Employers in the timber contracting industry may be aware of the legal drama currently being played out with respect to casual employment. It is hard to avoid the issue as it has been in the media and its ramifications are significant for business in this country.
In a recent Federal court case, WorkPac v Skene, labour hire firm, WorkPac, found itself at the centre of a nationally significant court ruling that certain casual employees should not be deemed casual and, as such, deserve to be paid accrued leave entitlements in line with permanent employees. The case was brought to the Federal Court by the CFMEU representing the employee. This is despite the fact that the employee, in this case, was paid a casual loading to compensate for annual leave and other entitlements. Based on long standing industrial cases, it really does defy logic and create a potential nightmare particularly for small and medium size business.
In latest developments and after considerable pressure, the Federal government will become a party to federal court proceedings testing whether casual workers have the right to “double-dip” on entitlements by being granted leave accrual as well as a casual loading.
In the WorkPac v Skene case, the Federal Court held that the term ‘casual employee’ in the Fair Work Act has no precise meaning and whether any employee is a casual for the purposes of the Act depends upon the specific set of circumstances. The Court found that Skene had predictable hours set 12 months in advance and that both sides made a firm advance commitment to the duration of his employment and hours of work.
The very widespread and longstanding practice across virtually all industries is that an employee is a casual if they are engaged and paid as such. It is common for casuals to work on a regular and systematic basis for extended periods. These essentially are long term casuals and it offers flexibility to both the business and the employee.
The employment of casuals plays a vital role in Australia’s labour market, including the timber contracting industry. A loss in flexibility in this area would destroy competitiveness and jobs. One in every five Australian workers is a casual employee, with more than 80 per cent of casual employees working for small and medium businesses with fewer than 100 staff members.
The government and employers are rightly concerned that the legal right to offset an obligation against payments already made for the same entitlements was not confirmed in the WorkPac v Skene case.
The decision by the Federal Court up ends the long established industrial precedent and norm that a casual is an employee who is engaged and paid as such receiving a loading (25 per cent) to compensate for most award entitlements.
If this decision is not clarified or amended, the legal system has made it very difficult for an employer to employ a casual without the potential for future claims by the employee for entitlements even though the employer rightly believes they have already been paid an inflated higher hourly rate of pay as compensation.
Employers should review their existing contracts to ensure it is clear a casual loading is being paid and the employee has signed and aware they are under a casual contract of employment. It should be made clear preferably in monetary terms the amount of the hourly rate that is payment for annual leave, personal leave (sick leave) and public holidays.
If there is litigation at some point in the future, the payment of a casual loading may be able to be offset against annual leave and other entitlements where it is clear a specific amount or percentage is attributable to the payment of those entitlements.
As if to make matters more difficult at present surrounding the employment of casual employees, the Fair Work Commission (FWC) has handed down a decision which is operative from October 1, 2018. This decision, dependant on relevant award, requires employers to offer a casual employee the opportunity to convert to full-time or part-time employment after 12 months regular and systematic employment.
The employer is required to notify relevant employees of their right to convert to full or part-time work by giving the employee a copy of the casual conversion subclause from the relevant award within the first 12 months of casual employment. Existing casual employees need to receive a copy of the conversion subclause within three months of October 1, 2018. For instance, employees covered by the Clerks – Private Sector Award 2010 who were already employed as at October 1, 2018, must be provided with a copy of the subclause by January 1, 2019.
It is clear that some casual employees may prefer to remain in their existing arrangements and retain their 25 per cent loading. In these instances, it is crucial tree contractors record in writing the employees desire to remain casual and keep such record with the employee’s time and wage records.
Finally, an employer may refuse an employee request to convert to full time employment on reasonable grounds. Tree contactors should contact TTIA regarding these grounds as they will need to be put in writing to the employee. Employers will also need to be aware of the relevant provisions of specific industrial awards that apply to them as well as ensuring casual employees have a copy of the casual conversion clause.
TTIA will keep The Australian Abor Age magazine readers informed on any ruling by the Federal Court in relation to the “casual double dipping” on the entitlements case as outlined in the Skene decision above. In relation to the casual conversion issues, I strongly suggest you seek advice from TTIA if you are a tree contractor member.
If you are not a member of TTIA, seriously consider joining as employers need to take specific steps to review their current employment arrangements with casual employees or risk potentially difficult legal consequences.