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The $54,000 mistake businesses are making when it comes to casual staff

By the end of this article, you could either be celebrating or, potentially panicking, depending on whether you are an employee or a business owner.

In a recent case, a business was ordered to pay a casual employee leave entitlements, a benefit generally reserved for permanent employees, as the nature of their employment was deemed to have all the characteristics of permanent work. The judgment set a precedent that just because an employer classifies an employee a casual worker, it doesn’t necessarily mean they are one.

“There are many reasons a business might label a worker as casual, but treat them as a permanent member of staff,” explains Adzuna CEO Raife Watson.

“Employers do not have to guarantee casual employees work, which offers a distinct advantage during tough market conditions or quiet periods.

“Secondly, casual employees are not entitled to paid personal leave, annual leave, notice of termination, or redundancy pay, all of which are a huge cost to a business,” Mr. Watson said.

The benefits are obvious for a business, but what are the benefits of casual work for the worker?

“I enjoy the flexibility and variety of casual work, which fits in better with my lifestyle,” says Ben Phillips, who works as a casual employee for a number of employers.

“Working full-time can be restrictive when it comes to working toward other goals. I am trying to finish a novel, which would almost be impossible with a full-time job,” Phillips said.

There are pros and cons of casual work on both sides of the fence, however, casual employees in Australia are not currently abiding by their definition in the tens of thousands.

Traditionally, a casual employee was an employee who had no guarantee of continuing employment with their employer and whose hours of work were irregular or uncertain.

According to recent research from the Australian Bureau of Statistics, 41% of casual employees are guaranteed a minimum number of hours’ work each week by their employer, 47% of casual employees’ income does not vary from one pay period to the next, and 62.5% of casual employees usually work the same number of hours each week.

These figures are telling and should be ringing alarm bells for Australian businesses.

Ask yourself the question, do your casual workers have these characteristics?

  • irregular work patterns;
  • uncertainty around the period of employment;
  • discontinuity; and
  • intermittency of work and predictability.

 

In the aforementioned case, the worker had a regular roster of seven days on and seven days off and was provided a twelve-month roster in advance. Therefore, his work was deemed regular, certain, continuous, and predictable. He was clearly a permanent worker.

What are the implications for a business who treats a permanent employee as a casual worker?

If employees are wrongly classified as casuals by their employer, they will be entitled to seek compensation as well as penalties of up to $54,0000 against the employer for each breach or misrepresentation.

Advice for business owners

If you employ casual staff, review their employment contracts to ensure that you clearly identify casual loadings in monetary terms.

Ask yourself the following questions:

  • Do your casual employees work in predictable, regular patterns?
  • How far in advance do you supply your casual staff with a roster?
  • Do you commit specific hours and days to your casual workers?