Did you know from 18 December 2018, incorrectly classified casual employees may be entitled to a casual loading offset payment against the National Employment Standards (NES) entitlements of the annual leave the casual should’ve received?

Did you also know that as their employer, you’re the one that needs to pay up?

Firstly, let’s look at what defines a casual employee.

According to the Fair Work Ombudsman, “A casual employee does not have a firm commitment in advance from an employer about how long they will be employed for, or the days (or hours) they will work. A casual employee also does not commit to all work an employer might offer.”

For example, an employee who works to a roster that changes each week and can refuse or swap shifts, is casual.  Additionally, a casual employee:

  • Has no guaranteed hours of work
  • Usually works irregular hours
  • Doesn’t get paid sick or annual leave
  • Can end their employment without notice, unless notice is required by a registered agreement, award or employment contract.

After at least 12 months of being engaged regularly by an employer on a casual basis, and if it’s likely that the employment relationship will continue, a long-term casual employee can:

  • Request flexible working arrangements
  • Take parental leave
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New Fair Work Regulation

The new regulation applies if an employee:

  • Is employed on a casual basis
  • Is paid a casual loading identifiable as payment to compensate the employee in lieu of entitlements that they are not entitled to under the NES, such as personal or annual leave.
  • Is, despite being classified as a casual, a full-time or part-time employee for some or all of their employment for the purpose of NES
  • Has made a claim to be paid for one or more of the NES entitlements (that they don’t have) that they didn’t receive for all or some of the time that they were incorrectly classified as a casual.

The new regulation applies to employment periods that occurred before, on, or after 18 December 2018.

What you need to do

Essentially, nothing. Unless a casual employee has made a claim to the Fair Work Commission, you don’t need to calculate a casual offset loading against NES entitlements owed to them.

What you will need to do, however, is to ensure that:

  • Employee payslips clearly show the casual loading separately to ensure the employee is fully aware that they are a casual and paid a loading.
  • Employees are aware that the casual loading compensates their relevant NES entitlements.
  • The wording in the employee’s contract is tailored to meet the wording in the Fair Work regulation.

Many employers want the certainty and continuity of an employee turning up at the same time everyday without having to commit to the expense of engaging someone long-term. Unfortunately for employers, this picking and choosing of employment terms is often in breach of Australian employment law.