Employee Entitlements, Payroll

Recent Changes to Employee Entitlements

Recent Changes to Employee Entitlements

Recently the Fair Work Ombudsman announced changes for employee entitlements that affect a number of common awards, such as the Fast Food Award, Hospitality Award, Retail Award and Hair and Beauty Award and particularly affect casual workers. The changes are in force from 1 January 2018.

The changes affect overtime payments, minimum engagement periods and changing status from casual to permanent.

If you use the Fair Work Ombudsman Pay and Conditions Tool, these awards have already been updated to reflect the changes.

The Changes

The biggest change to affect the updated awards is that casual employees are now entitled to overtime pay. Previously, the National Employment Standards required that casuals work a maximum of 38 hours per week plus ‘reasonable additional hours’. Each award’s conditions are slightly different. Some examples:

  • The Fast Food Award requires that casuals receive overtime pay for more than 38 hours in a week, and more than 11 hours on any day.
  • The Hospitality Award requires that casuals receive overtime pay for more than 38 hours in a week, and more than 12 hours on any day.
  • The Hair and Beauty Award requires that casuals receive overtime pay for more than 38 hours in a week, and more than 10.5 hours on any day.
  • The Retail Award requires that casuals receive overtime pay for more than 38 hours in a week, more than 11 hours on one day of the week, and more than 9 hours on any other day of the week.

The awards also now stipulate the minimum number of hours that a casual must be paid for per shift. Most are a minimum of 3 hours.

Some of the other awards also have changes to part-time requirements. For example, hours may be varied by agreement each week, rather than having to be a set number of agreed hours that are the same each week. Any additional hours are not necessarily classified as overtime, unless 38 hours in the week is exceeded.

For the full list of awards that are affected by the changes, see the Fair Work Ombudsman news. 

How is the Overtime Calculated?

Each award governs the calculation of overtime payments, penalty rates and casual loading. There is no one global method for calculating loadings or penalty rates. You will need to check the award for how to calculate the overtime payment, which may or may not include casual loading on overtime hours. In some awards, there is no loading paid on the weekend rates, but there are specific penalty rates for weekend work instead.

What is a Casual Worker?

When a new worker is engaged there are certain criteria that need to be fulfilled for the worker’s status to be classified as casual. A casual worker is not on a regular roster with guaranteed hours of work. Although they may be part of a team of workers, and have an understanding with the employer that they are available for work, the nature of casual work is irregular and variable.

Permanent part-time or full-time workers have ongoing and regular work and accrue personal and annual leave. Permanent workers must give notice if they wish to leave employment; equally, the employer must give notice if they wish to terminate the employee for any reason.

Casual workers, however, generally do not need to give notice if they wish to leave employment, nor does the employer need to give notice if the worker is no longer required—unless the employee has signed an employment contract that requires notice by either party.

Casual workers are paid only for the hours of service or work performed; they do not accrue paid personal or annual leave. Because they are not entitled to receive paid leave, they are paid a higher hourly rate than permanent staff, in order to compensate for the lack of leave entitlements.

What Are Casual Workers Entitled To?

Casual workers are entitled to certain rights under the National Employment Standards.

  • 2 days unpaid carers leave on each occasion
  • 2 days compassionate leave on each occasion
  • Community service leave (except paid jury service)
  • Maximum of 38 hours per week

For long-term casuals (those who have worked over 12 months and have a reasonable expectation of ongoing, regular and systematic work), there are additional entitlements:

  • The right to request flexible working arrangements
  • Unpaid parental leave
  • Long service leave (according to each state’s requirements for years of service) is also payable to long-term casual workers.

When Should You Offer Casual Employees a Permanent Position?

 A casual worker can request to be made permanent at any time, and if the employer agrees this can be implemented right away. However, each award differs in what the employer’s obligations are regarding offering permanent positions to employees.

The Fair Work Act does not cover this question specifically. Therefore, when assessing changes of employment status from casual to permanent, you need to consult the award that governs the worker. Some awards are silent on the issue, so the employer is not obliged to offer a permanent position. Other awards stipulate that if a casual employee requests to be made permanent after a specific time (usually 12 months), the employer is obliged to grant the request, or at least formally consider the request and notify the worker of the decision.

What Next?

We suggest you review your casual workers annually, to assess whether the conditions of the job and workplace have changed, and if the casual worker should be considered as a permanent part-time staff member.

You may also like to do a calculation comparison of paying your worker as a casual against paying them as a permanent worker—even if you are not obliged to offer a permanent position. This can be a valuable exercise to make sure you are aware of the full costs of engaging your workers as casuals.

As a rule, if your worker has become an integral part of the business and staff team, has the expectation of ongoing and dependable work and has predictable work patterns, then you should consider addressing the issue.

Check our article Is My Worker an Employee or a Contractor? for related information

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