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Casual or permanent? Know your employees’ work status to avoid disputes

24 September 2018 | Sonya Black, LLB (Hons), B.Com, Special Counsel – Employment, Avant Law, QLD

It is not uncommon for practices to receive claims of unfair dismissal and underpayment from casual employees, particularly when the employment relationship sours or comes to an end. To avoid disputes, it’s important to be clear about new staff members’ employment status from the outset.  

Many practice staff, such as receptionists and nursing staff, are employed on a casual basis. This is generally mutually beneficial for everyone – employees receive a casual loading and employers and employees enjoy flexibility in their work hours and rostering arrangements. 

However, things can change dramatically if the employer–employee relationship becomes acrimonious or the employee’s employment ends. Casual employees may claim they were actually permanent employees and make an unfair dismissal claim against the practice, and/or allege they were underpaid and entitled to annual leave and sick leave payments. Therefore, practices need to be clear about whether an employee is a casual or permanent employee (either on a full time or part-time basis) from the outset, depending upon the factual circumstances and the reality of what the position encompasses.

Is an employee casual or permanent?

Historically, courts and commissions applied a test of “regular and systematic” work to determine whether an employee was a casual or permanent employee. This test considered whether the employee worked a regular number of hours each week or regular shifts during the week. If they fit these criteria, they were most likely regarded as a permanent employee (this can also include part-time employment).

This changed in 2013 when the Fair Work Commission found that whether an employee is casual or permanent depends on how those terms are defined under the relevant modern award or enterprise agreement. 

Recent decision

This year, the position changed again with a decision by the Full Court of the Federal Court. This found that an employee might be a casual employee for the purposes of award entitlements (such as a casual loading), but might be a permanent employee for Fair Work Act purposes (which is relevant for unfair dismissal protections and annual leave entitlements). It is likely that this recent decision will be challenged, but it is the current law. In this case, the individual was found (on appeal) to be a permanent employee for the purposes of the relevant award and the FW Act.  The Court noted that what typifies casual employment is the absence of a firm advance commitment to the duration of employment, or days or hours worked. It also noted that payment of a causal leave loading does not, in itself, determine the relationship, although it is one consideration.

It is currently unclear how this decision will play out and if an employer will be liable to pay a casual loading and other casual entitlements under an award, and also have to defend an unfair dismissal claim and liability for paying leave entitlements if the individual brings a claim about their employment. The Federal Government is currently considering the potential impacts of the decision.  Practices can mitigate these issues by considering the relevant award definitions for casual employees (see below), and whether there is a risk that casual employment would fail the test set out by the Federal Court above.

Award definitions

Reception staff

Reception staff and practice managers are employed under the Health Professionals and Support Services Award 2010.  

    A casual employee is an employee who:

  • is engaged to work as a casual employee on an hourly basis
  • is engaged to work for 38 hours or less per week
  • is not a part‑time, full-time or fixed term employee.

    A part-time employee is an employee who:

  • is engaged to work less than an average of 38 hours per week
  • has reasonably predictable hours of work (for example, works 20 hours every week or performs certain shifts every week).
  • When read together, these definitions mean that an employee who works reasonably predictable hours cannot be a casual employee. 

Nursing staff

Practice nurses are employed under the Nurses Award 2010.

A casual employee is an employee who is engaged to work as a casual employee on an hourly basis.  There is no link to the definition of a part-time employee. This means that a nurse who works reasonably predictable hours may still be a casual employee.

Unfair dismissal claims

Under the Fair Work Act, casual employees who work on a regular and systematic basis and have a reasonable expectation of continuing employment on a regular and systematic basis are entitled to make an unfair dismissal claim.

You should seek advice before dismissing a casual employee given the risk that the employee may bring an unfair dismissal claim.

Leave entitlements

Under the Fair Work Act, employees other than casual employees are entitled to paid annual leave and paid personal leave (i.e. sick leave and carer’s leave). The recent decision outlined above, found the indicia of true casual employment is “irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability”.If a so-called casual employee works in a regular and systematic way and is found to have on-going employment status, they will be entitled to leave payments (possibly in addition to any casual loading they are entitled to under the relevant award).

Managing casual employees

Practices should consider if the factual circumstances of an individual’s engagement support an employee being classified as a casual or permanent employee. If a casual employee brings a claim and is found to be a permanent employee for the purposes of the Fair Work Act, the practice may have to pay leave entitlements and be unable to offset the casual loading they have paid to the employee as a casual. A casual employee may also be able to lodge an unfair dismissal claim if the practice no longer requires their services.  

Cover for employee contract disputes

Your Avant Practice Medical Indemnity Insurance covers employee contract disputes and will provide defence, advice and support if an employee makes an unfair dismissal or underpayment claim against your practice. The policy also covers discrimination complaints. ^Cover is subject to the full terms, conditions and exclusions of the policy.

More information

For more information on the modern awards visit: fairwork.gov.au

Download our factsheets Employmentand contractor services agreements or watch our webinar: At the front line: risk management for practice managers.

^IMPORTANT: The Practice Medical Indemnity Policy is issued by Avant Insurance Limited, ABN 82 003 707 471, AFSL 238 765. This policy is available at www.avant.org.au or by contacting us on 1800 128 268. Practices need to consider other forms of insurance including directors’ and officers’ liability, public and products liability, property and business interruption insurance, and workers compensation.

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