Casual employment may seem like a good way to field a workforce without the pesky concerns of termination notice, annual leave, sick leave, and redundancy pay.
Many employers engage people on this basis. The problem is that the term is routinely misapplied, and as a matter of law, the employees you think are casual may in fact be permanent.
The term ‘casual employee’ is not expressly defined in the Fair Work Act or in any modern award, other than as ‘an employee engaged and paid as such’. This lack of clear definition means that there is a great deal of room for interpretation when considering if an employee is casual or not.
Generally speaking, an employee who works regular hours and has a reasonable expectation of ongoing work is not, at law, a casual employee. If you have employed the same individual for 3 years, 5 days per week as a ‘casual’, in the absence of some strict terms in an employment contract, the court would probably not consider them to be casual at all. Somewhere along the line, their employment has become permanent, and they may press a claim for leave, notice and redundancy entitlements should you ever elect to terminate them. It can come as a rude shock when a ‘casual’ employee of 10 years service presses a claim that mounts up to tens of thousands of dollars.
To be confident that employees are truly casual and will be considered as such by a court, you need to ensure the following:
1. That they are expressly described as casual in their employment contract or letter of appointment. The most common problems arise when employees are not subject to a written agreement;
2. That, in providing for the casual’s hourly rate, the contract separates the base component from the casual loading (the amount paid to compensate casuals for their lack of leave entitlements);
3. That, if a ‘casual’ is working regular hours and reasonably expects to continue to do so, you as the employer offer them full time employment from time to time. If they elect to remain as a casual (as they often will, to ensure they continue to receive the more generous pay associated with casual employment) then you have protected yourself from possible future risk.
If you have any casual employees who work regularly and you anticipate that they will continue to do so, it would be worthwhile consulting with us about the arrangements you have in place to ensure that you are not exposed to unnecessary risk.
Please contact a member of our employment team if you would like more information on this topic or on any other employment issue.