On 18 December 2018 the Federal Government introduced the Fair Work Amendment (Casual Loading Offset) Regulations 2018 (Cth) (Amendment) to vary the Fair Work Regulations 2009 (Cth) (Regulations) in light of the decision in Workpac v Skene, a case we have reviewed previously (Workpac v Skene article).
The Amendment clarifies that an employer now has a statutory right to offset casual loading that has been previously paid to a casual employee provided that:
· The employee was employed on a casual basis;
· Casual loading was clearly identified as being paid to the employee in lieu of paid leave entitlements under the National Employment Standards (NES);
· The employee should not have been classified as a full time or part time employee during their employment with the employer; and
· The employee has made a claim for one or more of their NES entitlements.
The Explanatory Memoranda of the Amendment states that it is intended to “provide declaratory clarification of existing legal and equitable general law rights to offset payments of identified casual loading”. It is noted that the Workpac v Skene decision made no specific ruling on the ability of an employer to offset previously paid amounts of casual loading against alleged NES entitlements.
The key benefit for employers is that the Amendment gives a statutory right (provided the aforementioned conditions are met) to make a claim offsetting previous payment of casual loading. This means that they are automatically included as part of the terms and conditions of employment (usually set by employment contracts or enterprise agreements) such that no variations or amendments are necessary.
Absent from the Amendments is any statutory relief regarding the classification of casual employees, which remains a consideration (involving a totality approach similar to that of the classification of employees from independent contracts) at common law. It is likely that further guidance will be provided by Workpac v Rossato case currently with the Federal Court.
It is important to note that the Amendment merely provides a right for employers to make a claim to offset casual loading against alleged NES entitlements. This means that invoking the Amendment remains subject to the discretion of a Court. As such, employers are cautioned against relying on the Amendment and should still review their existing arrangements with their casual employees (in order to reduce arguments that they are permanent employees). This will mitigate as much risk as possible and may avoid potential headaches (and costs) in the event that a matter proceeds to litigation.
For now what should employers do? We recommend the following suggestions:
1. Review your existing agreements – do they clearly identify casual employees as casual or are they ambiguous? A recent contract we have reviewed noted an employee was casual but erroneously contained a clause that gave the employee paid leave.
2. Review your payment structures with your payroll staff – is it clear that your casual employees are paid a clearly identifiable casual loading?
3. Review the tenure of your current employees – is it viable to engage long term casual employees as permanent (full-time or part-time) employees to mitigate risks?
4. Consider the use of additional documentation for the employee to sign in order to demonstrate their acknowledgment they are a casual employee – particularly a schedule or a separate agreement altogether.
5. Review the operations of the business – are you engaging casual employees on a regular and systematic basis through the use of rosters? This can be particularly risky given uncertainty (as discussed in Workpac v Skene) is a key element of casual employment.
Are you an employer with casual employees? Could your company be at risk of a claim for NES entitlements? NB Lawyers, lawyers for employers can offer an obligation free consultation to discuss how we can assist you with any concerns you may have regarding your casual employees.
About the Authors
Jonathan Mamaril is the principal and director of NB Lawyers, the lawyers for employers, and a specialist in employment law. Over the last ten years, Jonathan has helped hundreds of employers understand their legal requirements, mitigate risk and liability, protect their reputation and achieve their goals for business growth and expansion.
Dan Chen is a lawyer at NB Lawyers, the lawyers for employers, and specialises in employment law. Dan is passionate about assisting business owners, small and large understand their obligations under Australia’s complex workplace relations system.