On 17 December 2018, the Fair Work Amendment (Casual Loading Offset) Regulation 2018 (Amending Regulation) was registered and took effect from 18 December 2018. The Amending Regulation amends the Fair Work Regulations 2009 to address ’double dipping’ concerns that arose as a result of the contentious Workpac Pty Ltd v Skene decision. Members may recall in that matter a full bench of the Federal Court of Appeal found that an employee truck driver was entitled be paid compensation for an entitlement to annual leave, even though he was engaged on a casual basis according to the employer, and paid a casual loading for his engagement. 

The Amending Regulation applies where all of the following criteria are met:

• An employee is employed by their employer on a casual basis
• The employee is paid a casual loading that is clearly identifiable as being an amount paid to compensate the person in lieu of entitlements that casual employees are not entitled to under the National Employment Standards (NES), such as paid personal or annual leave
• Despite being classified by the employer as a casual, the employee was in fact a full-time or part-time employee for some or all of their employment for the purposes of the NES
• The employee has made a claim to be paid for one or more of the NES entitlements (that casual employees do not have) that they didn't receive for all or some of the time that they were incorrectly classified as a casual.

If all of these points are satisfied, an employer can make a claim to have the casual loading payments made to the employee taken into account when working out the entitlements owing to the employee for the relevant NES entitlements.

While the Amending Regulation addresses the ‘double dipping’ claim concern, it does not address the more substantive issue highlighted by the decision – i.e. the fact that the Fair Work Act 2009 does not provide a definition of “casual” that confirms that a casual employee is one that is engaged and paid as such, and who receives a casual loading in lieu of paid leave entitlements otherwise provided under the NES. For example, under the Building and Construction General On-site Award 2010 a casual employee is paid a casual loading of 25 per cent for ordinary hours in lieu of annual leave, paid personal/carers leave, paid community service leave, notice of termination and redundancy benefits and public holidays not worked.

The Amending Regulation applies to employment periods that occurred before, on or after 18 December 2018. However, it should be noted that as a ‘disallowable instrument’, there is a risk that the Amending Regulation could be disallowed by a vote in the Senate when federal parliament resumes.

In a related move, Industrial Relations Minister Kelly O’Dwyer has also announced that the Morrison Government intends to legislate to provide regular casual employees the right under the NES to request a move to full-time or part-time employment. The proposed legislation is intended to mirror the Fair Work Commission (FWC) ruling that extended casual conversion rights across the modern award system, thereby ensuring that the entitlement covers the field.

Importantly, FWC’s recognition of the right of an employer to refuse an employee’s request to convert on reasonable business grounds will be preserved in the Government’s proposal, as will the right of the employee to choose to remain as a casual (and continue to receive the benefit of their casual loading).

Members seeking further information are encouraged to contact the IR Department on (03) 9411 4560.