Casual Staff: Applying the Duck Test Down Under

There are generally only three categories of employment: full time, part time and casual. Within the first two, it is possible to distinguish between permanent, temporary and fixed term. Each is relatively easy to define and can fall into the category of "if it looks like a duck, talks like a duck, and walks like a duck, then it is probably a duck." Unfortunately the same cannot be said for a casual employee. Just because it is called a duck, doesn’t mean it is one.

Australian companies have always used a form of employment referred to as "casual" to provide a way of supplementing the workforce during peak periods of activity, or to cover absences of other staff. "Casual" staff have very few benefits or entitlements and are paid a loading as compensation for the loss of these benefits.

Recent legislative changes have now made it more complex to determine whether someone is actually a casual or whether he or she should be employed in a more permanent manner.
As a consequence, HR practitioners need to be particularly careful in deciding whether an employee is to be classified as a casual or temporary employee.

The definition of casual used in current industrial relations awards and legislation is usually worded along the lines of "someone other than a full time or part time employee" or "someone who is defined as a casual and paid as a casual." Such definitions are circuitous and do not provide any real assistance.

To examine whether someone is a casual we have to examine the definitions of full time and part time to identify the characteristics which would distinguish an employee differently.

Full time and part time employee definitions typically refer to regular hours of work: full time meaning someone who works 38 hours and part time being someone working less than 38 hours but regular hours.

Casual must therefore describe work which is less than 38 and which is irregular.

In recent years, as a result of pressure from unions in particular, awards and agreements have been negotiated to impose increasingly higher penalty rates for the engagement of a casual.
A casual would usually be paid a loading of, say 10%, on the normal hourly rate as compensation for not having an entitlement to various leave benefits such as sick leave or holiday pay. Casual also meant no employment relationship, resulting in the employer being able to terminate at an hour’s notice.

Over time, the loading has been increased and in recent determinations has been increased to between 20% and 25% depending on the industry.

Casual or Regular?

Whilst casuals have been unable to pursue unfair dismissal claims, there is now an increasing number of cases where employees have sought redress, arguing that they were not casual as there was an employment relationship created by working more regular hours over a period greater than 12 months.

Casual employees have successfully argued that the pattern of work was regular and that they had an expectation of continuing work.

To add to the confusion, the new Fair Work act provides on the one hand that casuals are employees defined and paid as such, but then sets out to bestow various benefits on those casuals who do in fact work regular hours. For example, parental leave may be available to a casual who would have a reasonable expectation of continuing employment by the employer on a regular and systematic basis.

This adds to the confusion of determining what constitutes a casual and will lead to problems for many small businesses. It is more than likely that the existence of regular patterns of work over an extended period will render the employee to be part time rather than casual. This will have a significant impact on many small businesses who use local people to fill in critical work periods and who have established themselves as reliable precisely because of the circumstances that caused them to seek casual work in the first place.

Small businesses would typically employ someone as a casual to fit in with school hours – mums who can fit in a few hours while their children are at school. School students might also be employed as a casual after school or on a Saturday morning.

However, two additional factors influence the decision as to how people are employed. The first of these is that the majority of awards specify a minimum of three hours pay for any period of employment of a casual and the loading which is payable, plus any other penalty rates, will force many employers to reduce their workforce.

HR practitioners will need to be especially careful in deciding the status of an employee and will need to closely examine the intended working pattern. They should also be in a position to calculate the cost of the employee – comparing casual rates plus loadings with the cost of employing the person on a part time basis. In some cases, the 25% loading is likely to make it far more expensive to call someone a casual.

Whilst some employers may wish to employ the casual duck because it is easy to terminate their employment, the wise HR professional will have to decide whether it really is a duck.