COVID Casual Chaos – Casual confusion yet again - Wolters Kluwer CCH

COVID Casual Chaos – Casual confusion yet again

By Siobhan Mulcahy (partner), Gadens

Casual calamity? Could be. Certainly a casual conundrum for many in the FMCG industry!

Casual employees and how you manage them in respect of JobKeeper has emerged as the biggest grey area for employers as they work hard to manage their workforces through this pandemic. Sadly, those in hospitality who most need the sustenance that JobKeeper can provide, in terms of financial support and flexibility while they weather the COVID-19 storm, are also those who often have large low income earning casual workforces. For many, the JobKeeper scheme, rather than providing a haven in the storm, is proving a cashflow and logistical headache.

There has been much confusion around who is ‘in’ and who is ‘out’ of the scheme in addition to what casual employees do and don’t have to do in terms of work while they are receiving JobKeeper payments. The inconsistent concepts of ‘casualness’ and being regular and systematic with an ongoing expectation of employment are uncomfortable bedfellows and it all adds up to suggest that you can be a little bit pregnant – or at least a little bit casual!

Casual chaos compounded

Casual employment has been in the spotlight for a number of years now, with a spate of recent cases in which ‘casual employees’ have argued they are in fact correctly legally categorised as permanent employees and entitled to the benefits of permanent employment such as annual leave and personal leave.

Long term casuals have also long had access to the unfair dismissal jurisdiction.

The Federal Government’s introduction of the JobKeeper scheme, which has seen ‘long term casuals’ eligible for the $1,500 per fortnight payment, continues this trend and has raised a range of novel issues for businesses – particularly in the FMCG space.

What is a casual?

Unlike full-time and part-time employees who have clearly defined hours of work, and only take time off when on leave or otherwise permitted to do so, casuals are employed on a per engagement basis and can accept and reject shifts as they wish. In most cases a casual employee is defined as one who is ‘engaged and paid as such’.

The nature of casual employment was considered by a Full Court of the Federal Court in May this year, in the much anticipated case of WorkPac Pty Ltd v Rossato. In that case the court confirmed that the indicia of casual employment included irregular work patterns, uncertainty as to the period over which the employment is offered, discontinuity and intermittency of work, and unpredictability. This collection of indicators is referred to as the ‘essence of casualness’. This is somewhat difficult to reconcile with the concept of a long term casual under the JobKeeper scheme in the context of employee eligibility and even more difficult to manage on the ground in terms of allocation of work. Practically, while hospitality or retail employees are often engaged as casuals over long periods of time and have the ability to accept and reject shifts as it suits them, those employees often work with a degree of regularity or according to a system that is anything but casual. Hence the chaos and confusion!

When is a casual eligible for JobKeeper?

The JobKeeper scheme legislation and rules (Rules) provide that ‘long term casual employees’ are eligible for the JobKeeper scheme. An employee will be a long term casual where they have been employed on a regular and systematic basis for the 12 months preceding 1 March 2020 for JobKeeper 1.0 and prior to 1 July 2020 for JobKeeper 2.0. To be eligible for payment, casuals must also remain employed by their employer and not be nominated by another employer (where they have more than one employer).

An Explanatory Statement issued with the Rules provides that a casual employee is likely to be employed on a regular and systematic basis where the employee has a recurring work schedule or a reasonable expectation of ongoing work. However, this is about as far as the guidance on regular and systematic casual employment under the scheme goes.

The concept of regular and systematic casual employment is already contained in the Fair Work Act 2009 (Cth), for example regular and systematic casuals can have access to the unfair dismissal jurisdiction where they have a reasonable expectation of employment continuing on that basis.

One of the leading cases on the meaning of regular and systematic casual employment, Yaraka Holdings Pty Ltd v Giljevic [2006] ACTCA 6, held that the term ‘regular’ implies a repetitive pattern and does not mean frequent, often, uniform or constant. It also found that the term ‘systematic’ requires that the engagement be something that could fairly be called a system, method or plan. This will involve considering matters such as actual shifts worked across the prior 12 months, rostering arrangements and how casuals accepted/ rejected shifts. This needs to be assessed on a case-by-case basis, which is difficult administratively en masse for a large casual employer.

Businesses may have casuals that clearly fit within the category of regular and systematic casual employment and others who fall into more of a grey area. Ultimately, it has been a question of judgement for employers, but in the context of JobKeeper being a ‘one in, all in’ scheme it is incumbent upon employers to get this right. This has been an area that has been ripe for significant disputation, albeit that the Fair Work Commission does not have jurisdiction to resolve these eligibility disputes and there is not at present a ready forum to do so.

Most in the FMCG space have adopted the general rule of thumb that if a casual employee is actively ‘on the books’ and has been for over 12 months, and is part of the system for consideration for shifts, they are considered a long term casual for the purposes of this legislation.

This has meant for some employers that they have been obligated to nominate casual employees and pay them a sum of $1,500 gross per fortnight as a minimum when the employee has previously worked a low number of hours generally earning substantially less. Where a significant number of employees are in this category this has caused some employers a perverse cashflow issue whereby their wage bill increased dramatically from the pre-JobKeeper period – albeit that this has been ultimately reimbursed. To some degree these issues will be abated as JobKeeper 2.0 introduces a two tier payment system for eligible employees, creating a distinction between those employees who previously worked on average less than, or more than, 20 hours per week.

What if a casual employee refuses to work?

The biggest issue that has arisen is what happens where a casual for whom you receive JobKeeper refuses to work. What if you want them to work more to get the most productive ‘bang’ for your JobKeeper buck?

Casual employment is by its very nature, engagement by engagement, therefore casuals as a general principle are entitled to reject shifts. However, in our view, long term casuals should continue to make themselves available to work the regular and systematic casual employment they had prior to the JobKeeper scheme being introduced, unless they have a good reason not to do so. That is, if a casual usually worked 20 hours a month across varying days, this arrangement should continue while the JobKeeper scheme is in place and the JobKeeper wages subsidy should be applied to the casual’s wages. An employer could always request a casual employee to work more than their usual hours (subject of course to payment of the higher of $1,500 (or lower amount under JobKeeper 2.0) or the employee’s usual hourly rate) but in our view could not direct this.

But what if a casual refuses to work those shifts? If a casual was to become ill, needed to care for an immediate family member or member of their household who was ill, or wanted to stay away from the workplace for legitimate precautionary health reasons, then a refusal to work casual hours could be legitimately explained. In this case, the casual would continue to receive the JobKeeper payment and it would be risky for an employer to take any steps to end the casual employment while such legitimate reasons persisted.

However, where a casual does not have any legitimate reason not to work, in our view it would be open to an employer to engage in a process whereby they look to terminate the casual engagement. While an employer most likely cannot direct a casual to work, it can look at terminating their employment if they are no longer willing to make themselves available (and those employees would cease to receive JobKeeper payments).

Importantly though, ‘long term casuals’ under the JobKeeper scheme will most likely be eligible to make an unfair dismissal claim. Therefore, employers need to ensure that they have a ‘valid reason’ for dismissal and that the dismissal is effected in a procedurally fair manner. This would involve putting a casual on notice that a failure to accept shifts may result in termination of employment. The best rule of thumb is really to treat your casual like you would a permanent employee in the same or similar circumstances. As we said – it seems you can be a little bit casual!

Genuine casuals

The associated sleeper issue with classifying casual employees as ‘long term casuals’ for the purposes of the JobKeeper scheme is that they may later seek to argue that they are in fact permanent employees entitled to permanent employment entitlements.

It remains to be seen whether classifying employees as long term casuals for the purposes of JobKeeper flushes out misclassification cases but it is as important as ever for employers to ensure they are properly classifying employees and that employment is underpinned by robust employment contracts including casual loading offset clauses.

Gadens disclaimer: This article deals with a range of complex, and in some cases novel, issues and employers are encouraged to seek tailored legal advice for their individual circumstances.

Source: This article was originally published on Gadens’ website, 22 October 2020, and has been reproduced with permission.