Is it just a ‘casual’ relationship? Unpacking the recent Fair Work Commission decision on Casuals

It is often a misconception with employers that employing casual staff is a better and easier alternative to employing full-time or part-time staff, for cost and flexibility reasons.

Employing casual staff often allows for better flexibility especially in industries where down-time occurs, seasonal fluctuations and perhaps future uncertainty.  In hospitality, this works well for pop-up bars and tourist hot spots where the workforce may halve in the quieter months. Also, casual employees are not paid entitlements when the business is closed for holidays.

With recent Award changes, employers not only have to look at the cost effectiveness of employing casual staff they now must also look at their legal obligations.

On 1^st October 2018, a decision was made by the Fair Work Commission to include a clause in many awards including the Restaurant Industry Award 2010, Hospitality Industry (General) Award 2010, Fast Food Industry Award 2010 and Registered and Licensed Clubs Award 2010 for ‘Conversion to full-time or part-time employment.’  This is where a casual employee who has worked regular ongoing hours for the preceding twelve months can request, in writing, a conversion to become a permanent employment as a either a part-time or full-time employee.  The employer can agree or disagree to the request on reasonable grounds which are outlined in this clause in each award.

There was a recent decision made in the Full Court of the Federal Court (WorkPac Vs Skene) where a casual employee, who was receiving the casual loading in lieu of permanent employment, was in fact entitled to accrue annual leave.  While this decision does not automatically apply to all casual employment arrangements, it does however highlight the importance of all employers to look at each individual engagement with their casual employees and ascertain whether or not the employee’s status is correctly set at ‘Casual.’

With these recent developments, it is important for employers to review all of their rostering and payroll, to ensure they know where they stand with each staff member, based on the previous 12 months. Employing a casual employee consistently at the same number of hours without any variation is not casual employment.  It is also not necessarily the “cheaper option” compared to employing staff.  Even though you do not have to provide paid leave entitlements, such as personal and annual leave, there is an extra loading of 25%.  While each hospitality venue and every employer-employee relationship are unique, on an overall basis, it may be time for employers to consider the calculations of employing majority full-time/part-time employees.

Case Study Example

Background: Using the pay rates of a ‘Level 2 Food & Beverage Attendant” (as at 1^st of July, 2018) in a Hotel as an example, let’s have a look at the comparisons – a casual employee working 38 hours, a full-time employee paid hourly or a full-time employee on an annualised salary. 

Assumptions: The employee has a half hour break per shift, works Tuesday to Thursday during the day, Fridays and Saturdays (including night) and has Sundays and Mondays off.

Please note, in calculating the comparisons, leave loading was also factored in at 17.5% of the 4 weeks annual leave. Based on the calculations in the table above, this is calculated at $537.89 (full-time employee paid hourly) and $672.32 (full-time salary staff).

From this example, we can see that it could be advantageous from a cost-effective point of view to convert the employee from “casual” employment to full-time.  However, other influences in the decision-making process may include calculating the added cost of employing more staff while this employee is on leave, as well as determining future outlook of the business.  There will also be other factors to consider based on each individual employee-employer arrangement.  

In light of the recent court decision, as well as inclusions the Fair Work Commission have made to many awards regarding, ‘Casual Conversion,’ hospitality business owners and decision makers must re-evaluate the cost effectiveness and/or convenience of employing the majority of their staff on a casual basis.  Unless you are employing staff on an Ad-Hoc basis, casual employment is perhaps not ‘just a casual thing’ in the end.

Do you need help with assessing casual and permanent staffing costs? Please call, or book in a time online, and we’ll be happy to assist. Tel: 08 8235 1594         www.brisan.com.au