In May 2020, the Full Federal Court ordered an employer WorkPac to back pay a casual employee, Rossato, full paid leave entitlements and public holiday payments which he was owed on the basis he was a permanent employee that was mischaracterised as a casual.
This decision was made because Rossato worked regular, predictable, systematic hours. The Federal Government has appealed this decision to the High Court, wary that the decision could have substantial impacts to employers.
Since, Attorney General Christian Porter has drafted an amendment to the Fair Work Act 2009, which seeks to overturn the decision. The proposed amendment would allow an employer to reduce their liability to back pay permanent employee entitlements to employees mischaracterised as casuals that were paid an identifiable casual loading.
A key part of this proposal is the identifiable casual loading. If an employee has been mischaracterised as casual, they may not be entitled to claim back payment of permanent employee entitlements like paid leave if they have been clearly paid a casual loading.
Casual employees are entitled to a higher pay rate which includes a casual loading, paid because they do not receive benefits such as sick and annual leave. The proposed legislation highlights the importance of stating when casual employees receive a casual loading in place of permanent employee entitlements in employment contracts and payslips.
In Rossato’s case, he was not paid a separate identifiable casual loading during his employment. The employer attempted to retrospectively assert he had been paid causal loading, claiming he had been paid a ‘loaded flat rate’, however this was the same as permanent employees in the company.
The Government’s new legislation would retrospectively extinguish accrued entitlements owed to mischaracterised employees, such as permanent employees labelled casuals or contractors. This could be harmful to employees who are owed entitlements, however, would protect employers from having long-term regular casuals claiming permanent entitlements.
The decisions regarding Rossato’s Case and the Fair Work Act amendment will be highly awaited. Current best practice is that casual employees have a written contract including their entitlements and paid a clearly identifiable casual loading highlighted in payslips.
If you need assistance with employment contracts or pay rates for casual employees contact us on (08) 9316 9896 or email@example.com