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Casual vs Full-time

Employing Casuals vs Employing Full-time

James Thompson | 21 Mar 2019

Many people would agree that keeping a constant workflow and steady employees is a difficult task for any business owner or manager within the construction industry. For many, predicting the amount of work that will be accepted by potential clients next quarter, next month, or even next week can be a difficult task, and many of us have experienced times where we have had too much work to handle and seemingly booked out for months into the future, and then other times work will get slow for no reason before we start drowning in it again. While there are steps we can take to help smooth out the highs and lows, the very nature of running a painting business is cyclical workloads and employment.

One way that business owners and employees have used previously and some still are, is by “contract wages” where the labour is performed and charged out per hour on invoice and the “employee” supplying their own ABN. In previous years, this was incredibly popular and for good reason, it was seemed to be easy, cheap, and effective. An employee could finish with one company when work slowed and start with another the following day without the pain of filling out all the employee forms, superannuation forms, and employee induction paperwork to simply work for a friend’s business for a week before going back to your regular employer when the next job kicks off.

There are several issues with this system which I will cover in future articles, however this method is now known as sham contracting and is very high on the ATO’s hit list along with Fair Work getting involved in a different capacity. With very few exceptions, sham contracting is not permitted and an employer still employing people in this manner is taking a huge risk by potentially opening themselves up to litigation and prosecution for breaching relevant legislation. (Another article on this in the future too.)

So why did I start this article by talking about cyclical workloads and sham contracting? Because many employers are now aware of their responsibilities to employee people on Tax File Number (TFN) and are now moving people across. However how do you get around the varying workload? Some weeks you need all your staff as much as they can work, and next month you may have two slow weeks; who wants to get stuck paying your employees to sit at home on full pay? A common method that has been tried is by putting employees on a “Casual” work basis, simple, they get work when you have it, none when you don’t, and you don’t have to pay holidays or sick pay. Well, not really.

I won’t go in too deep into the legal terminology because let’s face it, learning Latin to read this article – ain’t no one got time for that – so I’ll put it in plain English as much as I can. A Casual employee is one that is hired on a strictly casual basis, they get paid for what they work, and you as the employer have no obligation to provide them with work if you choose not to (exceptions like anti-discrimination, or if the employment contract states otherwise). So this seems like a great fix.

If a Casual employee is effectively a permanent employee, with a regular set of hours, with a consistent flow of work and the employee effectively unable to choose to work elsewhere on a particular day or week and return without detriment to the first company, then they are likely not a casual employee in the strict sense of the word as per the Fair Work Act 2009 (Cth).

In a recent case of Workpac Pty Ltd v Skene [2018] FCAFC 131 an employee with an employment contract stating they were a casual, but who was given a permanent roster to work alongside the same staff on daily basis, and his contracted provided for only 1Hrs notice of termination. Mr Skene’s employment was continuous apart from one 7day unpaid period agreed to in advance. Mr Skene filed with the Federal Circuit Court and was successful in proving, that even though the employment contract stated he was a casual, the basis of his regular employment and the continued and indefinite nature of his employment reflected that of a permanent employee. As such, he was eligible to be paid leave as would a permanent employee. This decision was upheld on appeal at the Federal Court of Australia Full Court.

Basically, in plain English, if it looks like a duck, walks like a duck, quacks like a duck – it’s a duck. So even if you want to call it a horse, everyone still knows that it is a duck. There is a common perception of the law that the words put down on a page and signed to are more important than the substance of the action or the actual effect on the parties. It is not uncommon for sections of contracts to be read down (effectively struck out) to avoid mischief (where not everything is above board).

I can already hear people shouting at me saying that it’s not fair, casuals are already paid more per hour than full time in lieu of entitlements, surely that’s double dipping. And yes, I suppose it, is. However this is now covered by an update to the Fair Work Regulations 2009, in December 2018 that aims to prevent employees from “double dipping”. If a permanent arrangement is declared, then the employer might still be able to recalculate the pay without the casual loading and use this to offset any possible leave entitlements under the National Employment Standards.

Key considerations:

  1. How far in advance is there a stated intention for employment; written or verbal, for employment?
  2. What is the actual nature of the employment? Tip: do you think or refer to them as full-time casuals?
  3. Consider offering permanent positions where practical (permanent does not necessarily mean fixed hours)
  4. Review your employment contracts and the actual circumstances, to see how the recent decisions may affect your business.

It is important to note that ignorance is no excuse, and employment is a two-way street. While some employees may prefer to be on a casual employment basis to receive the 25% loading in lieu of entitlements, some may prefer the stability and access to paid leave. However, keeping yourself on the right side of the law is a far better position than potentially being caught out, especially considering the financial implications and possibly criminal action for some breaches.

James Thompson
Former painting contractor
Currently studying Bachelor of Commerce in Accounting and Employment Relations at Griffith University.

Any possible leads for an employment opportunity in this sector would be greatly appreciated, please contact me on LinkedIn or 0477 108 176 if you may be able to help a fellow painter.

The information contained in this article is for general interest only. The content does not constitute legal advice and should not be relied upon as such. The application and impact of laws can vary widely depending on specific circumstances. Specific legal advice should be sought from an independent professional before acting upon information contained in this article.

an independent professional before acting upon information contained in this article.


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