In response to last year’s landmark Full Federal Court decision, WorkPac Pty Ltd v Skene, (see our earlier article here) the Government has introduced new regulations which allow employers, in certain circumstances, to offset the casual loading paid to an employee against certain entitlements that may otherwise be owed to the employee if they are found in the future to be a permanent employee. The new regulations will effectively prevent casual employees from ‘double dipping’ and claiming permanent entitlements in addition to their casual loadings.
The new Fair Work Amendment (Casual Loading Offset) Regulations 2018 (Cth) took effect on 18 December 2018.
In WorkPac Pty Ltd v Skene, the Full Federal Court found that a casual employee (who received the benefit of casual loading) was not a casual employee for the purposes of the Fair Work Act 2009 (Cth) (FW Act), but a permanent employee and therefore entitled to leave entitlements. This highly publicised decision sets a new precedent and means that an employer will not be immune from claims for entitlements under the FW Act, even if the outcome results in the employee “double-dipping” with respect to entitlements.
When can the new regulations be applied?
The Fair Work Amendment (Casual Loading Offset) Regulations 2018 (Cth) can be applied immediately by employers and in circumstances where all of the following criteria are met:
If the above criteria are satisfied, an employer can make a claim to have the casual loading payments made to the employee taken into account when determining the entitlements or amount payable to the employee.
A Loophole Closed
The Minister for Jobs and Industrial Relations, Kelly O’Dwyer MP (Minister), considered the new regulation to be necessary to provide “greater clarity” around employers’ legal rights to offset payment of casual leave loadings against the NES entitlements which are not otherwise available to casual employees. The Minister echoed employer concerns that “every employer must comply with their legal obligations, but being forced to pay for entitlements twice is unfair and potentially crippling for many small businesses.”
Due to the Government’s “concern(s) that the legal right to offset an obligation against payments already made for the same entitlements was not dealt with in Skene v Workpac”, the new regulations were introduced to ensure “the same thing does not happen again.”
In addition to the new regulations, the Government has also intervened in a separate Federal Court ‘test case’, WorkPac v Rossato, in which Workpac is seeking declarations that:
The outcome of this case will be important for all employers affected by the decision in Workpac v Skene, and we will provide an update as the case unfolds. If WorkPac is successful in obtaining the declaration, the risk to employers in connection with the engagement of casual employees will be materially reduced moving forward.
Due to the current uncertainty in what is otherwise a complex area, it is important that employers minimise their exposure to risk. To reduce risk around the status of casual employees, employers should:
If your business requires assistance in navigating this area, please contact our Employment Advisory team. Our team will be able to assist in reviewing your business’ commercial and employment arrangements, including casual employment contracts and ensure proper classification of your employees.
Natasha Horvat, Senior Associate
Stacey Devitsakis, Lawyer