Confusion around employee’s status resulted in a large unpaid wages claim
Blossom Lawyers recently encountered an issue whereby an employer client was exposed to a claim for unpaid wages, because the casual employment relationship they believed was in place for an employee, was actually that of a permanent part-time employee.
The employer used a casual employment contract template that was available for free on the internet (the contract). The contract stated that the employee was a ‘casual employee’ and the employee was therefore not entitled to annual leave, sick leave or any other entitlements available to permanent employees.
What would a court consider?
When determining the employment status, a Court considers all of the relevant facts and circumstances including the characteristics of the employment relationship, such as the:
- Guarantee of ongoing work;
- Expectation of future work;
- Regularity of work and hours of work;
- Remuneration and whether this includes a casual loading; and
- Payment of leave entitlements.
A recent court decision has determined that the ‘existence of a firm advance commitment to continuing and indefinite work (subject to rights of termination) according to an agreed pattern of work will ordinarily demonstrate… the existing of on-going full-time or part-time employment rather than casual employment’.
Consequently, for an employment relationship to be deemed a casual arrangement, there would be no guarantee or expectation of ongoing or future work, the availability of work and the hours of work would usually be irregular, a casual loading would be applied, and the employee would not be entitled to paid annual leave, paid sick/carer’s leave, or paid compassionate leave.
- More information about the rights and entitlements of a casual employee is available from the Fair Work Ombudsman website .
Facts of the case
In the matter that Blossom Lawyers was assisting with, the following relevant characteristics were present:
- The contract stated that it was a casual employment arrangement;
- There was a termination notice period applicable of 6 months by either party;
- The hours and days of work were systematic and regular;
- The employee was paid a casual loading at 25%; and
- The employee was not paid for annual leave, sick/carer’s leave or compassionate leave.
One major issue the employer faced is that with the contract providing for a 6-month termination notice period, there was an expectation of future employment subject to the employer or employee giving 6 months’ notice of their intention to terminate the contract. In these circumstances and where the employee was working regular systematic hours, the employment arrangement would likely be considered by a court to be that of a permanent employee, notwithstanding that the contract stated that it was a ‘casual’ employment arrangement.
Where the employment relationship was likely to be considered a permanent part-time arrangement, the employee ought to have been paid annual leave, sick/carer’s leave and compassionate leave. The employer was therefore exposed to a claim for unpaid wages for these leave entitlements (subject to any set-off available).
The take-home message from this matter is that employers need to ensure the provisions of their employment contracts comply with all legal requirements and are drafted so that the characteristics of the employment relationship reflect the intentions of the employer and employee.
Do you need help?
Are you a business with concerns that your employment contracts may not be correct and worried about a potential adverse action or unpaid wages claim? Contact Holly Mylne, the Principal of Blossom Lawyers, to arrange a consultation at our Southport office on the Gold Coast. Otherwise, you can take advantage of our free 20-minute telephone consultation to discuss your legal matter.
Email: admin@blossomlawyers.com.au
Phone: (07) 5636 5598
