Classifying Casual Workers Compliantly

The meaning of casual employment has evolved and been upheld many times through common law. Under the Fair Work Act, a casual employee is classified as such if they have accepted an offer of employment where there is no firm advance commitment to ongoing work with an agreed pattern of work

There have been a number of drivers of growth in casual employment over the past several decades including:

• demand factors, such as employer preferences for a more flexible workforce that can be adjusted quickly in response to changes in operational needs
• supply factors including the greater labour force participation of women who may require part-time work to supplement household income and students who desire part-time work to assist them with their costs of living while undertaking study
• strong growth in employment in service industries that are more likely to use casual workers, such as hospitality, retail trade and health care and social assistance. There is also evidence of greater use of casual employment among industries that traditionally did not use this form of labour (such as the male-dominated industries of manufacturing, construction and mining).

However, the ability to define someone as a casual worker is something that employers need to be careful with. Are your employees classified as casual employees, but are actually operating more like a contractor? What does a permanent casual entail? How do you know if you are currently compliant?

There are four factors that must be taken into account to determine if an employee is in a casual position:

• Choice: An employer can elect to offer work and a casual employee can elect to accept or reject that work;
• Need: the employee will only work as required;
• Job Type: the employment is described as casual employment; and
• Rate Of Pay: the employee is paid a casual loading (a higher pay rate for being a casual employee), or a specific pay rate for casual employees

In Australia, more than two million workers are employed on a casual basis.

As of August 2021, 20.9% of casual workers were male and 24.2% female. Overall, casual workers totalled 22.5% of the Australian workforce.

Young workers aged 15 to 24 years are much more likely to be contracted on a casual basis compared with those who are aged 25 to 64 years.

So why is it important to classify your workers correctly?

Take, as an example, a labour-hire company that supplies casual workers in the mines. These workers are given the same roster as their permanent full-time counterparts, but at fixed, all-inclusive hourly rates compared to a base salary rate.

This means that those employed as casual workers could receive up to 30-40% less than their permanent counterparts for performing the same or similar work (especially if they missed out on their 25% casual loading as a result of their rate).

A casual worker with fixed hours can become a compliance nightmare for payroll, particularly if awards and rates are not applied correctly, and especially given the legal definition of the type of employment.