In response to the decision in WorkPac Pty Ltd v Skene  FCAFC 131 (WorkPac Decision), the Minister for Jobs and Industrial Relations has made the Fair Work Amendment (Casual Loading Offset) Regulations 2018 (Cth) (Casual Loading Offset Regulations).
The Casual Loading Offset Regulations came into effect on 18 December 2018.
The WorkPac Decision
In September 2018, Rigby Cooke published an article regarding the effect on businesses who engage casual employees following the WorkPac Decision, in which the Full Court of the Federal Court determined that a fly-in fly-out employee was entitled to annual leave as he was not a casual employee for the purposes of the Fair Work Act 2009 (Cth) (FW Act).
The Full Court found that the employee was entitled to be paid compensation for monies in lieu of annual leave, even though he was paid a casual loading for his engagement (although his employment contract did not clearly identify the loading amount).
The effect of the decision was that employees could receive both a casual loading and be paid leave entitlements of permanent employees.
Casual Loading Offset Regulations
The Casual Loading Offset Regulations were introduced to deal with the implications of the WorkPac Decision. The regulations apply where the following criteria are satisfied:
- a person is employed by an employer on the basis that the person is a casual employee; and
- the employer pays the person an amount (loading amount) that is clearly identifiable as an amount paid to compensate the person for not having one or more relevant National Employment Standards (NES) entitlements during a period (employment period); and
- during all or some of the employment period, the person was in fact an employee other than a casual employee for the purposes of the NES; and
- the person makes a claim to be paid an amount in lieu of one or more of the relevant NES entitlements.
If all of the above criteria are met, an employer can avoid the double-dipping result in the WorkPac Decision and make a claim to have the loading amount taken into account in determining any amount payable to an employee in lieu of one or more relevant NES entitlements.
It is important to note that as the Casual Loading Offset Regulations are yet to be put before the Senate, there is a risk that they may be disallowed, which would mean the regulations cease to have effect. There is also potential for there to be a legal challenge to the validity of the regulations.
Important Reminder for Employers
Employers need to ensure that the casual loading amount and the purpose of the loading (i.e. payment in lieu of annual leave etc) is clearly and separately identified in casual employment contracts.
If you would like advice or assistance with any of the above issues, please contact a member of our Workplace Relations team.