The information contained in this advice is a little lengthy, but given the importance of the content, business owners are encouraged to review it carefully so as to avoid issues going forward and ensure compliance with statutory obligations. In the last few of months there have been a series of decisions by the Fair Work Commission (‘FWC’) and the Federal Circuit Court (‘FCC’) which have impacted on the way casual employees are employed and what entitlements accrue to them. Below are summaries of these recent developments. Employers that employ large numbers of casual staff or that have casual employees that work on a relatively regular roster will need to consider their staffing arrangements to minimise the risk to their business going forward.
Casual Staff and Leave Entitlements
On 20 August we advised our clients of the Decision in WorkPac Pty Ltd v Skene –  FCAFC 131.
In this Decision, the Full Bench of the Federal Court found that an employee that was employed on a casual basis, but worked regular hours was entitled to annual leave. This was the case even though he had been paid the casual loading. The employee was permitted to effectively double-dip on the two entitlements.
A more detailed summary of the Decision is available here.
The full impact of this Decision will not be apparent for some time, but one of the options to try and redress the negative outcomes of the Decision is no longer available. The time limit to appeal to the High Court has passed and so the only possible way to sort this matter out in the short term is through legislative reform. Given the mess currently occurring in the Federal Liberal Party and their historical reluctance to make changes to the Fair Work Act 2009 (‘the Act’), especially just prior to an election, we are not hopeful of that occurring any time soon.
The current situation has created an additional risk issue that should be considered when determining whether an employee should be employed on a casual or permanent basis.
Casual Conversion to Permanent Employment
Since the commencement of the Modern Award System on 1 January 2010, many of the main Awards have had a clause which permitted casual employees to request to convert to permanent employment after a period of either 6 or 12 months of regular casual employment. In our experience, this has not caused excessive difficulties under most Awards, but there is certainly the potential for problems to arise.
The FWC as part of their 4 yearly review process has determined that the 84 Modern Awards that do not currently have a casual conversion clause, will have a model clause inserted allowing an employee to request conversion to permanent employment after a 12 month period of regular casual employment. This obligation commences on 1 October 2018. If a request is received an employer can only refuse the conversion on reasonable business grounds, and if they do refuse, they must notify the employee in writing of the reasons within 21 days of the request being made. The employee will then have access to dispute resolution processes through the FWC.
Employers must provide a casual employee, whether a regular casual employee or not, with a copy of the Award provision within the first 12 months of the employee’s first engagement to perform work. In respect of casual employees already employed as at 1 October 2018, the employer must provide such employees with a copy of the provision by 1 January 2019.
The right to request conversion is not a one off event which has to be taken up at the 12 month anniversary. It can be requested at any time after that date and the same rules apply in determining whether the request is granted or refused.
The significant broadening of the right to casual conversion will likely put this issue closer to the front of mind of some staff. Whether they will seek to assert their rights is unknown, although in our view, most casual employees would prefer to be paid the higher casual loading. However, given the situation that we currently face as a result of Workpac Pty Ltd v Skene, employers may need to convert employees to minimise risk of claims for leave entitlements, at least until the law regarding this issue is finalised either by the High Court or legislative amendment.
It is important that employers comply with their obligations under the casual conversion clause. There are significant penalties for failing to comply with obligations under Modern Awards and the FCC has put employers on notice that they will be viewing seriously non-compliance where cases are brought in front of them in this area.
The casual conversion provisions contained in Modern Awards do not apply to employers operating under existing enterprise agreements unless the enterprise agreement incorporates the clause from the Modern Award or the enterprise agreement contains its own version of a casual conversion clause. If either of these circumstances are present, employers must comply with the obligations imposed on them by the relevant clause. It is likely that future enterprise agreements that are made after 1 October 2018 will have to deal with this issue as part of the assessment of the BOOT Test during the certification process so dealing with the issue of casual conversion is likely to be an issue for most businesses in some form going forward.
On 21 September 2018, the FWC handed down a Decision which inserted a minimum engagement per shift for around 30 Modern Awards that previously did not have them. The changes affected both casual and part time employees and vary slightly depending on the Award.
In most cases the minimum engagement is two hours for casuals but there are some awards that have longer periods.
Whilst this change should not impact most businesses, some operations that can be significantly impacted by weather may need to consider how these changes could impact them.
These changes have effect from 1 October 2018.
General Retail Industry Award 2010- Changes to Casual Penalty Rates
The General Retail Industry Award 2010 (‘the Award’) has been benefitting recently as a result of reduction in penalty rates for Sundays and public holidays.
Unfortunately, this Award has now had penalty rates for casual employees that work on Saturday and after 6.00pm Monday to Friday increased. The Saturday penalty rate will increase for Saturday from the current 10% up to 25% in 5% increments starting on 1 November 2018, then 1 October 2019 and a final increase on 1 March 2020. A penalty of 5%, 10% and then 15% will be applied to work after 6pm Monday to Friday which will have effect on the same dates.
Employers are also reminded that since 1 January 2018, employers of staff covered under this Award have been required to pay penalty rates for casual employees that work overtime. Prior to this date a penalty rate was not payable.
These changes do not affect employers with existing enterprise agreements, but they will certainly affect employers either renewing existing agreements or developing a new agreement.
What Do Employers Need to Do?
The above changes may impact on employers in varying ways and to varying degrees depending on the industry in which they are involved and the makeup of the workforce. They have the potential to fundamentally change the way staff, especially casual staff are employed.
Employers should conduct a review from time to time to identify how changes may impact their operations and the current changes would be a good opportunity to undertake such a review. In addition to the changes outlined above, there have been important decision relating to workplace policies and enterprise bargaining, amongst others in recent times.
Employment law and its associated obligations is increasingly imposing itself on the employer/employee relationship. Severe penalties exist for non-compliance and litigation action is increasing exponentially in some areas.
If you would like us to undertake a review or audit of your current arrangements, please contact the Employment Services & Solutions Australia (“ESSA”) office on (08) 9240 4393 to arrange a time to meet.
Director – Employment Services & Solutions Australia