Casual leave entitlements

Casual leave entitlements may be about to change as a result of a landmark Federal Court decision.

On 20 May 2020, the Federal Court found that because a casual worker’s employment was “regular, certain, continuing, constant and predictable” and he was given rostered shifts well in advance, he was eligible to the same entitlements as a full time employee.

As a result of this decision, millions of regular casual employees may have an entitlement to claim amounts of back pay for annual leave.

What’s the current casual entitlement?

Casual workers are entitled to a higher pay rate than equivalent full-time or part-time employees. This higher rate is called a “casual loading” and is paid because casuals don’t get benefits such as sick or annual leave. The casual loading is typically around 25 per cent of the equivalent full time employee hourly rate.

What case did the Federal Court hear?

The case centres around labour hire firm WorkPac, which employed a worker as a mine worker at two Queensland mines owned by Glencore. The worker was a casual employee, on rolling contracts, over a three-and-a-half-year period.

As a casual, he was paid an extra 25 per cent loading on top of his wage.

But the Federal Court found that because the worker’s employment was “regular, certain, continuing, constant and predictable”, and he was given rostered shifts well in advance, he was eligible to entitlements that full time employees receive.

What’s the impact of the decision?

The Federal Court decision means that regular casuals may be entitled to receive paid annual, compassionate and personal leave like permanent employees. Industry groups estimate the judgment could affect more than one million workers across the country and cost businesses $8 billion.

Community response to the decision

Labor’s Industrial Relations Minister Tony Burke said the decision was “a big win for Australians who have been working permanent hours but have had a minority of employers treat them as though they were casuals”.

Industrial Relations Minister Christian Porter has said the government would consider intervening in the case to change the law on casual leave entitlements and could back any appeal to the decision to prevent what some employers are calling “double-dipping” of casual entitlements.

Will all casual employees be eligible for these benefits?

The decision will not automatically apply to all casuals (such as those who work infrequent shifts and irregular hours) but it could prompt workers who have “regular, certain, continuing, constant and predictable” employment to question whether they are entitled to the benefits associated with ongoing employment.

Where to from here?

Given the possibility of an intervention from the government or an appeal from employer groups, there’s no telling where this one might end up…or when. In saying that, smart employers would be well positioned by taking advice now around managing their HR risk on casual leave entitlements, including having employment documents that specify define what benefits casual employees are entitled to…a small investment now may pay off big time down the track.

We’ve written before on the topic of long term casual employees. While casual workers can offer your business flexibility and help safeguard against unpredictable business conditions, it’s equally important you structure your casual employment function in a manner that also considers your risk. And that’s where Bare Bones Consulting comes in. 

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