Risky Business- The Permanent Casual!

Casual hires with leave and other entitlements.

Lets’ start this conversation with a few questions that I’m sure many business owners and leaders in the staffing industry are asking themselves at the moment…..Is that a casual worker we just on-hired? – Are we sure they are a casual worker? Or are they a permanent employee, with full leave and other entitlements? The casual rate they are receiving could become awfully expensive later if they are also entitled to annual leave, long service leave, redundancy pay and termination notice.  Not to mention the casual loading you’ve paid them.

Well guess what?  You do not get to offset that against a not-casual-worker’s claim for entitlements.  Congratulations on your new full-time employee that you generously paid at a casual rate!

Since the 20th of May 2020, this is exactly the risk you take on every casual hire and it transforms the entire staffing and labour hire industry and the broader Australian business economy. 

The 20th of May 2020, of course, was when the “Rossato Decision” was handed down by Justices Bromberg, White & Wheelahan, which shook the trees quite literally.  The ruling was that Mr Rossato was not a casual employee, even though he was:

hired under 6 consecutive contracts that explicitly stated he was hired as a casual employee

covered by an EBA that covers casual workers and grants a 25% casual loading

the loading is specifically in lieu of entitlements (leave, redundancy pay & termination notice)

was paid at a flat rate, incorporating the casual loading, which was higher than the minimum required by the EBA 

So it walks & talks like a casual – is hired & paid as a casual… but now has the entitlements of a full-time permanent worker.

If it sounds like a nightmare, you’re on the right track (because it’s not as if the Modern Award system isn’t already tricky enough!)

Welcome to your new status quo.

The ‘Rossato’ decision is not going to go away, nor is it likely to be changed – because it is a confirmation of a previous decision. That makes it the new status quo, as established in WorkPac -v- Skene (“Skene”).

Skene’s ruling was that just because you identify, contract and pay someone as casual, doesn’t mean entitlements don’t apply. Under Skene, if an employee can show working arrangements that demonstrate a firm advance commitment as to:

1. the duration of employment and/or the days and hours they are scheduled to work; and

2. that the work scheduling/rostering is regular and systematicThen they may still be considered as having those entitlements like a full-time permanent employee.

Why did the ‘Rosatto’ decision go against casual worker entitlements for casual hires?

There were a few primary factors in the decision, including:

Rosters were provided to Rossato months in advance, which demonstrated the employer’s advance agreement that he would be employed in a stable, predictable and indefinite manner

Although he was paid a flat rate higher than the EBA required, the exact amount he was paid due to the “casual” nature of his employment was not specified.

There was no way to conclude that Rossato’s rate wasn’t simply the going market rate at the time.

His contract stated that he received his rate in lieu of entitlements, instead of stating that the rate was in payment for or in satisfaction of entitlements

What can you do to avoid this scenario?

You could not hire casual staff at all – it is not a wonderful solution.  At least you are paying for what you get. 

In specific industries, where you know that your clients are going to want regular candidates at regular times on an ongoing basis you will need to consider the regularity that candidates are engaged.  For example changing rosters and patterns of work.

What is an absolute imperative, is that the information provided to your candidates needs to be noticeably clearer on how they are engaged and how their entitlements are being dispersed to them? 

Alternatively, you might simply accept that hiring casuals is a gamble that may result in a hidden balloon payment of leave, redundancy payout and notice requirements. 

If you are looking for a more reasonable and economically sane strategy, you could just use the ratescalc.com application. For less than you spend on a mobile phone per month, ratescalc.com will protect your business and business process against such outcomes.

How does ratescalc.com protect against casual hires with full entitlements? 

Ratescalc has several standard features that will help ensure that you are not hiring permanent full-time staff at a casual rate.

These include:

A full suite of calculators in its digital quoting engine that break down every aspect of casual hire rates of any kind, including Casual PAYG, Casual Flat Rate PAYG, Tenured/Fixed-Term and Non-Award based PAYG rates

Automated document production of contracts and employment schedules that specify in black and white the exact component of any given rate that is paid as a casual loading

Advanced APIs that make this casual component available to, so that it can be listed specifically on every payslip and document you send to an employee

Tight integrations with many of the leading recruitment industry systems, ensuring the breakdown rate component data is pushed to your system (or pulled down from ratescalc by your system)

That means, no matter what the ‘Fair Work Commission’ decides or what happens in the future, your employment operations will remain fair and equitable. Even if it is decided that you have a full- time permanent employee after the fact, the casual loading is itemised and specifically paid as payment for entitlements not received.

So, that means that your hires can receive a casual’s rate or a permanent staff member’s entitlement which is clear but never both for the same work done. 

We cannot think of anything fairer to all parties than that!

If you’d like to read a little more about this landmark case check out this article from our friends at IRIQ which provides an excellent brief summary: 

Disclaimer: This article is no substitute for legal advice and does not take into account the particulars of your individual situation. Whilst Ratescalc offers many features to protect against industry risk, your work process and daily practices will always be the most critical factor in risk mitigation and avoidance. The team at ratescalc can guide your organisation on how best to enable your business through the use of its proprietary software. Formal notices, contracts and schedules issued to your candidates / employees on behalf of your organisation should be reviewed by your trusted legal advisors.

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