Since the decision of the Full Court of the Federal Court of Australia in Workpac v Skene  FLAFC 131 (“Skene“), employers have been concerned that in addition to paying casual employees a casual loading, they may also be responsible for back pay entitlements under the National Employment Standards (“NES”) in circumstances where an employee has been incorrectly classified as a casual employee instead of a full time or part-time employee.
In Skene, the Full Court upheld the decision of the Federal Court which found that an employee who was classified as a casual employee by his employer but who worked a regular roster set a year in advance was not a casual employee but was a permanent employee. As a consequence, the employee was entitled to annual leave under the NES and the Enterprise Agreement which applied to his employment.
The decision left open the capacity of an employer to set off its liability for leave or other benefits against the casual loading paid to the employee, where such loading is clearly expressed as an identifiable amount.
On 18 December 2019, amendments to the Fair Work Regulation 2009 came into effect to clarify that employers, in certain circumstances, may claim that an employee’s casual loading payment should be set off against NES entitlements owing to the employee. The amendments allow an employer to 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.
Employers should be aware that the amendments will only apply where all of the following criterial are met:
- An employee is employed by their employer on a casual basis.
- An 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 NES, such as 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 they were incorrectly classified as a casual.