Managing people

Casual employees: what you need to know

Usually, a casual employee is paid only for the time worked and doesn't receive payment for any paid leave.

30 June 2021

Normally, a casual employee is paid only for the time actually worked and does not receive payment for public holidays (except under certain circumstances), personal/carer’s leave, or annual leave. Additionally, a casual employee may be terminated without notice. This guide covers the key considerations for casual employee entitlements. 

Casual employment definition

Although there’s no definition of ‘casual employee’ in the Fair Work Act, the courts have generally interpreted the term ‘casual’ to mean an employee who works only on demand by an employer.

The essence of ‘casualness’ is the absence of a firm advance commitment as to the duration of the employee’s employment or the day/s (or hours) the employee will work. The descriptions supplied by the relevant industrial instrument will not override the true legal relationship which arises from a full consideration of the circumstances. See Hamzy v Tricon International Restaurants t/a KFC [2001] FCA 1589 (16 November 2001); Williams v MacMahon Mining Services Pty Ltd [2010] FCA 1321 (30 November 2010).

It should be noted that where an applicable modern award or enterprise agreement contains a specific definition of a casual employee, the terms of the industrial instrument should be applied when interpreting the Fair Work Act, rather than the term being interpreted under its common law meaning. See Telum Civil (Qld) Pty Ltd v Construction, Forestry, Mining and Energy Union [2013] FWCFB 2434.

Casual vs. part-time or full-time employment

Employing and paying a person as a casual employee does not necessarily mean they are casual.

So how do you determine if an employee is classified as casual versus part-time or full-time?

The following factors have been considered in case law as relevant indicators of the existence of a casual employment relationship:

  • the way in which wages are paid — hourly rates are more consistent with casual employment than are weekly wages
  • the period of time over which the employment extends — the longer the length of service the less likely the employee is a casual employee
  • the number of hours worked per week — the more numerous the hours worked the less likely the employee is a casual employee
  • whether the employee had a consistent starting and set finishing time — the more consistent the hours the less likely the employee is casual
  • whether the employee worked according to a roster system that was published in advance — the more regular and planned are the hours the less likely the employee is casual
  • whether there was a reasonable mutual expectation of continuity of employment — if so, the less likely the employee is a casual
  • whether notice was required by the employer prior to the employee being absent or on leave — if so, the less likely the employee is a casual
  • whether the employee was informed of the casual nature of the employment — if not, the employee is less likely to be casual

It should be noted this list is not exhaustive, nor is any particular factor more important than another.

It’s important to determine the nature of the employment relationship, as a casual employee, generally, does not have access to entitlements available to part-time or weekly employees, such as  annual leave, personal/carer’s leave and public holidays.

Leave entitlements for casual employees

Under the National Employment Standards, a casual employee is not entitled to paid annual leave, personal/carer’s leave, jury service, or the minimum periods of notice of termination by the employer. However, a casual employee employed on a regular and systematic basis may be entitled to unpaid parental leave and may be eligible to make an unfair dismissal claim.

Under the Standards, a casual employee also has an entitlement to unpaid compassionate leave and unpaid carer’s leave, as well as an entitlement to paid long service leave under the relevant state or territory long service leave statute.

Meal breaks

A casual employee’s entitlement to a meal break is subject to the provisions of the relevant modern award. Usually, an employee cannot work more than five continuous hours without having a meal break, although some awards allow a maximum of six hours in certain circumstances. eal breaks may also be changed by agreement, under the individual flexibility agreement provisions of the applicable modern award.

Casual loading entitlements

Most modern awards provide for the payment of a loading to casual employees. The ‘standard’ casual loading is 25%. The loading generally is not considered a ‘penalty rate’ because the benefits for which a casual is compensated include entitlements such as annual leave, personal/carer’s leave and public holidays.

As a general rule in modern awards, where penalties apply, the penalties and the casual loading are both to be calculated on the employee’s ordinary time rate. See Award Modernisation Decision — Priority Awards [2008] AIRCFB 1000 (19 December 2008). For example, a modern award that provides a casual loading of 25% and a penalty rate for work on a public holiday of double time and a half (250%) would receive an ‘all-up’ casual rate for public holiday work of 275%.

Reference should be made to the applicable modern award or enterprise agreement to determine whether a penalty is calculated on the casual hourly rate, rather than the ordinary rate. For example, the Manufacturing and Associated Industries and Occupations Award 2010 provides that the casual loading is ‘payable for all purposes of the award’. This means any penalty prescribed by the award is calculated on the loaded casual hourly rate. See here.

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