Court decision

Casual employees in the aged care sector

By Joanne O'Brien / 10 August 2021
3 min.
Worthwhile read for: Aged care providers

Aged care providers will be relieved to read that the High Court has clarified the status of casual employees by deciding that a worker will be employed on a casual basis if the contract of employment genuinely reflects a casual engagement.

In two decisions involving Workpac Pty Ltd, a labour-hire company, the Full Federal Court reached the conclusion that to be truly employed as a casual, a worker must have “no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work”. Further, the payment of casual loading by the employer was not a determining factor meaning that long term casual employees could be paid a casual loading and potentially “double dip” by also claiming leave entitlements.

These decisions raised concerns across the aged care sector which has a highly casualised workforce. In an industry that struggles to attract staff and where most employees are women, it is not unusual for employers to allow staff to work regular shifts week in week out, to fit in with their family responsibilities. The possibility of large claims for unpaid leave entitlements against the back drop of providers already struggling to remain viable have caused serious concern in board rooms. 

Concerned about the magnitude of the cost of such claims to all employers, the Commonwealth Government passed amendments to the Fair Work Act 2009 (Cth), introducing a definition of casual employee. The definition is consistent with the court’s requirement that there be “no firm advance commitment” but requires the characterisation of the employment relationship to be at the time the job is offered not at the time a claim is made. 

The amendments also addressed double dipping. Where an employer can demonstrate that casual loading has been paid to an employee subsequently found entitled to national employment standard entitlements, the court can reduce the amount payable to the employee. However, the reduction cannot go below zero and result in the employee be liable to make any payment to the employer.

The High Court appeal was already underway when the amendments commenced. The court’s decision provides clarification as to how employment contracts should be interpreted.

If the employment relationship is clearly expressed in an employment contract as being casual, then it will be a genuine casual employment regardless of: 

  • how the relationship develops over the course of the employment; or
  • the expectations of the employee.

Payment of casual loading in lieu of entitlements is still a strong indicator of casual employment, reducing the risk of double dipping claims.

This does not mean that employers can avoid their obligation to provide entitlements required under the national employment standards by simply labelling an employee as casual. However, this decision, combined with the amendments to the Fair Work Act should make aged care providers more confident to continue their usual arrangements with casual employees.

For more information, please contact our Aged Care team.

Joanne O'Brien
Joanne O'Brien is a Partner in the firm, and a sector specialist in the Health and Aged Care and Not-for-Profit space.

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