A lot of employers are not aware of the pitfalls when it comes to hiring ‘casual’ employees, thinking this would be less risky or more flexible for their practice than permanent employment.
Casual employment provides benefits to both the employee and employer. However, if used in the wrong circumstances the legal and financial risks can be detrimental. The law has different tests that apply to help determine if a staff member is ‘truly’ casual.
It is determined on a case by case basis after examining factors, such as:
how you engage with a employee,
their working patterns,
the extent to which their employment is ‘regular and systematic’ and they expect to keep working for you in the future,
has been given an advance commitment to ongoing work.
Changes to Modern Awards and a recent Federal Court decision have put rules for casual employees in the spotlight.
A recent Federal Court decision has again highlighted that employees may be entitled to paid leave entitlements under the National Employment Standards (NES), even if they’ve been appointed as a casual and paid a loading under an applicable Award or Enterprise Agreement.
This type of unexpected cost (years’ worth of back pay) can have a big impact, particularly if multiple employees are affected, or if the Fair Work Ombudsman also prosecutes for non-compliance penalties.
However, the Government has recently varied the Fair Work Regulations 2009 to clarify that in certain circumstances, employers may claim that an employee’s casual loading payments should be offset against certain NES entitlements owing to the employee (such as any leave entitlements).
In addition, recent changes to Modern Awards have now introduced a new right for ‘regular’ casuals to request a transfer to permanent employment.
Employers must also notify casual employees about these new rights. All private dental practices should take the opportunity now to reassess their relationships with casual employees, ensure they comply with the new notification rules, and ensure their casual contracts and systems are up-to-date and appropriate for their practice.
New right to request permanency from October 2018, ‘regular casual’ employees under the Health Professionals and Support Services Award and Nurses Award also have the right to request full-time or part-time work.
For the first time, the Awards now include a definition of ‘regular casual’ which includes casual employees who, over the preceding 12 months, have worked a pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to perform as either a part-time or full-time employee.
An employer can only refuse a casual’s request to become full- or part-time on reasonable business grounds. Reasonable business grounds for refusing a request may include, for example, where it’s reasonably foreseeable that the casual position will cease to exist within the next 12 months.
However, any such decision would need to be based on facts and, if there’s a dispute about whether reasonable business grounds exist, the employee (or employer) can refer the dispute to the Fair Work Commission.
Importantly, there’s no right for an employer to require an employee to transfer to permanent employment. An employer may offer an employee permanency and providing reasonable incentives to persuade them to agree to this (e.g. an increased base rate of pay).
Review employment contracts: Warning signs would include if the contracts describe an employee as a ‘regular’ or ‘permanent’ casual; make reference to any ‘usual’ or ordinary hours of work; lock employees into particular shifts; or include clauses requiring advance notice of termination, probation periods or similar.
The contracts should clearly identify the amount of the casual loading you are paying (rather than just specifying the fully loaded rate).
How can you protect yourself and your practice?
Only use a casual model if your business needs are genuinely uncertain and changeable, with no guarantee/expectation of ongoing work or regular work patterns.
Get advice on which model to use before you hire and consider the options carefully – for example, a variety of template contracts and other information is available for members on the ADA (NSW) website.
Don’t pick a casual arrangement just because you want to ‘try before you buy’ – remember that permanent employment is usually subject to a probation period of 6-12 months anyway.
Don’t set and forget – review each casual employee’s work patterns regularly, to see whether your business needs have changed in that time, or their actual work patterns have become more regular and systematic – if something’s changed, discuss it transparently and update their contract accordingly.
No matter which model you choose, to minimise uncertainty and limit the risks, ensure you have a well drafted, written contract in place before the employee starts work and update or replace it whenever the relationship changes significantly.
Please don’t hesitate to contact one of our award winning advisors if you’d like to discuss Employee Agreements.