31 January 2019

The new rules of casual employment

KnowCents

Many medical centres in Australia employ casual staff, including the large corporates. A recent court ruling has set a new precedent for casual employment, getting a little more serious about its definition. This may have implications for general practice.

If you’re not au fait with the updates and want to avoid costly claims, it’s important to understand what constitutes “casual”, how to draft a watertight contract, and when to convert a casual employee to permanent.

On 16 August 2018, the Federal Court shook up the definition of casual employment.

In WorkPac Pty Ltd v Skene, Mr Skene, a fly-in-fly-out mining worker contracted and paid as a casual, was awarded payment in lieu of annual leave entitlements (recall: that casual employees are normally not entitled to leave entitlements). As well as, WorkPac was penalised for wrongful employee classification.

The reason? Mr Skene worked a set roster of seven days on, seven days off on a regular basis for close to 21 months. To the court, this was no “casual” arrangement.

Since then, the definition of casual employment has become a lot less, well, casual. Labelling a worker as such isn’t enough. According to the court, the most important factor in classifying an employee as casual is the “essence of casualness” – that is, when an employee has an “absence of a firm commitment” to the regularity of their work.

Since the ruling, the Industrial Relations Minister has announced plans to introduce laws to prevent this perceived “double dipping” by casual employees.

In the meantime, WorkPac has commenced proceedings in a separate matter to attempt to have the decision in WorkPac v Skene overturned. The minister has announced that the government has joined as a party to those proceedings in the interests of giving “clarity and certainty” over employer obligations, while the CFMEU has a very different view, and has also joined the proceedings.

In short, it’s a “watch this space” as this matter continues its way through the courts. Until then, WorkPac v Skene highlights the importance of addressing these issues in your employment contracts.

A carefully drafted employment contract can help. To minimise the risk of exposure, ensure all casual contracts include the following:

• A clear statement of intent that the engagement is a casual one.

• A clear indication of whether the pay rate is inclusive or exclusive of casual loading. Consider separating the pay rate and loading on payslips  to make it clear loading is on top.

The question of conversion 

Since 1 October 2018, the Medical Practitioners Award 2010 includes a right for “regular” casual employees to be converted to permanent employment.

What is a regular casual employee?

According to the award, a “regular casual employee” is a casual employee who, in the preceding 12 months, worked a pattern of hours on an ongoing basis which the employee could continue to perform as a full-time or part-time employee without significant adjustment.

Failure to notify casual employees of their right to convert, or failure to convert a casual employee to permanent employment, are both considered breaches of the Fair Work Act 2009 (Cth), and can attract up to $63,000 in penalties, plus compensation for any loss suffered by the employee.

What does this mean for your practice?

When a regular casual employee requests to convert to full or part-time employment, you must genuinely consider the request.

You can only refuse on reasonable grounds. That is, if:

(a) it requires a significant adjustment to the employee’s hours of work;

(b) it’s known or reasonably foreseeable that the employee’s position will cease to exist within the next 12 months; or

(c) it’s known or reasonably foreseeable that the hours of work which the employee is required to perform will be significantly reduced in the next 12 months.

What should practices do?

All employees who were casual employees as of 1 October 2018 must have been sent a copy of the conversion clause by 1 January 2019 (which is set out in the award). Anyone employed after this time must be provided with a copy of the conversion clause within the first 12 months of their employment.

Employees aren’t obliged to convert to permanent employment, but it’s a good idea for you to record the acceptance or rejection in writing. It may come in handy to illustrate how the employee regards the employment relationship, while minimising the risk of wrongful classification.

The upshot

Take casual employment seriously, ensuring you meet the updated requirements, create a watertight contract, and give staff members the opportunity to convert if and when their roles start resembling something permanent.

My-Linh Dang is Managing Director of Metis Law, legal experts specialising in business contracts, capital raising, mergers an acquisitions and privacy. ([email protected]). Kevin Cheng and Andrew Robertson are Directors of Osana.