Paid leave for casual employees

Here’s what you need to know about the recent Federal Court ruling on paid leave entitlements for casual employees.

A Full Federal Court decision handed down on 20 May 2020 has upheld the view that casual employees who have a firm advance commitment as to the duration of their employment or the days and hours they work are permanent employees and therefore entitled to paid leave entitlements. This includes annual leave, paid personal/carer’s leave, paid compassionate leave and payment for public holidays as a permanent employee.

Under the Fair Work Act and Modern Awards, casual employees are entitled to receive a “casual loading”: generally 25% of the base rate of pay of a permanent employee.  This higher rate is paid because casual employees have traditionally missed out on receiving the paid leave entitlements received by permanent employees.

The recent Federal Court decision now means employers with casual workers are at risk of having to backpay certain entitlements, unless they hold documentation from their casual employees that these individuals wish to remain as casuals.

There’s little question certain workers prefer to stay on casual status. Many want the higher rate of pay, while others have family, study or outside commitments that are better suited to casual employment arrangements.

Bottom line? If you have long term casuals (and this can mean as little as 6 months’ service), you need to:

• undertake an audit of your casual workforce to assess whether any of these might be deemed a permanent employee; and
• hold documentation confirming each worker has elected to remain a casual employee and that by accepting the casual loading, they forego the opportunity to make a retrospective claim for permanent employment entitlements.

Need more info on what you should be doing with your casual employees? Contact us here. We’ll guide you through the process.