Double Dipping Appeal Must End Casual Chaos Once And For All

Published July 17, 2020 (last updated July 20, 2020) Author: Employsure
business owner enquiring about double dipping

A High Court appeal over a decision that could see some casual employees claim permanent entitlements, needs to provide small business owners with further clarity, according to Employsure, Australia’s largest workplace relations advisor.

The call comes as labour hire firm WorkPac seeks leave to appeal the Federal Court’s controversial decision to uphold leave entitlements for casual mine worker Robert Rossato in a case that has become known as ‘double dipping’. The decision potentially paves the way for ‘regular and systematic’ casual workers to claim both paid entitlements as well as 25% casual loading, a situation that has been described as an economic ‘time bomb’ for employers.

“This ruling by the Federal Court is one that could put a number of businesses in a compromising position with no way out,” said Employsure Managing Director Ed Mallett.

“What we want now is clarity on whether this will lead to business owners having to shell out more money for casual workers than they were originally entitled to. While we wait for the appeal to be heard in the High Court, it is important for employers to understand whether this impacts their business, and what they can do to help protect themselves.

“It is important SMEs comply with and understand their obligations under any applicable industrial instrument regarding casual conversion. They should also review their relationship with their casual employees regularly. What may have started out as a casual relationship may overtime become a more permanent one.”

A court can impose penalties of up to $63,000 per contravention for a corporation and $12,600 per contravention for individuals for wrongly classifying the employee as a casual when in fact they should have been classified as permanent.

What Should Employers Do?

As a general guide, casual employment is characterised as unpredictable, irregular, intermittent and not pre-allocated, whilst permanent employment is characterised as an indefinite duration which is stable, regular and predictable.

Business owners are being encouraged to look at all aspects of how they operate when assessing their legal obligations. These include:

  • Regularly reviewing their workforce to see if any long-term casuals could be considered a permanent employee
  • Ensure the contracts or enterprise agreements of staff include a definition of what a casual employee is. Casual loadings should be identified in the contract as well as payslip, and made clear it is to be paid in lieu of paid leave and other entitlements
  • Work with hiring staff to make sure they’re aware of the factors that could lead to a casual worker becoming permanent

If an employee turns out to be permanent, an employer should:

  • Determine the employees’ annual leave and personal/carer’s leave accruals based on the time they have been engaged on a permanent basis, and determine how many public holidays they should be paid
  • Meet with the employee to explain that their permanent status and issue the employee with a variation of contract to reflect this status. In this, obtain mutual agreement from the employee to reduce their rate of pay to the permanent rate (ie no casual loading)
  • Ensure records of annual leave and personal/carer’s leave accruals are reflective of previous permanent employment and ensure they receive all National Employment Standards permanent employee entitlements moving forward.

Moving Forward

Given the retrospective nature of the Federal Court’s decision, it may not be possible for businesses to protect themselves from past exposure. In these circumstances, it is recommended those that feel at risk seek formal advice.

“What we don’t want to see in the coming months are businesses that have been suffering though a pandemic suffer even further,” continued Mr Mallett.

“This court decision, in light of the uncertainty, might see businesses refrain from engaging staff on an ongoing casual basis. If that is not feasible, they should consider ensuring that casual contracts of employment contain an appropriately drafted offsetting provision, and a separate clause permitting restitution in circumstances whereby the employee is considered to be permanent.

“We hope the appeal in the High Court by WorkPac will swing in their favour, or else we may see billions of dollars in entitlements paid out by businesses that simply can’t afford to do so, given these times.

“We need better clarity on how small and medium sized enterprises can operate with their casual employees in the future. The High Court needs to restore sense and clarity to casual employment for the thousands of Australian businesses affected by this decision.”

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