Thursday, 20 December 2018

Off-Setting Rules a Cure for Employers’ Fears of Casual Costs

We recently reported on the ‘casual controversy’ surrounding the findings in the case of WorkPac v Skene. In that case, an employee was found to be a permanent full-time employee, despite being engaged as a casual and receiving the appropriate casual loading. The employee was found to be entitled to back pay of certain entitlements, such as annual leave.

Prior to the case of WorkPac, it was broadly accepted that payment of a casual loading effectively compensated casual employees for entitlements of permanent employees, including annual leave and personal leave. However, following WorkPac uncertainty surrounded whether casual employees could in effect ‘double-dip’, receiving both the casual loading plus entitlements such as annual leave if they challenged the nature of their engagement.

In response to concerns raised by employers on the implications of WorkPac, the Federal Government has now passed an amendment to the Fair Work Regulations 2009 to address this ‘double-dipping’ scenario.

In summary, the Regulations now provide that where a casual employee has been paid a casual loading, and is subsequently found to actually be a permanent employee, employers have the ability to off-set any amount of casual loading already paid against entitlements claimed by the employee under the National Employment Standards (eg annual leave).

The new Regulations came into effect on 18 December 2018.

Importantly, to benefit from these off-setting arrangements under the Regulations, the casual loading paid to the employee must be clearly identifiable as being an amount paid to compensate the employee in lieu of entitlements that casual employees are not entitled to receive, such as personal or annual leave.

Therefore, as set out in our earlier update, it remains crucial that employers have in place processes for the engagement of casual employees, including written employment contracts.

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.

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