A landmark decision of the Federal Court highlighted that if employers incorrectly classify employees as casuals, when the nature of their work seems to be that of a permanent employee, employees may be entitled to various entitlements under the National Employment Standards (NES) that would be equivalent to those of a full time employee.
However, the Government has passed the Fair Work Amendment (casual loading offset) Regulations 2018 to clarify that, in certain instances, an employee’s casual loading payments should be offset against certain NES entitlements owed to them if they are deemed to be a permanent employee.
To avoid employees from “double dipping” and taking the benefits of casual loading as well as NES entitlements, the Regulations stipulate in which circumstances casual loading payments will be offset against certain NES entitlements. This regulation applies when:
- A person is employed on the basis of a casual employee; and
- The employer pays the person a loading amount, that is clearly identifiable as an amount paid to compensate the person for not having one or more relevant NES entitlements during an employment period; and
- During all or some of the employment period, the person was in fact an employee other than a casual for the purposes of the NES; and
- The person makes a claim to be paid an amount in lieu of one or more of the relevant NES entitlements they did not receive for the time they were incorrectly classified as a casual.
If these provisions are satisfied, the employer can make a claim to have casual loading payments made to an employee taken into account when working out entitlements owed to an employee for the relevant NES entitlements.
Next Steps
It is recommended that employers do the following:
- Clearly stipulate in all agreements that casual loading is included in remuneration to compensate casual employees for not having the relevant NES entitlement/s;
- Review employment contracts and ensure the nature of their employees work is identical to what is stipulated in the contract.
If you require any assistance in reviewing employee contracts to check whether your casual employees could be potentially deemed as permanent, please do not hesitate to contact us.