“Casuals” – what we need to know following WorkPac Pty Ltd v Rossato
The essential question that is being asked here is
“ if an employee agrees to a contract that labels them a casual but their work is systematic (rostered well in advance for example) and regular (set hours and days) and longer-term (happening for years) are they still a casual?”
In the WorkPac decision, the Federal Court says NO
The way the courts have looked at this situation is that if a person is working regular and systematic hours then they are entitled to annual leave, personal leave and other payments made that have typically been understood by employers as covered in the enhanced wages that they have been paying through their award or enterprise agreement.
The courts see it that even if an employee is getting the enhanced wages if they are working regularly and systematically then they are entitled to access to entitlements such as annual leave despite the inflated wages for the time they work.
Something to be mindful of. In the Job keeper application employers have set out who are the regular and systematic casuals so essentially signing a document to say you have casuals that the courts no say you may owe then their entitlements.
Although the court recognized the practice of treating non-casuals and casual was widespread and unclear – employers are no on notice that the practice cannot continue unabated.
Topline takeaway from this case is that
A casual employee is someone whose work is inconsistent, irregular or short term, and casual employees whose work doesn’t fit that description can now make a claim that they are (and have been) a permanent employee and are therefore owed the appropriate entitlements.
Casual Employment – what it means and why do we have casual employment:
a casual employee is a person employed by a business who has no guarantee of ongoing work.
their work is inconsistent and irregular
a casual can be on a roster but where 1 – 2 weeks ahead are set down and no more – meaning there is not an ongoing expectation,
the employee themselves does not have an expectation that they will have ongoing work,
there is no pattern on the days and the hours that they workweek from week
there may be times when there is no work for them.
Casual employment was designed as a non-permanent staff member that was brought on to meet fluctuating demand in the business without incurring longer-term business costs
Employers wanted employees they can dismiss more easily and who do not incur redundancy payouts
A business that fluctuate (tourism, hospitability, etc) wanted employees permanently but ones that did not create long term business and administration burdens
Long-term casuals who work steadily and systematically. In the Fair Work Act, long-term casuals get some extra rights, such as parental leave. Reflecting on their different role, they are also allowed to claim the Job Keeper subsidy. And, like other casuals, they also get casual loading – extra money to offset their insecurity.
Since the Federal Court handed down its decision, I have been working in the background to get my head around what this means for clients who have casuals and have come up with a list of questions. I have been listening to several webinars and panel discussions on what this now all means and have complied a list of questions and the responses.
Note: This is general information and not intended to replace legal advice. Each workplace is different, and each should be considered separately. If you need the support or have further questions we strongly advise that you contact us on firstname.lastname@example.org. This is an evolving situation and many questions will not be answered in full until we have some further cases tested through the court system and determinations made to help guide us.
Be careful in your interpretations of a causal – for this case to apply they need to be regular and systematic. As a guide please see the characteristics of Rosseto and then look at the bottom of this document at What to do to avoid the WorkPac Trap?
It may not be over yet – the government will be talking to employers and employer groups and has not ruled out legislation that could change the casual equation. The Attorney General hinted that legislative measures may be taken to address this case especially considering the current economic climate concerning COVID-19. There has not been any indication from WorkPac if they intend to bring a High Court appeal for this case. It is therefore important that you keep up to date with what’s happening
Characteristic of Rosseto’s employment (WorkPac Pty Ltd v Rossato  FCAFC 84)
Drive-in drive out employee
7-days on 7-days off roster
Shift pattern for 3.5 years
Provided a roster in advance – up to 7monhts in advance
The contract did not go into the specifics on the breakdown of the hourly rate
Worked in a nine site – once there, there was no practical ability to decline shifts
Case impacts FIFO/DIDO relationship
The contract did not have an off-set clause for the annual leave
Questions and Answers to the questions received so far
What happens if the casuals have already opted out of the casual conversion and I have this all documented – does this case apply to that situation?
The way the court case says is that you cannot contract out of the National Employment Standards (‘NES’). The law is saying that just because they say they are casual does not solve the fact that they are entitled to annual Leave/ sickness. You as a business are not protected against the risk from the decision outcomes despite signing the documents.
If the employee is regular and systematic, just because they have ‘casual’ written on their forehead it does not mean they are for the issue of annual and sick leave. Just because they sign the documents make no difference.
That said you will need to determine if the casual is indeed a systematic and regular casual. Have a look at the characteristics of Rosseto’s employment as a guiding framework to start and then check back on roster and patterns.
If an employee opts out of becoming a perm full-time or perm part-time employee and wishes to remain a casual, then you need to advise then that they will be treated as a casual in the work allocations. This means that you will not guarantee systematic and regular work and they will get irregular work and no guarantee of consistent work.
Basically – An employee who turns down an offer of permanency can still be found to be a permanent employee if they are continued to be treated like one.
You can clearly articulate to the employee that if they wish to maintain their status as a casual and carry on receiving the 25% casual loading them as a business you need to ensure that you treat them like a causal and there can be no guarantee of regular or ongoing work.
The casual either need to change to a perm full-time employee which means they will collect the benefits from this and lose the casual loading. You may as a business consider a 5% increase to the employee to make up for the loss of the 25% more attractive.
You are not protected from the risk of an employee claiming for the accrued back payment. It is advised that as an employer gets ahead on this and determine who is a risk and start those conversations.
You can use the signed forms to argue in defense that they are not regular and systematic and that you were attempting to interpret the relationship, however …….
If it looks like a duck, swims like a duck, and quacks like a duck,
then it probably is a duck.
Can you use the Job Keeper payment against the potential leave payments due to mitigating any costly payouts?
If you have casuals who you have determined are systematic and regular casuals (as when you lodged the Job Keeper entitlement and set them out as such) then you may be able to off-set the accrued annual leave that you may owe them with the job-keepers.
We advise you to check with a legal expert but you may be able to say to them, of you do not need them to be working at the moment and they are on some sort of job keeper stand-down you are entitled to ask them to take annual leave during this stand down. You will be setting this down now as payment of accrued annual leave. This means that you are paying down any potential annual leave
We are aware of the recent decision in the Federal Court WorkPac v Rosseto and as a consequence to that, we are not clear if you have a leave entitlement however without admitting that you do we are going to putting you on annual leave instead of on stand down and the $1500 that you are receiving from me that is paid to me by the government is going to pay down the leave balance.
Note: This was suggested as an opportunity by Ed Mallett, Employsure in is #weekdaysWithEd on Thur 21st May 2020 – we advise strongly to seek advice before doing this as there is also how will this be reported through the payroll system.
How far do you need to go back to retrospectively?
Employees have 6-years from when they left the employment for annual leave claims. This also applies to public holidays or sick days for the other claims.
If a casual employee ceased working for you but was a permanent employee, then there are potential claims that exists for.
Non-payment of accrued but untaken annual leave
Non-payment of public holidays
Non-payment of sick leave (if they can prove the days)
Where you are in a situation where you had at first been engaged as a genuine casual and then over time they morphed into a permanent employee – their rosters become more fixed – you may need to make the decision when they reached this point and then from them treat them as a permanent employee. If you do not want to bring them on as permanent, then you need to revise the working relationship, so they remain ‘irregular’ casual.
Our contract says in several places that the employee is paid a casual loading that covers the entitlement to leave and sickness – will they still have the right to claim payment of these now
A casual employee is not determined by the statement or the name made in the employment contract or agreement but in the totality of their employment situation. Just because you have it in the contract that they are a casual you can not contract out of the underlying legislation. What remains a grey area is are they regular and systematic or are they true casuals.
You can write what you want in employment contracts but if they are indeed regular and systematic casuals then you can have that it is an increased rate in lieu of the provisions in the award for annual leave and personal/carers leave but it will not override legislation.
Characteristics of In Skene v WorkPac Pty Ltd Skene
Work 7 days on, 7 days off on a continuous roster
His roster was determined at the start of each year for the coming team with the same team
If the Modern Award that is applicable to our workplace and employees says that you can pay a leave loading and it has the flexibility provisions is this not enough.
Short answer is no. You cannot rely on the fact that you are paying this loading as a defence and way to mitigate the risk. If the employee is a regular and systematic employee as was the case is Rosseto then you are at risk of having to pay the employee entitlements.
What is the interpretation of predictable working times?
Working regular, set rosters with the same work team, planned a year in advance with the expectation that the employment will continue and which contemplated that he had to turn up to work with the team, meant that the parties intended his to be a permanent employee – not a causal
At what rate do you pay the annual leave backpays
You will pay the annual leave at the ordinary rate of pay without the 25% leave loading. Note however that it is important to keep accurate records and as extra protection also document the payments and get the employee to sign off receiving this.
I have casuals that work a 3-6month period for a specific job – is that a casual
Fixed-term contracts – the risk here is that it is not fixed term but ongoing – you need to ensure that this is a genuine working relationship that is that of a fixed term. Start date and an end date and not just a way to avoid the obligations of paid entitlements. It is suggested that you have clear and concise employment fixed-term contracts that clearly define what the working relationship
Are the casuals not then ‘double-dipping’ as they get 25% loading – are they then essentially getting the same money twice?
In this decision, the Federal court says no. The Fair Work Act does not provide for ‘entitlements or their cash equivalent’, it just provides for entitlements. “casual loading is in the nature of compensation for an absence of entitlement, not a payment in lieu of taking the entitlement.”
In other words, being paid casual loading does not in and of itself make someone a casual employee.
It is noted that in the case of WorkPac v Rossato – the pay was an increased amount, but it was not clear that the increased amount was for the fact he was classed as a casual. We recommend and strongly advise that in your payroll you have it clearly distinguished that there is a line for ordinary hours and another for the casual loading of 25%.
Can you offset any casual loading already paid against any potential amount owed?
No – in this case the court also found that employers were not able to offset any casual loading already paid to the employee against the amount owed.
In this case the Court refused to accept that the casual loading, included in the hourly rate, was paid by WorkPac by mistake, or as a consideration which had totally failed. The Court could not rule out that the hourly rate merely reflected the market rate for guaranteeing Mr Rossato’s service.
If the Award that applies to the casual says that it has a 25% loading does that cover it
If their work is consistent, regular or long term this decision confirms they cannot be categorized as ‘Casual’. And they are entitled to be paid leave etc– irrespective of what hourly rate the employer chooses to pay them.
The government introduced some regulations to say that employees in that circumstance should not be able to double-dip. The intention was that if an employee has been paid a separately identifiable casual loading and later found to be a permanent employee, they would not be able to double-dip on permanent entitlements (i.e. the employer should be able to offset the casual loading paid against any entitlements claimed).
In the Rossato case, the court found that the employer could not rely on the regulations (for quite technical legal reasons), but this has cast doubt on whether the regulations can be relied upon by any employer. This is one of the reasons why the case may be appealed and/or the regulations may be amended.
What can we do to protect ourselves and manage the risk of claims?
You need to look at where you are now. Look at all your casual staff and determine what the relationship is. If they are employed like a perm staff member then the likelihood.
The court, in this case, decided that the elements of a casual employee must include:
The option for employees to accept/decline shifts
No commitment required in advance
Do not just continue as you have in the past and hope no one makes a claim. Identify the casual employees (past and present) who may not have been employed as a casual and assess the potential exposure to your business of any claim
Identify the employees
Look at their length of service
Work out the pro-rata entitlement to paid annual leave
Work out the number of public holidays they did not work
Assess records of any unpaid leave
Review your contracts of employment to determine what set-off entitlements you may have. Make sure your contracts for casuals record the true relationship
be more diligent in classifying casuals, as employees who work set, inflexible hours with a degree of certainty about ongoing work are unlikely to be ‘casual’.
Continue to pay casual loading and have a liability for paid leave as well.
Identify which employees do not want to change their ‘casual status’ and consider a plan to negotiate with these employees to agree to set-off
review and monitor your casual workforce: employment arrangements may change during employment and if a casual is no longer a casual, consider converting their employment status to permanent to mitigate any potential exposure (particularly where a casual employee is covered by a modern award containing a casual conversation clause);
Determine the structure of your business and if casuals are the right choice. A long-term casual may be significantly more expensive that a perm employee.
Begin to plan a negotiation on managing for.
Claims for accrued untaken annual leave by past employees (have a deed ready)
Provide for increased annual leave/ personal leave liability on the books
If you are receiving Job Keeper – consider whether you can direct the ‘casual’ employees to use some of their accrued annual leave entitlement
Consider whether any applicable award permits cashing out annual leave but remember there must be an agreement for cashing out accrued annual leave.
What to do to avoid the WorkPac Trap?
If using casuals, the greater the variance in the hours and times they work the better chance you have of defending any claims and showing that they are true casuals
Have a greater variety of hours and times
Have a pool of casuals to allow a variance
Have irregular hours of work with no guarantee of any days or set hours
Ensure casual have no reasonable predictability that their work will continue
Roster casuals a week or at most a fortnight in advance
It is also recommended that you have a system to show if challenged that the hours were open to the employee to accept the hours or decline them. This was it does not set up an expectation of regular work. If an employee if certain of hours week in week out there is a risk, If you have a system that when you send out the work available the employee has the options to accept or decline the greater the protection.
Better late than never! If as a business you have patchy engagement documents or are concerned that you may not have consistently applied the exiting casual conversion process as set down in the Modern Awards then it is strongly recommended that you issue all staff with confirmation of employment agreements and include the casual conversion letters as appropriate. Fresh HR Insights can help in this so please contact us.
Note: Failure to undertake the Casual Conversion Process as set out in the Modern Awards is a breach under the law and can result in penalties for the business. Let us help you get this right.
Unfair dismissal claims are every employee’s worst fear. Here are some common cases and scenarios of unfair dismissal in Australia that everyone should know about and learn to avoid. If you are an employer, you can learn to avoid such happenings through the correct HR procedures.
What Constitutes As Unfair Dismissal?
According to Australian workplace laws, legislation and the Fair Work Act, unfair dismissal refers to an instance whereby an employee is dismissed from their position in an unreasonable, unjust or harsh manner.
A dismissal can be considered harsh, unjust and unfair if the worker was:
Dismissed in any manner listed above;
Let go without the correct dismissal procedure;
Not provided with the opportunity to have a support person
Not given an opportunity to respond
Or dismissed by a small company that did not follow the Small Business Fair Dismissal Code.
COVID-19 And Unfair Dismissal
This has to be the most relevant scenario out there due to the global pandemic that is currently wreaking havoc on everyday life (as at April 2020). With the unsettled economy and some forced self-isolation and quarantines in Australia, the workforce is looking a little unsteady as well, at that in some cases may be a massive understatement with Hospitality and tourism pretty much disseminated.
Know this, the workplace laws are still in place and unfair dismissals that are related to the pandemic will be treated like any other dismissal case. There have been updates and advice posted on the Australian Fair Work Commission website – it is strongly advised that all employers make themselves familiar with these. At present, the gist of it is that there are procedures in the works for businesses that are impacted by the pandemic.
It has been encouraged that employers and members of the workforce work together to maintain business continuity. The goal is for beneficial and workable solutions to be found for each workplace and circumstance. It is in times like this that treating your teams correctly could be the difference in how you come out into what Fresh HR Insights has coined “the new world of working”.
The current options for employees that aren’t able to work include paid leave and unpaid leave. Updates on this can be found on the official website along with other options and scenarios for workers and businesses alike. Included in the listings are entities that are eligible for government financial support. Accountants are all over the JobKeepers so it is advised that you make sure you have made contact with them and
Sham Redundancy (not a genuine redundancy)
This is a pretty common sight within the category of unfair dismissals. Sometimes an employer will terminate a member of their workforce for alleged ‘redundancy’. The truth of the matter is usually uncovered upon investigation.
The way that this sham is revealed as such is when:
The worker could have offered assistance, retrenched, in another area of the company;
The vacated position needs to be filled by another therefore the work was still there;
Or the company failed to consult with the worker before deciding to make their position redundant.
It is STRONGLY recommended that an employer always gets advice when looking at redundancy. All awards and registered agreements have a consultation process for when there are major changes to the workplace, such as redundancies. The consultation process sets out the things the employer needs to do when they decide to make changes to the business that are likely to result in redundancies.
A failure to comply with those consultation obligations means that an employer:
will not be able to establish that a person’s dismissal was a case of “genuine redundancy” under s389(1)(b) of the Fair Work Act (FW Act) and therefore is at risk of an unfair dismissal claim;
may be required to participate in a dispute settlement procedure under the enterprise agreement if this is activated by a union/employees; and/or
may be ordered by a Court to pay penalties and/or compensation for breach of an award/agreement (in addition, interim orders may be made including temporarily preventing the employer from implementing any redundancies).
Plain and simple, it is unlawful to terminate a worker if there is any hint that it is on discriminatory grounds. This includes but is not limited to an employee’s sex, age, familial responsibilities, nationality, political opinion, religion, marital status, sexual orientation or race.
Thankfully this is not one of the top reasons for unfair dismissal cases these days, but these cases do still occur and it’s crucial that, as a company, any dismissal is not construed as having a discriminatory basis.
It’s not discrimination if the actions:
are allowed under state or federal anti-discrimination law
are taken against an employee of a religious institution to avoid harming the organisation’s religious beliefs
do not relate to one of the protected attributes, or
relate to the necessary requirements of the job.
When A Workplace Right Was Exercised
Believe it or not, simply exercising one’s right has gotten employees sacked in the past. It is against workplace laws for anyone to be dismissed for intending to or exercising a workplace right. This would be a breach of the general protection’s provisions of the Fair Work Act of 2009.
Included within the category of workplace rights is a rightful benefit claim, participating in procedures, filing a complaint – the list goes on. General Protections claims are often difficult to navigate and can have costly implications.
The general protections have been introduced to:
protect workplace rights
protect freedom of association
provide protection from workplace discrimination, and
provide effective relief for persons who have been discriminated against, victimised, or have experienced other unfair treatment.
A person (such as an employer), must not take any ‘adverse action’ against another person (such as an employee), because that person has a workplace right, has exercised a workplace right or proposes to exercise that workplace right.
Adverse actions that can be taken against an employee or potential employee might include:
not giving them their legal entitlements
changing their job to their disadvantage
treating them differently than others
not hiring them
offering them different (and unfair) terms and conditions, compared to other employees.
Terminations Without Due Process
If an employer does not follow the proper dismissal process (be procedurally unfair), the terminated employee is at liberty to file for unfair dismissal. As a business, this is where knowing and exercising the correct disciplinary process is crucial. We have seen many a case where a dismissal was deemed to have been a fair reason BUT the process was deemed to be harsh and therefore the employee was awarded compensation. Don’t let this happen to you – a simple call or email to our team can save you costs that don’t need to be incurred.
All workers should be given the chance to improve before dismissal. If it comes to be that this opportunity was not offered to the dismissed employee, it can serve as grounds for an unfair dismissal case.
Here are a few circumstances that are covered by unfair dismissal laws:
The proper training was not provided for the position.
The poor performance was out of the employee’s hands.
The worker has a good explanation for not performing according to expectations.
There was no warning that performance needed to improve.
It was not explained that performance was lackluster.
This is just the start, there are so many cases out there where the proper procedures were not followed. This is not just bad for employees, as if it is proven that the employee termination was unfair, it does not reflect well on the company.
Check out Fresh HR Insights for HR support services and consultancies that you might not even realise you need.
The human resources department is often the heart of a company. Did you know that they can also be added to your business virtually?
What Is Virtual HR?
Virtual Human Resources refers to the process of providing a range of services within this department through various technological channels. A virtual HR department uses technology to connect HR services with the workforce rather than having a physical presence within the business’ premises.
The way that this is achieved is through self-service platforms where workers provide data directly into the channels thereby avoiding having to reach out to a third party for the service. The demand for Virtual HR has increased as more businesses seek to reduce costs in their HR departments. Additionally, virtual HR has been found to offer users a competitive edge and a reduced risk compared to traditional HR outsourcing. The main virtual HR functions that exist include virtual training, onboarding and recruiting. Virtual HR can be offered in packages, as software and more.
COVID-19 has catapulted the need as well as the technology that allows for virtual HR. From ZOOM meetings including disciplinaries and performance management to team meetings and get togethers. What has been a challenging time for all not just on the Gold Coast but Australia wide has actually shown immense innovation in what we can actually do virtually.
Advantages Of Virtual HR
At present, whether you are using outsourced experts or an in-house team for HR services, the fact is that good HR is a necessity in any business. Human resources professionals are the lifeblood of the company because their job is to ensure that the business gets the most out of its employees. Unfortunately, the costs of hiring or running a good HR team is often pretty high. Here are five of the top advantages of using virtual HR.
For some, HR services are more of an afterthought or “as needed” practices, only being brought in when there’s an issue. This is somewhat limiting as ongoing practices and procedures are often integral to smooth sailing in a business. For instance, let’s say that concerns aren’t being addressed on a regular basis, your workforce may end up feeling demotivated and unsupported. The goal is, as always, to keep productivity steady and the bottom line in mind.
This is where virtual HR would come in. HR functions and services can be better integrated across the board. This would allow for an extended reach and ensure higher efficiency in integral functions throughout the entire workforce of the business.
Ongoing Performance Reviews
Instead of the once-a-year meeting companies tend to have on performance reviews, virtual HR can monitor workforce performance continuously. This will allow you to collect data on a larger scale and in turn make it easier to identify bugs as they happen. This can include employee feedback and correspondence which, if done right, will make your workforce feel valued, engaged and assisted.
Virtual HR allows companies to do more with less. This practice promotes self-service among employees. Other HR services like payroll are done with automated ease which eliminates human error and the expense of company resources.
Another top advantage that the use of virtual HR brings is the reduction of overhead costs. Thanks to virtual HR, having a physical human resources department filled to the brim with employees and other costs is not a necessity. The integral functions and practices of HR can be present in a company without the “middleman”.
Imagine you have a chain of business locations, having a physical HR presence in each will prove taxing on your company resources. It’s possible to still have an efficient workforce and only one HR department running the show thanks to virtual HR. You also do not have to pay superannuation (in most cases) on the cost of the virtual HR team
Being Everywhere At Once
It is no longer a necessity to be physically present in the world of business. This might have seemed like a strange made-up concept a few years ago but it is entirely possible to achieve an entire department’s tasks without having a set of HR offices in your company building. Coupled with the fact that your reach is actually extended through the use of virtual software means that physical location is no longer a hindrance and HR services can be accessed anywhere with just a few clicks of a mouse.
If you’re looking to streamline your processes, check out Fresh HR Insights for HR support services and packages that you might not even realize you need! Did you know that we offer a system of hours as opposed to a monthly fee.
We also do not run a call center – you get direct access to an employment relations expert whenever you need assistance. We help you resolve HR/ ER issues & put a plan in place to avoid future problems. The hours in our HR/ER support bundles include phone, emails, forms, correspondence letters, advice, policies, procedures and onsite meetings. Find out more HERE https://www.freshhrinsights.com.au/hr-er-advice-line/
Stand-downs, voluntary leave, redundancy and working at home are hot topics in today’s environment. Today, David interviews Paulette McCormack from Fresh HR Insights who helps us slice through the complexity. Contact us for hr support services.
This payment and requirements can potentially cause issues for all businesses.
We strongly advise that is you aren’t clear on something or want to discuss actions that you need/want to take, that you discuss it with the relevant professional. This will be helpful for small business hr compliance.
If you need Business Consulting and Bookkeeping Assistance, Belinda’s details are below
Clerks Award flexibility during outbreak of coronavirus
The determination inserted a temporary new Schedule, which applies from an employee’s first full pay period on or after 28 March until 30 June 2020. Schedule I adds award flexibility to the Clerks Award flexibility during the coronavirus outbreak for:
employees’ classifications and duties
minimum engagement/pay for part-time and casual employees
span of hours changes while working at home
full-time and part-time employees’ hours of work
directions to take annual leave.
The Commission may extend when Schedule I operates until, if necessary. We’ll update our information if that happens.
The following changes apply under Schedule I, for employers and employees covered by the Clerks Award.
Annual leave and close down of business – Clerks Award flexibility
Employers can direct an employee to take annual leave under Schedule I by giving their employees at least 1 week’s notice (or any shorter period of notice that is agreed).
If the annual leave is because the business is closing down for a period due to coronavirus and an employee doesn’t have enough paid annual leave to cover the whole period, the employer can direct them to take unpaid leave. The period of unpaid leave counts as service for entitlements under the:
National Employment Standards.
If the business isn’t closing, the employer can only direct an employee to take annual leave if the:
employee still has at least 2 weeks of leave left after the direction
employer considers the employee’s personal situation.
Employees can take up to twice as much annual leave at a proportionally reduced rate if their employer agrees.
Employees and employers can still agree to take annual leave at any time.
You can find more information on Coronavirus and Australian Workplace Laws HERE
Importance of Updating and reviewing your company policies and procedures
Employee handbooks should be reviewed and updated at least on an annual basis, and an employer may want to consider reviewing the handbook every six months. While the core elements of policies and procedures may stay the same the details should change according to industry standards, organizational needs, or legal requirements. In addition, policies should line up with the company’s mission, vision, and values and these may change.
The REALITY is however that small business owners do not have the time to constantly update or amend the policies and procedures that they have in place. And it is not a legal requirement in Australia. BUT as an employer, you have a legal responsibility to inform your employees of their casual employment rights and responsibilities even if there is no federal or state law that requires you to have an employee handbook.
BUT an employee handbook is a great way to induct new staff into your Company and give existing staff a document they can reference at any time to keep their knowledge of workplace policies and procedures up to scratch.
Writing an employee handbook from scratch is a big undertaking. You have to explain a lot of rules and guidelines in a way that is easy to understand yet detailed enough to get the full message across to your employees.
Flexible working arrangements – 1st December 2019 affecting all modern awards – additional obligations in regard to arrangements and request for flexible working. Flexible work is now a model term in all Modern Awards. Under the model term, employers must actually have a discussion with employees who make a request and try to come to a genuine agreement. The obligation to discuss did not exist under the Act. Employers must also provide a written response explaining any grounds for refusal of the request.
Casual Conversion – October 2018 – many modern awards received a new clause that provided casual employees with an entitlement they did not have before. As of 1October 2018, ‘regular casual employees’ may request that their employment be converted to full time or part-time employment.
Family and domestic violence leave – The Fair Work Amendment (Family and Domestic Violence Leave) Act 2018 took effect on 12 December 2018. The FW Act now includes the right for workers to take up to five days of unpaid family and domestic violence leave per year as part of the NES. This extends the right to all workers, beyond the coverage of the award system.
Termination Payments – A new termination payment clause has been included in some modern awards. This clause imposes a requirement that on termination an employer must pay an employee’s outstanding wages and other entitlements no later than seven days after the day the employment was terminated. Common modern awards that now have this clause include:
Clerks – Private Sector Award 2010;
General Retail Industry Award 2010; and
Banking, Finance, and Insurance Award 2010.
First Aid Allowance – Clerks – Private Sector Award 2010– need to be paid the full weekly amount regardless of the hours that they work and not pro-rata.
As of 1 January 2020, employers are required to pay superannuation on their employee’s gross pay. This also includes any salary they have sacrificed. Salary sacrifice arrangements will change from January 2020 and it’s important you let your affected employees know. It is now no longer possible for the employer to pay an employee on a salary sacrifice agreement on the reduced amount of super. Read more about casual employee termination.
IMPORTANTLY on the 1st March this year (2020) there are a number of awards being affected by changes – you can read about it here (HERE) What happens if you do not comply??
The proposed new clauses will fall into one of three categories and have specific requirements:
Category 1 – includes modern awards which cover employees who work relatively stable hours. The Commission determined that the annualized salary term for this category will not require an employee’s agreement to the introduction of an annualised salary arrangement. The employer may implement an annualized salary in this category without employee agreement;
Category 2 – includes modern awards that cover employees who work highly variable hours and/or significant ordinary hours of work which attract a penalty rate. The Commission determined that the annualised salary term for Category 2 modern awards will require employers and employees to agree on the application of an annualized salary arrangement; and
Category 3 – includes modern awards that currently provide that the annualized salary be an amount not less than a specified percentage above the minimum weekly wage set out in the modern award (e.g. 25% in the Restaurant Award). The FWC determined that the annualized salary term for Category 3 modern awards will require employers and employees to agree on the application of an annualized salary arrangement. The clause will only apply with respect to the non-managerial staff.
As of 1 March 2020, employers are also required to pay employees for any overtime worked if their salary does not include overtime.
From 1 March 2020, if an employer discovers that an employee received less pay on their annual wage agreement than if they were paid under the award, it’s your responsibility to pay your employees the difference. This payment is required to be paid within 14 days and the process needs to be undertaken every year. This is also applicable upon the termination of contracts.
Employers must now keep records of when their employees start and finish work, and when they take their breaks.
From 1 March 2020, a failure to comply will amount to a breach of a modern award—colloquially referred to by the media as “wage theft”—and will attract civil penalties under the Fair Work Act 2009 (Cth).
New annualised salary award provisions will apply from 1 March 2020
As part of the four yearly review of modern awards, the Fair Work Commission (FWC) has recently handed down a decision which will impact employers paying annualised salaries to employees covered by a modern award with an annualised salary clause. The FWC decision on annualised salary award provisions finalises the terms of three new standard ‘annualised wage arrangement’ clauses, which will replace the existing annualised salary clauses in the 19 modern awards already containing an annualised salary clause. The new terms will also be inserted into three modern awards which have not previously had an annualised salary clause.
What is an annualised salary arrangement?
Annualised wage (or salary) arrangements are permitted under a number of awards and allow an employer to pay a fixed annual wage in satisfaction of various award entitlements, including minimum weekly wages, allowances, overtime, penalty rates and annual leave loading. Most of the existing annualized wage award provisions are relatively simple to apply and allow employers a reasonable degree of flexibility and convenience when managing remuneration arrangements.
What is changing with annualised salary award provisions?
The new award annualised wage provisions are in generally consistent terms but there are important differences and employers should carefully review the arrangements for each award covered employee in their business to ensure compliance. Key changes to the award annualised wage provisions include:
An employer may pay a full-time employee an annualised wage in satisfaction of minimum weekly wages, allowances, overtime penalty rates, weekend and other penalty rates and annual leave loading;
The employer must advise the employee in writing and keep a record of:
o the annualised wage to be paid;
o the provisions of the award to be satisfied by the annualised wage;
o the method by which the annualised wage is calculated, including specification of each separate component of the annualised wage and any overtime or penalty assumptions used in the calculation;
o the outer limit number of ordinary hours which would attract payment of penalty rates under the award in a pay period or roster cycle; and
o the outer limit number of overtime hours which the employee may be required to work in a pay period or roster cycle;
If an employee works hours in excess of either of the outer limits specified above during a pay period or roster cycle, those hours are not covered by the annualised wage and must be paid separately in accordance with the applicable award provisions. That is, these amounts must be paid on top of the annualised wage;
The annualised wage must not be less than the minimum amounts payable under the award for work performed over the year for which the annualised wage is paid;
Each 12 months following the commencement of the annualised wage arrangement or upon termination of the employment, the employer must calculate remuneration payable under the award and compare it to the annualised wage actually paid to the employee. Any shortfall must be rectified by the employer within 14 days;
The employer must keep a record of the start and finish times, including any unpaid breaks taken, for each employee who is party to an annualised wage arrangement. This record must be signed by the employee or acknowledged in writing as being correct during each pay period or roster cycle. An electronic acknowledgement will be acceptable; and
The model award clause to be inserted into certain awards where employees typically work highly variable hours requires that the employee and employer agree to the annualised wage arrangement (ie, employee consent is required) and allows either party to terminate the arrangement by giving the other 12 months’ written notice.
What should employers do to prepare for these changes?
We expect that many employers will find the new annualised wage arrangements difficult to implement and time-consuming to manage. Given this, employers should review the annualised wage provisions that will apply to your business from 1 March 2020 and start preparing for the introduction of the new arrangements or alternatively, seek advice about other compliant options.
What awards are affected by the new obligations?
Model Clause 1 will become the standard annualised wage arrangements clause for awards under which employees generally work relatively stable hours, namely the:
Banking, Finance and Insurance Award 2010;
Clerks – Private Sector Award 2010;
Contract Call Centres Award 2010;
Hydrocarbons Industry (Upstream) Award 2010;
Legal Services Award 2010;
Mining Industry Award 2010;
Oil Refining and Manufacturing Award 2010 (clerical employees only);
Salt Industry Award 2010;
Telecommunications Services Award 2010;
Water Industry Award 2010; and
Wool Storage, Sampling and Testing Award 2010.
Model Clause 3 will become the standard annualised wage arrangements clause for awards under which employees work highly variable hours or significant ordinary hours which attract penalty rates under the award, namely the:
Broadcasting and Recorded Entertainment Award 2010;
Local Government Industry Award 2010;
Manufacturing and Associated Industries and Occupations Award 2010;
Oil Refining and Manufacturing Award 2010 (non-clerical employees);
Pharmacy Industry Award 2010;
Rail Industry Award 2010;
Pastoral Award 2010; and
Horticultural Award 2010.
The FWC has deferred the insertion of:
Model Clause 3 in the Health Professionals and Support Services Award 2010 for supervisory and managerial staff; and
Model Clause 4 in the Restaurant Industry Award 2010, the Marine Towage Award 2010 and the Hospitality Industry (General) Award 2010 in respect of non-managerial staff,
as it further considers these changes. A new operative date for these changes will be determined later.
New annualised salary obligations coming into effect from 1st March 2020?
Will you be ready?
The Fair Work Commission (FWC) have introduced three new annualised salary obligations clauses, as part of their four-year review. Each of the clauses were created to represent the work patterns and habits relative to each industry, and then allocated to each of the 22 modern awards affected. If you identify with any one of these awards, then now is the time to start examining your agreements both new and old, to ensure you are ready for the change’s effective 1st March 2020.
The clauses incorporate significant changes with the annualised salary obligations including but not limited to:
New written requirements incorporating notification of how the salary was calculated, noting weekly hours of work and relevant award obligations, and in some cases setting limits on maximum hours included in remuneration (with additional payments required if exceeded);
New record keeping requirements. It is now compulsory for all salary employees to keep signed accurate time and attendance records including start time, finish time and unpaid meal breaks taken;
New wage reconciliation requirements. Every 12 months a reconciliation must be conducted using the time sheets and based on the award payment due, if they were paid as per the award. If a shortfall is identified between what was paid and what the award would have paid, then this must be paid to the employee;
In addition, a year to date reconciliation must also be completed upon termination with any underpayments to be paid within 14 days;
Employers need to ensure that they have the infrastructure in place to comply with the new record keeping requirements, wage reconciliation process, and managing remuneration for overtime payments if required.
The team at Fresh HR Insights are watching this changes carefully and will be in touch with our clients in due course for how it will impact them and the tools are have created to make this as easy as possible. If you are not a client of ours and need some support please email us on email@example.com
“Regular” casual employees covered by an award have a right to request that their employment be converted to permanent employment, following decisions by the Fair Work Commission (FWC) last year. A Full Bench of the FWC has now made some changes and clarified a few matters in another decision released earlier this month.
Who is a regular casual?
A regular casual is an employee who has over a calendar period of at least 12 months worked a pattern of hours on an ongoing basis and could perform the same work as a permanent employee without significant adjustment being required.
Such an employee can request a conversion to permanent employment, but must do so in writing. The employer can agree to or refuse the request, but can only refuse on “reasonable grounds” and after consultation with the employee.
What has been changed?
The FWC considered submissions from a wide range of parties, and its decision will make the following changes
The 12-month eligibility period will become a rolling period, not a one-off, so the employee’s right to request conversion will remain continually exercisable.
Casual employees who have worked an average 38 hours per week over the 12 months and are seeking conversion to full-time employment will now be required to have worked “equivalent full-time hours” over 12 months. This change is to allow for the fact that the employee may have taken periods of leave that could have reduced his/her average.
An employer’s grounds for refusing a request must be “based on facts which are known or reasonably foreseeable” (eg that the job will not exist in 12 months’ time), not speculative or based on a general lack of certainty about future needs.
The requirement that the employer and part-time employee agree in writing on the terms of employment (days, hours, start/finish times, breaks, overtime and notifying variations) have been clarified by standardising the provisions – in some awards, the employer was previously only required to “inform” the employee.
Three awards that previously did not have casual employment conversion clauses will now have a clause inserted.
Minimum engagement for casual and part-time employees
This decision also clarified the minimum engagement period for employees to mean that that they must be engaged and paid for at least two consecutive hours on each occasion that they are required to attend work. This means that an employee must be paid for at least two hours every time he/she is called in, which in turn that an employee called in twice on the same day must be paid for at least two hours each time. Previously an employee could be called in twice or more but only paid for two hours.
The FWC also made some other changes to minimum engagement period provisions in some specific awards.
4-yearly review of modern awards – part-time employment and casual employment FWCFB 4695, 10 August 2018
More news on casuals
In another recent decision by a Full Bench of the Federal Court, a large number of employees currently described by employers as ‘casuals’ could in fact be permanent, thus removing any need to request permanent employment Read more here.
Employees Permanent Full-time Permanent Part-Time explained. The type of employees that you choose to meet your business requirements is a very important decision. Business owners need to be aware of the legal ramifications relating to each employee type and manage them accordingly and appropriately. Businesses should follow ‘best practice’ to reduce the costs, minimise legal exposure and develop an engaged workforce. A well-designed Recruitment Process and New Starter documents also goes a long way to ensure your processes and procedures are effective. This also help integrate new employees for the long haul and not just a passer bye.
Once any employee has been hired, they must be given the Fair Work Information sheet thereby ensuring the employer meets their obligations under the FWA.
This is the most common employee relationship. These individuals are employed on an ongoing and full-time basis. There isn’t a formal definition of permanent full-time however, it is generally taken that they work a 38-hour week or longer. Under the Fair Work Act 2009 (FWA), if an employee is employed on a full-time basis but there has been no agreement of their ‘ordinary hours of work’, these can be considered to be 38 hours per week. When it comes to dismissal these workers generally have access to the complete range of legal remedies unless it is explicitly stated otherwise in their award. Damages awarded to a permanent employee would typically be higher than those awarded to a casual or fixed-term employee.
There is also no formal qualification of part-time hours, however, it is understood that they generally work less than 38 hours per week. They are different to casual employees in that they typically work the same hours each week. As defined by modern awards, they work ‘reasonably predictable’ or ‘constant’ weekly hours. When it comes to dismissal these workers generally have access to the complete range of legal remedies unless it explicitly states otherwise in their award. Damages awarded to a permanent employee would typically be higher than those awarded to a casual or fixed-term employee.
We all know that it can be frustrating when you have an employee who you may have given an advance to, provided equipment to or where uniforms have not been returned on departure and you want to get it back BUT you need to know before you act what you can and cannot do.
HERES THE BASICS
An employer is prohibited from making any deduction from an employee’s wages without the employee’s specific authority and, even then, when this authority is obtained, such deduction can only be made for the purpose of paying a third party, for the benefit of the employee in accordance with the Fair Work Act.
The Fair Work Act provides that an employer may deduct an amount payable to an employee if:
The deduction is authorised in writing by the employee and is principally for the employee’s benefit;
The deduction is authorised by the employee in accordance with an Award or Enterprise Agreement; or
The deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a Court.
Some examples of deductions from an employee’s wages by an employer that could breach the Fair Work Act include:
Deductions to cover shortages from cash registers;
Cost of training courses provided to an employee where the employee is directed to attend by the employer;
Cost of a mobile telephone provided to the employee for work-related use;
Cost of tools and equipment supplied to an employee for work purposes;
Cost of damages to the employer’s assets (including motor vehicles);
Cost of breakages or accidents; and
Cost of an employee’s uniform
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It is extremely important for employers to be aware of the national minimum wage rate. By law employees must be paid the minimum wage for difference kinds of jobs under relevant Industry Awards. It is okay to pay employees more than the minimum wage, however some employers are paying less which can come back to bite them. Many employers can become complacent or even unaware of the minimum requirements, and this can lead to unwanted problems for the business.
Finding the right award can be difficult and time consuming for many employers, however it is in their best interest to ensure employees are being paid the minimum award rate. The Industry Awards can be found on the Fair Work website under the industry in which you business is conducted. This can be confusing at times for employers to find the correct Award for a particular role. Yet, it would be in their best interest to seek further advice to ensure they are paying their employees correctly.
It should be noted that different pay rates apply to casuals, who receive 25% loading on top of the minimum wage to make up for not receiving annual leave or personal and sick leave. Juniors, who are usually under the age of 21, will generally receive a lower wage which is calculated as a percentage of the relevant adult pay rate. Another important fact to remember is that employees must be paid correctly for all hours they work. This includes time spent training, in meetings, opening and closing the business and in some cases doing a trail shift.
Employers must be responsible for checking minimum wage rates on a yearly basis as each year the Fair Work Commission reviews the national minimum wage and pay rates under awards. The changes made will be published and begin from July, meaning that employers must pay their employees the correct wage from the first full pay period on or after 1st July.
There have been previous incidences where over a period of time employers have paid their employees below the minimum wage. Once this has been noted by the employee it has resulted in the business having to back pay. Being that it is generally a lump sum of money that is owed, it can be quite difficult for the employer, especially if running a small business, to acquire this money in a short period of time.
Overall, it is in the best interest of the business to continually check minimum wage rates to ensure every employee is being paid correctly. Whether they are full-time, part-time, casual or juniors, employers have a duty to ensure they are paying their employees correctly.
If you need help with your pay rates, awards or just want to get peace of mind that you are paying the right amount – contact us today
Having an employment contract did not prevent a former employee from claiming payments for additional hours worked because the contract failed to clearly express which entitlements were included in her annual salary.
As an administration coordinator, Ms Stewart was employed by Next Residential Pty Ltd (Next Residential) with an annual salary of $78,000. Her employment was terminated in January 2016, and she lodged a claim of underpayments of $30,000.
Ms Stewart alleged that Next Residential had not paid her overtime and lunch breaks as required by the relevant award. The award, in this case, was the Clerks – Private Sector Award 2010 [MA000002].
Next Residential claimed any additional hours worked were not directed by the company; any additional hours worked were offset by early finishes, late starts and half days, and, as per her contract, she was paid an annual salary, which took into account additional hours worked. The contract stated “Your salary is inclusive of any award provisions/entitlements that may be payable under an award” and “Your remuneration takes [reasonable] additional hours of work into account and no further payment will be made for extra hours worked.”
The Clerks – Private Sector Award 2010 [MA000002] contains a clause permitting employers to pay employees an annualised salary in satisfaction of minimum weekly wages, allowances, overtime and penalty rates and annual leave loading. The clause states that the employer is required to inform the employee which specific provisions of the Award would be satisfied by the annual salary.
Ms Stewart argued her contract of employment did not identify the applicable Award and did not inform her of the Award provisions that were satisfied in the annual salary. Consequently, she claimed she was entitled to overtime hours worked and payment for work completed during her lunch break, amounting to $28,984.
Employers may pay employees an ‘all-inclusive rate’ that includes award entitlements, so long as this intention is clearly expressed in the contract of employment. However, under the Award relevant to Ms Stewart, not all entitlements may be included within an annualised salary, for example, meal breaks.
The Court found the contract created uncertainty and confusion by including “any” award provision under “an” award. The provision lacked specificity, and the parties were not alert to the applicable Award or the provisions which were to be included in the annualised salary. Further, the contract appeared to include entitlements in the annualised salary that, under the Award, could not be included.
As a result, the employment contract did not exclude Ms Stewart’s claim because the contract did not clearly indicate which entitlements were included in her annual salary.
Employers often include set-off provisions in employment contracts to provide one all-inclusive rate to satisfy all entitlements under an award or at law. You should review your employment contracts to;
check whether there is a relevant award that applies;
check the specific entitlements under that award that can be set off by providing an annual salary; and
amend and reissue employment contracts where this is not clear, or send out a letter to employees clarifying this.
Specific award entitlements should be included as a minimum and be as specific as possible.
Need help to review your contracts – call us on 1300 332 322.
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