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Casual workers and leave entitlements

Nov 18, 2020 | Accounting, Business

A Federal Court decision has set a precedent for casual workers and leave entitlements. Read on for the casual leave entitlement ruling that could potentially hit small and medium-sized enterprises’ cash flows!

In May 2020, the Federal Court ruled that some casual employees working regular and ongoing shifts have the right to certain benefits enjoyed by permanent staff, such as annual and personal leave and public holidays. The definition of Casual Employee can be located here.

Notably, the court also ruled that topping up workers’ pay through casual loading does not offset leave liabilities. This essentially means that some casual employees could be entitled to both paid leave and casual loadings, typically worth 25 per cent of their pay. In the Clayton Utz: Review of Workpac vs. Rossato Case the fact that Rossato’s employment contract explicitly stated he was a casual employee and that his casual loading was paid in lieu of leave entitlements, did not deter from the fact that he worked stable, regular and predictable shifts akin to that of a permanent employee.

For those businesses that employ casual staff, we recommend you review your contractual arrangements with these employees in light of the Australian Securities and Investments Commission’s (ASIC) updated FAQ.

The potential liability for casual employee entitlements could stretch back six years. The challenge is that not all employers may be able to establish what kind of leave entitlements, if any, are owed to their casual employees, without seeking external legal or professional help which, of course, comes at a cost.

We understand companies may not yet be aware of the recent case and its potential impact on their finances, so please reach out to us and we will calculate the potential liability, should there be an issue.