By Catherine Tratsellas
As we have highlighted in previous articles, a recent Federal Court of Australia decision found that employers who incorrectly classify and pay employees as casual, instead of full-time or part-time, could be responsible for backpaying various entitlements (e.g. annual leave) under the National Employment Standards (NES). However, the case did not that suggest backpay for these leave entitlements should take into account the casual leave loading (usually 25% of hourly rate), already paid to the worker, when calculating backpay. Many saw this as allowing ‘double dipping’.
In an effort to avoid this ‘double dipping’, where the employee receives both a casual loading and the entitlements that the casual loading is paid in lieu of, the Fair Work Amendment – (Casual Loading Offset Regulations 2018) was recently introduced.
What has changed?
The new regulation clarifies that employers, in certain circumstances, may claim that an employee’s casual loading payments should be offset against certain NES entitlements owing to the employee.
How does the new regulation work?
The new regulation applies where all of the following criteria are met:
- An employee is employed by the employer on a casual basis
- The employee is paid a casual loading, that is clearly identifiable as being an amount paid to compensate the person, in lieu of entitlements that casual employees are not entitled to under the NES, such as personal or annual leave
- Despite being classified by the employer as a casual, the employee was, in fact, a full-time or part-time employee, for some of all their employment
- The employee has made a claim to be paid for one or more of the NES entitlements (that casual employees do not have) that they didn’t receive, for all or some of the time that they were incorrectly classified as a casual
If these points are satisfied, an employer can make a claim to have the casual loading payments made to the employee taken into account when working out the entitlements owing to the employee.
When does this change come into effect?
This regulation came into effect on the 18th of December 2018 and applies to employment periods that occurred before, on, or after this date.
What should you do as an employer?
Despite this welcome change for employers, it is still crucial that businesses ensure that employees are properly categorised as to the basis of their employment, whether it be full-time, part-time or casual – and paid accordingly.
If you are in any doubt about how to classify the workers in your business, contact Employee Matters and Book a complimentary Discovery Session with us to find out how we can help.