Avoid Incorrect Classifications Of Your Employees…

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A casual worker with fixed hours can become a compliance nightmare for payroll, mainly if awards and rates are not applied correctly, especially given the legal definition of the type of employment.

Four factors must be taken into account to determine if an employee is in a casual position:

  • Choice: An employer can elect to offer work, and a casual employee can elect to accept or reject that work;
  • Need: the employee will only work as required;
  • Job Type: the employment is described as casual employment; and
  • Rate Of Pay: the employee is paid a casual loading (a higher pay rate for being a casual employee), or a specific pay rate for casual employees

Now is the time for due diligence in assessing your casual employees’ current situations. Maintaining compliance with this matter is paramount to ensuring that your current employment and HR processes are working effectively for you and your employees.

You need to ensure that:

  • At the commencement of employment, your casual employees are provided with a Casual Employment Information Statement (as well as every 12 months after).
  • Your current employment agreements reflect that casual employees do not have ‘a firm advance commitment to ongoing work’ and meet the specific criteria outlined in the definition of a casual employee to ensure they are correctly classified.
  • These employee contracts should specify whether an employee is casual, whether they can elect to accept or reject the hours and whether they are paid a casual loading.
  • There is clear casual to permanent conversion frameworks in place in your business (if you are not a small business), with clear processes ready to identify employees that may be entitled to convert to permanent employment.
  • Casual workers should also have superannuation contributions paid by their employers if they are over 18 years old (even if they earn less than $450 per month) or under 18 years old and work more than 30 hours per week.

Casual employees must be offered a conversion to full or part-time permanent employment under the National Employment Standards if:

  • they have worked for the employer for 12 months;
  • they have worked a regular pattern of work on an ongoing basis for at least the past 6 months; and
  • the employee could continue to work their regular hours as a permanent employee without significant adjustment.

Employees must respond in writing within 21 days as to whether they accept or reject the offer. If they reject the offer (or don’t respond), they continue to be casual.

If your employee accepts the offer, you must discuss the terms with the employee and confirm them in writing within 21 days. The commencement date must be the first day of the employee’s next full pay period after that notice unless the parties agree otherwise.

Incorrectly classifying your employees can lead to major compliance issues and result in significant penalties if caught. Talk to a trusted adviser or speak to a legal professional about your employment agreements today.

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