Casual employees and their entitlements
Employers need to be aware of what entitlements are applicable to casual employees. Casual employment often involves more than just determining an appropriate rate of pay, and there is often confusion over the definition of a casual employee and questions around a casual employee’s entitlements.
What is a casual employee?
While the current legislation (the Minimum Conditions of Employment Act 1993 (WA) for state system employers, and the Fair Work Act 2009 (Cth) for national system employers) provides entitlements for casual employees, there are no specific definitions of what it means to be a casual employee.
Where definitions are provided in awards or agreements, they are often of little help as they generally define a causal as “an employee who is employed and paid as such”.
Many common law decisions have found that casual employment is generally characterised by:
- an irregularity in working hours; and
- the right of the employee to accept or refuse work when it is offered.
In some unfair dismissal cases, industrial commissions have determined that “casual” employees are not in fact casually employed, and have awarded entitlements like annual leave, sick leave, public holidays and redundancy payments despite the employee receiving a casual loading.
It is not sufficient that parties to an employment contract agree that the employment is on a casual basis (although it is important to put the arrangements of the employment contract in writing). The courts will look beyond this agreement to consider whether the employment contract is in fact casual.
Ultimately, the question of whether an employee is casual is a question of fact and can only be resolved with reference to the particular circumstances of each case.
Are there any restrictions on casual employment?
Some state and federal modern awards place restrictions on casual employment in terms of:
- the number of hours per week a casual may work
- the number of consecutive weeks a casual may be engaged
- the number of casual employees that may be employed in relation to full and part-time employees
- how long an employee can remain on casual contracts before they must be offered permanent work.
Conversion to permanent employment
Some modern awards, such as the Manufacturing and Associated Industries and Occupations Award 2010, contain provisions that allow a casual employee the right to elect to have their contract of employment converted to full-time or part-time employment if the employee has been employed by a particular employer on a regular and systematic basis during a period of 6 months and the employment is to continue.
What are a casual employee’s entitlements?
The default minimum casual loading is currently 20 per cent, for state system employers and 25 per cent for national system employers.
However, it is important to comply with any higher loadings contained in any other instrument that may be binding on the employee; this may include modern awards, registered agreements or common law contracts.
Many employers engage employees on a casual basis, paying them the required casual loading in accordance with the relevant industrial instrument, such as:
- a state award
- a modern award
- an award-based transitional instrument
- a transitional minimum wage instrument
- agreement - based transitional instrument; or
- enterprise agreement
However, employers may not be aware that casual employees’ entitlements extend beyond minimum wages. Other entitlements that casual employees may qualify for include:
Overtime and penalty payments
In the absence of a specific provision to the contrary, casuals are entitled to overtime and penalty payments as prescribed in industrial instruments such as Awards.
Employers are currently required to contribute 9.5 per cent of an employee’s ordinary time earnings under the superannuation legislation. Casual employees are eligible for this 9.5 per cent assuming they meet the other criteria, such as earning $450* or over in a calendar month. Superannuation is also payable on the casual loading.
*Some modern awards, such as the Hospitality Industry (General) Award 2010, lower this threshold so that employers are required to make superannuation contributions for employees earning $350 or more in a calendar month.
Long service leave
Casual employees are entitled to long service leave under the Long Service Leave Act 1958 (WA), provided their service with the employer has been continuous. For casual employees, continuous service or employment does not necessarily mean an unbroken period of service. A series of employment periods (or employment contracts) could be deemed continuous service provided the employee was available to work when rostered over the whole qualifying period. The employer would have to refer to the binding industrial instrument for employees’ entitlements.
Unpaid carer’s leave
A casual employee is entitled to take up to two days unpaid carer’s leave for each occasion that a member of their immediate family or household requires care or support due to a personal illness, injury or an unexpected emergency.
Casual employees of State System Employers covered by the Minimum Conditions of Employment Act 1993 (WA), may have an entitlement to paid bereavement leave of up to two days per permissible occasion.
Casual employees of National System Employers are entitled to two days of unpaid compassionate leave for each occasion under the Fair Work Act 2009 (Cth). An example of an occasion would include a member of the employee’s immediate family, or a member of the employee’s household contracting, sustaining or developing a personal illness or injury that poses a serious threat to his or her life. Another occasion could arise where the member dies.
Casual employees who have been engaged on a regular and systematic basis for more than 12 months are also entitled to parental leave. In general, the primary caregiver is entitled to 12 months of unpaid parental leave in relation to the birth of their child or the adoption of a child, if they have completed 12 months continuous service with their employer.
Some state and federal modern awards will require that a casual be offered a minimum number of hours per shift (i.e. three hours per shift). When offered work for a particular shift, the employee will need to be paid at least this minimum period even if they are not required to work the full period. However, the employee will not be entitled to the minimum period if they do not work the required time because they go home sick or cease work without permission.
In the absence of a specific provision requiring minimum hours, a causal employee will only be paid for the hours worked.
Payment on termination
Once offered a shift, a casual employee will be entitled to the notice contained in their contract or industrial instrument for the termination of this shift.
As casual employees are employed by the hour or the day, their casual loading covers them for most paid leave entitlements. As such casuals will not be entitled to payment of any leave on termination of employment. The exception to this is long service leave.
State system employers
Casual employees employed by state system employers are not excluded from making an unfair dismissal claim. Regardless of their length of service with the employer, they can make an unfair dismissal claim.
National system employers
Generally, casual employees will not be protected from unfair dismissal in the national system, unless:
- the employment as a casual employee was on a regular and systematic basis;
- the employee had a reasonable expectation of continuing employment on a regular and systematic basis, and;
- the employee has completed the ‘minimum employment period’ with the employer (see below).
The minimum employment period
For national system employers, the minimum employment period depends on the size of the business. For small business employers (i.e. an employer who employs less than 15 employees – excluding irregular casuals) the minimum employment period is one year. The minimum employment period for other employers is 6 months.
It is important to note, that in WorkPac Pty Ltd v M Bambach  FWAFB 3206 (31 May 2012) a Full Bench of the Fair Work Commission determined that absences during which employees are in receipt of workers compensation payments will count as continuous service for the purposes of the meeting the minimum employment period for accessing unfair dismissal remedies.
Unlawful termination and discrimination
When determining if a dismissal was harsh, unjust or unreasonable, consideration will be given to whether there was a valid reason for dismissal and whether a fair procedure was followed by the employer prior to dismissing the employee. For small business employers, the dismissal may not be fair if the employer does not adhere to the small business dismissal code.
There are certain grounds for termination that are deemed to be unlawful in both the state and federal systems. Such unlawful grounds may include (but are not limited to) terminations on the basis of age, union membership or pregnancy/potential pregnancy.
Furthermore, casual employees also have access to claims under other state and federal legislation including the Equal Opportunity Act 1984 (WA), the Disability Discrimination Act 1992 (WA) and the Sex Discrimination Act 1984 (WA) in instances where they feel they have been discriminated against or sexually harassed.
Casual employees employed by national system employers also have access to the general protections provisions of the Fair Work Act 2009 (Cth). An employer cannot take adverse action (which includes dismissal, injury in employment, alteration of employment to the employee’s detriment and discrimination) against an employee because the employee has a workplace right.
A workplace right includes when a person:
- is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body, or;
- is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument, or;
- is able to make a complaint or inquiry about his or her employment.
General protections cover a range of additional provisions.
Employers requiring further assistance or additional information on General Protections or casual employment should contact CCIWA’s Employee Relations Advice on (08) 9365 7660.