There has been A LOT of press around the way in which businesses engage casual employees and many business owners are really confused and annoyed. 🤧🤧🤧 We get it, it’s complicated, so here’s the low down on what you need to know.

👉 The Full Bench of the FWC has clarified the application of overtime rates for casual employees across many modern awards. The decision clarifies if an employee is entitled to overtime rates and how the overtime rate is calculated. There are now three different methods for calculating casual employees overtime including the substitution method, cumulative method, and compounding method.

The method of calculation and the corresponding awards which have been affected is set out below:

  1. Substitution Method

 This is when overtime rates are paid in substitution of the casual loading that the employee is entitled to. In this instance, the casual overtime rate is the same as it is for permanent employees. The Substitution method applies to the following Awards:

✅ Airport Employees Award
✅ Aluminium Industry Award
✅ Ambulance and Patient Transport Industry Award 2020
✅ Amusement, Events and Recreation Award 2020
✅ Architects Award 2020
✅ Corrections and Detention (Private Sector) Award
✅ Cotton Ginning Award 2020
✅ Dredging Industry Award 2020
✅ Electrical Power Industry Award 2020
✅ Fitness Industry Award 2020
✅ Higher Education Industry-General Staff-Award 2020
✅ Local Government Industry Award 2020
✅ Market and Social Research Award 2020
✅ Meat Industry Award 2020
✅ Miscellaneous Award 2020
✅ Pharmaceutical Industry Award 2020
✅ Poultry Processing Award 2020
✅ Security Services Industry Award 2020
✅ Sporting Organisations Award 2020
✅ Travelling Shows Award 2020
  1. Cumulative Method

The cumulative approach is when the overtime rate is calculated on the normal base rate and paid in addition to casual loading. In this instance, the casual employee would receive the 25% casual loading on top of the usual 150% or 200% overtime rate. The below Awards will now use this method.

✅ Aboriginal Community Controlled Health Services Award 2020
✅ Airline Operations – Ground Staff Award 2020
✅ Animal Care and Veterinary Services Award 2020
✅ Banking, Finance and Insurance Award 2020
✅ Building and Construction General On-Site Award 2010
✅ Car Parking Award 2020
✅ Cement, Lime and Quarrying Award 2020
✅ Cemetery Industry Award 2020
✅ Children’s Services Award 2010
✅ Cleaning Services Award 2020
✅ Clerks—Private Sector Award 2020
✅ Commercial Sales Award 2020
✅ Educational Services (Post-Secondary Education) Award 2020
✅ Educational Services (Schools) General Staff Award 2020
✅ Fast Food Industry Award 2010
✅ Funeral Industry Award 2020
✅ Gardening and Landscaping Services Award 2020
✅ Gas Industry Award 2020
✅ General Retail Industry Award 2010
✅ Hair and Beauty Industry Award 2010
✅ Hydrocarbons Industry (Upstream) Award 2020
✅ Joinery and Building Trades Award 2010
✅ Legal Services Award 2020
✅ Live Performance Award 2020
✅ Medical Practitioners Award 2020
✅ Mobile Crane Hiring Award 2010
✅ Nursery Award 2020
✅ Oil Refining and Manufacturing Award 2020
✅ Pastoral Award 2020
✅ Plumbing and Fire Sprinklers Award 2010
✅ Ports, Harbours and Enclosed Water Vessels Award 2020
✅ Premixed Concrete Award 2020
✅ Rail Industry Award 2020
✅ Salt Industry Award 2010
✅ Silviculture Award 2020
✅ Storage Services and Wholesale Award 2020
✅ Supported Employment Services Award 2020
✅ Racing Clubs Events Award 2010
✅ Racing Industry Ground Maintenance Award 2020
✅ Real Estate Industry Award 2020
✅ Textile, Clothing, Footwear and Associated Industries Award 2010
✅ Waste Management Award 2020
✅ Wine Industry Award 2020
  1. Compounding Method

This is when overtime is calculated on the employees’ casual rate of pay. In this instance, the 25% casual loading is multiplied with the overtime rates of 150% and 200%, leading to overtime rates of 187.5% and 250%.  The Awards to use this method are:

✅ Aged Care Award 2010
✅ Alpine Resorts Award 2020
✅ Asphalt Industry Award 2020
✅ Black Coal Mining Industry Award 2010
✅ Broadcasting, Recorded Entertainment and Cinemas Award 2020
✅ Business Equipment Award 2020
✅ Coal Export Terminals Award 2020
✅ Concrete Products Award 2020
✅ Contract Call Centres Award 2020
✅ Electrical, Electronic and Communications Contracting Award 2020
✅ Food, Beverage and Tobacco Manufacturing Award 2010
✅ Graphic Arts, Printing and Publishing Award 2010
✅ Health Professionals and Support Services Award 2020
✅ Horse and Greyhound Training Award 2020
✅ Labour Market Assistance Industry Award 2020
✅ Manufacturing and Associated Industries and Occupations Award 2020
✅ Marine Tourism and Charter Vessels Award 2020
✅ Marine Towage Award 2020
✅ Mining Industry Award 2020
✅ Port Authorities Award 2020
✅ Professional Diving Industry (Industrial) Award 2020
✅ Professional Diving Industry (Recreational) Award 2020
✅ Seafood Processing Award 2020
✅ Stevedoring Industry Award 2020
✅ Sugar Industry Award 2020
✅ Surveying Award 2020
✅ Telecommunications Services Award 2020

These changes took place from the first full pay period on or after 20 November 2020 except for the Aged Care Award which took place from the first full pay period on or after 1 March 2021. If you need help working out if this applies to you then reach out. We got you! 🤘

👉 A bill was passed that clarifies the definition of casual employment called the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021. The bill imposes an obligation on large businesses (businesses which have 15 employees or more) to offer conversion to permanent employment. A small business employer (an employer who has less than 15 employees) is not obligated to offer casual conversion, but if a casual employee requests conversion, there is an obligation to not refuse this unless on reasonable business grounds. There is also a process that you need to follow with some documentation that is required. I you need help we have all the templates.

👉 There is now clarification surrounding the issue of ‘double dipping’. Courts are required to reduce a claim for relevant entitlements under the NES, made by an incorrectly classified casual employee, by an amount equal to the casual loading
amount the court considers appropriate. Importantly, this will apply retrospectively, which means that businesses will be able to rely on this provision for permanent entitlement claims which have already been made. Hallijuja on that one, we were starting to get seriously worried.

👉 Service of casual employees when being made redundant rules have changed – in essence periods of service worked by a casual employee no longer count as ‘continuous service’ for the purposes of redundancy and termination pay. Only periods worked as a permanent employee will be considered for such purposes. This is also good news for employers.

👉 All employers are now obligated to provide new and existing casual employees with the Casual Employment Information Statement. The CEIS has information about:

  • the definition of a casual employee
  • when an employer has to offer casual conversion
  • when an employer doesn’t have to offer casual conversion
  • when a casual employee can request casual conversion
  • casual conversion entitlements of casual employees employed by small business employers
  • the role of the Fair Work Commission to deal with disputes about casual conversion

So, there you have it, a lot to digest! If you need help with documentation to support any of the above processes, then reach out.

Written by

Emily Jaksch

CEO & Founder

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