a person engaged as a “regular casual employee” may request their employment be converted to full-time or part-time employment.  The employer may agree to or refuse the request, but the request may only be refused on “reasonable grounds” and after there has been consultation with the employee.


Forsythes Business and Financial Advisors
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