July 4, 2023

From Woolworths to 7-11 and the ABC, Australia is facing something of an underpayment epidemic recently. And while you might think you have your HR sorted and are out of the woods, a recent Federal Court judgement in the case of WorkPac Pty Ltd v Skene [2018] FCAFC 131 has highlighted concerns about classifying workplace relationships as either casual or permanent.

The fact of an employee being defined as ‘casual’ in their terms of engagement and being paid the appropriate 25% loading in lieu of holiday, sick- and long service leave pay does not prevent them being deemed ‘permanent’ under employment law, which is what happened in that case.

The Court said that the term ‘casual’ has no precise meaning and that the actual nature of the employment will depend of the “conduct of the parties … and the real substance, practical reality and true nature of the relationship”.  Thus, an employee who is labelled as “casual” but works regular part-time hours each week with regular holiday entitlements might more realistically regarded as ‘permanent part-time’. In contrast, someone who is taken on only over Christmas and is given shifts dependent on the extra workload is clearly a ‘casual’.

If the position you are looking to fill could be filled either by a casual or a permanent employee, we suggest that the reality is that the law will probably classify it as Permanent.

The sting in the tail for employers is that, if you have been paying someone on a casual basis for some months or years including a 25% loading and they are subsequently deemed to be permanent, that 25% loading will be treated as a bonus to be kept by the employee but you will also have to give them back pay for the entitlements they have missed out on had they been properly paid as permanent employee such as holiday pay, sick pay and long service leave.

There could be some expensive errors, so it might be better to avoid any artificial arrangements and call it like it is when it comes to employee classification.

This information and information published on our website and social media sites is general in nature and for information and entertainment purposes only.  This information does not constitute legal advice and should not be relied upon as such.  If you require legal advice which takes into account your personal circumstances, please contact us for an appointment.