Most companies have a clear idea of their relationship with their employees; be they permanent or casual staff. Unfortunately from time to time, our business clients approach the Employment Team with dismay and confusion because they have received a claim from a former employee who the business believed was casual, who now claims unpaid permanent employee entitlements. In some instances these unpaid entitlements have accrued over a period of years and amount to a significant claim.
A Common Claim
A casual employee is employed on a short term basis to work as needed. Usually casual workers do not have a reasonable expectation of ongoing work.
Problems often arise when the employment relationship ends. The business may receive a claim from the former employee seeking unpaid entitlements including annual leave and long service leave.
The business will generally explain that the relationship was casual over a number of years and there was no contract of employment or letter of appointment. This kind of arrangement leaves the business open to claims for unpaid entitlements.
Despite what the employee might have understood during the employment, it will now become a “he said/she said” dispute as the definition of the relationship will depend on the recollection of the employer and the employee at the time the employee began working for the business.
The business may have changed hands or the person who employed the employee is no longer with business. These are challenges for the business to overcome in defending the claim.
Tips and Traps
How does the business protect itself from claims from casual employees? When you are hiring new casual employees, this is the key time to take following steps:
- Discuss the employment relationship with your new casual employee, including stating that it will be casual position, the employee will work on an “as needed” basis, the business cannot guarantee ongoing, systematic or regular work and state that the casual rate of pay will apply because the casual employee is not entitled to annual leave, paid personal leave (sick leave) and parental leave.
- Document the employment arrangement with a letter of appointment or contract of employment. A short letter of appointment can suffice;
- Seek legal advice. We can assist you to draft a short letter of appointment. Although this requires some initial cost upfront, it can greatly impact defending a claim in future; and
- Diarise and review the employment relationship within a few months and approximately one year from the date of the appointment. At this point you should consider whether the employee has become a long-term casual employee or should be employed as a permanent part time employee. Long-term casual employees are entitled to a range of benefits.
Sometimes there are arguments either way as to whether the employee is truly casual or truly permanent. If the employee has been offered permanency but they elect to stay employed as a casual because of the greater flexibility it provides, it is unlikely that a court will consider the engagement permanent. Such an election should be properly documented so that the company can protect itself in the future if the arrangement is ever challenged.
If you are concerned that your business has employed casual staff without documentation in place, or is hiring new casual staff, please contact our Employment Team to discuss how we can assist your business to protect its rights and position.