By Stacy Gershberg
A recent decision has been made by the Fair Work Commission (effective 1st October 2018) to include a casual employee conversion clause in 85 Modern Awards. In a nutshell, casuals covered by those awards, have the right to request their employer to convert their casual employment to permanent employment, if they have been working a regular and consistent pattern of work for the past 12 months. This has many implications for businesses (we will produce a more in depth analysis of these changes for you in a separate article). It has also prompted business owners and leaders to think about the costs of casual vs permanent employment.
As employers consider the implications of this decision, one of the most obvious and largest costs in relation to permanent employment is leave entitlements. However, did you know that casuals already have certain leave entitlements? Are you aware what it is already costing you?
Parental Leave – those casuals who have been working a regular and consistent pattern of work for at least 12 months are entitled to 12 months of unpaid parental leave, just like permanent employees. Business owners should be aware that even in the case of ‘unpaid’ leave, there are costs to the business, such as productivity loss and potentially temporary recruitment of cover for the role.
Bereavement Leave – those casuals who have been working a regular and consistent pattern of work for at least 12 months are entitled to 2 days of unpaid bereavement leave. Again, although this is unpaid, the business may need to put strategies in place to maintain workflow in the employee’s absence which may include costs associated with temporary employment, labour hire or utilising other resources within the business.
Long Service Leave – casuals may be entitled to long service leave (most states have incorporated this). The rules and definitions around casual entitlement vary from state to state so its best to check the relevant long service legislation for a particular state.
Annual leave – this may seem like a ‘no-brainer’ and the answer should obviously be ‘no’. However, consider the following hypothetical situation:
Amy (fictional person) has been employed for 12 months as a casual for your business. She has had regular and consistent shifts and has generally been a solid employee. In the last couple of months, Amy has been starting to have performance issues and you and your management team decide to ‘discontinue’ Amy’s shifts. Do you owe Amy any leave entitlements upon her exiting your business?
If your answered ‘no’, you may be incorrect.
A recent legal case addressing this very issue, found in favour of a terminated casual employee. The judge awarded the employee (formerly of Workpac) $21,000, plus interest, in annual leave entitlements. In essence, the employee was able to ‘double dip’-receiving casual loading while employed and then receiving annual leave entitlements upon exit as well. A larger cost than employing the same person permanently.
So what were the key factors in determining this case?
Although the employee had been classified as ‘casual’ and their contract potentially confirmed this, it was actually the pattern of work that was the determining factor in this case. The employee had been been employed for 24 months in a regular and consistent pattern of shifts.
So while the changes to 85 Awards coming on 1st October are significant, you shouldn’t feel that you are in the clear if those Awards don’t appear to apply to your workers. The reality is that you need to review each case on its own merit.
To talk about the casuals in your business and how you should manage them, please book a Discovery Session with one of our Employee Experts.