Are casuals entitled to paid leave?

Q&A

Are casuals entitled to paid leave?

Is a casual employee entitled to paid leave under the Fair Work Act? Paul Munro explains.

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Are regularly employeed casuals entitled to paid annual leave?

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Q Our company employs several casual employees on a regular basis. Some of them have been employed for more than three years. One employee has asked our payroll department whether they have an entitlement to paid annual leave. The reason for the claim is because other employees in the same area who are employed part-time receive the benefit of paid leave. Also, such a claim could potentially involve a claim for paid personal/carer’s leave and other forms of leave provided under the Fair Work Act.

The Act refers to a long term casual as an employee who works on a ‘regular and systematic basis’, although it seems this appears only in the context of protection from unfair dismissal and entitlement to unpaid parental leave. While it is our understanding a casual employee may have an entitlement to paid long service leave, are there circumstances whereby a casual employee is entitled to paid leave under the Fair Work Act?
 
A The paid leave conditions prescribed under the National Employment Standards (with the exception of unpaid parental leave) specifically exclude casual employees, whether employed on a regular and systematic basis, or otherwise. Indeed, the ‘standard’ loading paid to a casual employee under a modern award (generally 25 per cent) is meant to compensate for the loss of certain employment conditions.

This is why it is important to determine the nature of the employment relationship, as a casual employee does not have access to entitlements under the Fair Work Act that are available to part-time or weekly employees, such as annual leave, personal/carer’s leave, public holidays and jury service make-up pay.

The Standards, however, do provide an entitlement for a casual employee to unpaid carer’s leave and unpaid compassionate leave. The more complex issue in this circumstance is usually determining whether the type of work being performed constitutes casual employment.

What is casual employment?


Employing and paying an employee as a casual employee does not, in itself, mean the employee is actually a casual employee. In assessing the nature of a particular casual employment relationship, courts and industrial tribunals have usually identified certain factors that characterise casual employment. This is in the absence of a definition of a “casual employee” in an applicable modern award or enterprise agreement, or relevant employment legislation.
 
The Fair Work Act does not define the meaning of a ‘casual employee’ (although it does define the meaning of a ‘casual employed on a regular and systematic basis’). In the absence of a definition, it has generally been interpreted that the term ‘casual’ means 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 an employee’s employment or the day or days (or hours) an employee will work. This is referred to as the common law meaning of casual employment. 
It should be noted that where an applicable modern award or enterprise agreement does contain 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

The following factors, while not exhaustive, have been considered as relevant indicators of the existence of a casual employment relationship:
  • the way in which wages are paid – weekly wages are more consistent with part-time employment than hourly or daily wages
  • the period of time over which the employment extends – the longer the length of service the more likely the employee is part-time
  • the number of hours worked each week – the more numerous the hours the more likely the employment is part-time
  • whether the employee has a consistent starting and finishing time and set days of the week – the more consistent the hours worked, including set days, the more likely the employment is part-time
  • whether the employee works a roster system published in advance – the more regular and planned the hours of work are, the more likely the work is part-time
  • whether there is a mutual expectation of continued employment – if so, the more likely the employment is part-time, although this may also fall within the definition of a “long term casual”
  • whether an employer requires an employee to give notice of being absent or on leave – if so, the more likely the employment is part-time, and
  • whether the employee was informed of the nature of the employment when hired – if not, it leaves doubt as to the true nature of the employment.

Modern awards


Most modern awards do not define a ‘casual’ employee, usually referring to an employee being ‘employed and paid as such’. There is a greater likelihood an award will contain a definition of a ‘part-time employee’. If provided, it would be advisable for an employer to ensure that the nature of a casual employee’s employment does not fall within the definition of a part-time employee under the applicable modern award. 

Conversion to full-time/part-time employment 


A modern award may contain a clause which prescribes that a casual employee employed on a regular and systematic basis for a sequence of periods of employment during a six-month period can elect to become permanent if the employment is continuing. An employer cannot unreasonably refuse an employee’s election. The conversion from casual to permanent employment (including part-time employment) is not automatic or compulsory. An example of such a clause is contained in the Manufacturing and Associated Industries and Occupations Award 2010. 

Long service leave


A casual employee’s entitlement to long service leave is subject to the relevant Commonwealth, state or territory long service leave legislation, or the applicable award-derived long service leave terms under a pre-reform federal award.

Generally, legislation provides that a casual employee is entitled to long service leave after having completed the appropriate period of continuous service with an employer. What constitutes ‘continuous service’ will depend on the relevant legislation, or the applicable pre-reform federal award terms.

The bottom line:  Under the National Employment Standards a casual employee is not entitled to paid leave, such as annual leave, personal/carer’s leave, public holidays and jury service make-up pay, but an employer should ensure the nature of an employee’s employment is not considered ‘part-time’ under the applicable modern award. A casual employee’s entitlement to long service leave is usually determined by the relevant Commonwealth, state or territory long service leave legislation, or the applicable award-derived long service leave terms under a previous federal award.

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