Fair Work: Casuals can become regulars within 12 months

Enrique Estagle

11 July 2017    |    read

As reported by the Financial Review, the Fair Work Commission recently ruled that millions of casual workers now have the right to become permanent employees as long as they have worked regular hours for 12 months. In the decision summary, Fair Work concluded that if a casual employee essentially works on a regular basis over a long-term period, they have the right to be converted into a full-time or part-time employee. Fair Work’s decision recommended that employers convert qualified employees through 85 modern awards: retail, banking, aged-care, agriculture, restaurant industries, and others. According to the latest estimates by the Australian Bureau of Statistics (ABS), 20.8% of the total workforce are casual employees. The top three industries that employ casuals are: Accommodation and Food Services (56.5%), Arts and Recreation Services (35.5%), and Retail (33.4%). What Does This Mean for Business Owners? Theoretically, conversion will not affect overall labour cost. Currently, casuals generally get paid on an hourly basis an extra 25% than their permanent counterparts. In contrast, only permanent employees get annual leave, sick leave, and are paid on public holidays. Essentially, the wage cost evens out. The main difference comes in the flexibility available to the employer. Casuals aren’t generally guaranteed any set minimum number of hours or specific shifts or days in a week. This might make it difficult for employers in seasonal or variable industries where the employer isn’t confident how many people they will need one week to the next. However, it doesn’t mean that businesses are mandated to convert their casual employees at the 12th-month mark. They still reserve the right not do so on the following grounds: It would require significant adjustments to the casual employee’s hours of work in order to accommodate them in full-time or part-time employment The current position will cease to exist The hours of work will significantly change or be reduced within the next 12 months In summary, there are large differences between casual and part-time employees. Employers should get advice from their employer organisation and employees should seek independent advice. And Tanda can expedite the entire conversion process as it automatically manages employee classifications for businesses.

As reported by the Financial Review, the Fair Work Commission recently ruled that millions of casual workers now have the right to become permanent employees as long as they have worked regular hours for 12 months.

In the decision summary, Fair Work concluded that if a casual employee essentially works on a regular basis over a long-term period, they have the right to be converted into a full-time or part-time employee.

Fair Work’s decision recommended that employers convert qualified employees through 85 modern awards: retail, banking, aged-care, agriculture, restaurant industries, and others.

According to the latest estimates by the Australian Bureau of Statistics (ABS), 20.8% of the total workforce are casual employees. The top three industries that employ casuals are: Accommodation and Food Services (56.5%), Arts and Recreation Services (35.5%), and Retail (33.4%).

What Does This Mean for Business Owners?

Theoretically, conversion will not affect overall labour cost. Currently, casuals generally get paid on an hourly basis an extra 25% than their permanent counterparts. In contrast, only permanent employees get annual leave, sick leave, and are paid on public holidays. Essentially, the wage cost evens out.

The main difference comes in the flexibility available to the employer. Casuals aren’t generally guaranteed any set minimum number of hours or specific shifts or days in a week. This might make it difficult for employers in seasonal or variable industries where the employer isn’t confident how many people they will need one week to the next.

However, it doesn’t mean that businesses are mandated to convert their casual employees at the 12th-month mark. They still reserve the right not do so on the following grounds:

  • It would require significant adjustments to the casual employee’s hours of work in order to accommodate them in full-time or part-time employment
  • The current position will cease to exist
  • The hours of work will significantly change or be reduced within the next 12 months

In summary, there are large differences between casual and part-time employees. Employers should get advice from their employer organisation and employees should seek independent advice. And Tanda can expedite the entire conversion process as it automatically manages employee classifications for businesses.

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Greens MP introduces franchise wages bill

A new bill called the Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees) Bill 2015 was introduced to Parliament last week. The bill, sponsored by Melbourne Greens MP Adam Bandt, is a direct response to the recent 7-Eleven saga, in which the Fair Work Ombudsman has already found over $600,000 in underpaid wages and entitlements. The bill aims to prevent this by making the franchisor responsible for correcting underpayments if the franchisee is not able to pay staff correctly and on time. You can read the text of the bill here, as well as its explanatory memoranda. Nobody would argue that it’s fair how 7-Eleven staff were underpaid, but this bill skirts a fine line that all franchisors should be aware of. The bill is written in the typical legalese of the Fair Work Awards and the National Employment Standards, but the gist of it is: If a franchisee employer does not pay an employee by pay day, then the employee, or someone acting on their behalf, can give the franchisor a written demand for payment. The employee doesn’t need to do this immediately. They have 6 years from the pay day in which they can make this request. The franchisor has 14 days to pay the employee what they’ve requested. If the franchisor doesn’t pay the employee within the given 14 days, the employee (or a lawyer) can take the franchisor to court. So if the franchisor disagrees with the employee’s written request… it must go to court! The court must add interest to the amount already owed to the employee. This interest is calculated from the pay day (so at this point it’ll already be 14 days worth). In short, if this bill became law, every franchisor in Australia would have unknown liabilities on their books for the wages of everyone who’s ever worked at one of their franchises any time in the past 6 years. And they could get these written notices if a franchisee gets their payroll out an hour late. This bill could certainly set a precedent for even more responsibilities for head office over what franchisees are doing. We think this could significantly change the dynamics of franchise agreements and cause a lot of headaches. It’s important for franchises to be ready for this sort of thing. Whether mandated by law or common sense, as a franchisor you need to be sure that your franchisees aren’t doing dodgy things with payroll that are going to see your brand on the front page of the Australian.   About the author Jake Phillpot is a Director of Tanda, a specialist time and attendance company focusing on the interpretation of Australian Modern Awards and Enterprise Agreements. Tanda maintains templates of popular Modern Awards including Fast Food, Hospitality, Retail, and Restaurant. These templates include the Fair Work mandated minimum wages of all levels of staff, as well as rules for penalty rates, allowances, and overtime based on the times that staff worked. For more information, read a Franchise Case Study with Red Rooster or call Jake on 1300 859 117. You can also request an enterprise POA.

Awards & Rostering    |    read

Australian Minimum Wage Update for 2016

With the End of Financial Year fast approaching, it’s time for you to start thinking about minimum wage and what is required of you as a business owner for the New Financial Year. Fair Work Australia has recently released its decision on national employment standards, which include wage increases for Modern Award rates. As of July 1 2016, the national minimum wage will increase by 2.4% or $15.80 per week. As a business owner, it is your responsibility to ensure that you are aware of these changes and have updated your pay rates for your employees correctly. How does the minimum wage update affect you? July 1, 2016 is the official day set by Fair Work for the proposed changes to take action, so it’s important that you are aware of any changes and understand what is expected of you in regards to workplace compliance, before July 1. Employers who have employees covered by a Modern Award… have the responsibility to check the updates to the Modern Award rate or the national minimum wage, and ensure that their records are updated as of July 1, and that the first pay run after July 1 is paid at the new pay rates. For example: Taylor, aged 24 is employed as a Casual Level 3, on the General Retail Award 2010. Typically, Taylor will work: Monday – 11:00am to 5:30pm (6 hours) Thursday – 5:00pm to 9:00pm (4 hours) Saturday – 10:30am to 5:00pm (6 hours) Sunday – 11:00am to 3:30 pm (4 hours 30 minutes) Prior to 1 July 2016, Taylor would have received $584.30 for working the 20.5 hours above. But in the New Financial Year, Taylor would now receive $598.51 for the same shifts which is an overall increase of $14.21 per week*. So that could be an extra $730 in Taylor’s bank account for the year. *The above example was automatically calculated using Tanda’s Award Interpretation software. Employers who have a custom agreement… whether this is an ‘above award rate’ or an Enterprise Agreement have the responsibility to carry out a ‘better off overall test’ (BOOT). This confirms that the current payment arrangement is better for the employee than the industry Modern Award. If the above award rate is higher than the new rate, then as an employer your responsibility is to ensure that you continue paying above the award rate. Why is it such an issue and what does this mean for businesses? National employment standards are important markers for employers as they provide the outline for what is expected by Fair Work, when managing and paying staff. Challenges have arisen over the years for employers who have struggled to keep up with the intricate details and updates to the numerous awards. Many employers experience paperwork headaches when trying to update their pay rates based on changes to Awards, and it is often further complicated by the additional factors of penalty rates and overtime. How can Tanda help? Managing minimum wage updates every year is a tedious and unnecessary task. But there are tools that automate this process… Tanda is workforce management software specialising in automating award interpretation in addition to rostering and timesheets. The market-leading award interpreter automatically calculates the gross wage for your staff based on your industry award and additional factors such as penalty rates and public holidays. Tanda then takes this information and transfers it into your payroll software, in a format that is ready to be processed, so you can pay your staff quickly and effectively. The best part about all of it- is that Tanda automatically updates Modern Award pay rates each year for you, in accordance with Fair Work’s minimum wage update. Tanda stores all your records securely in the cloud to meet your compliance expectations, but it also takes the stress out of your EOFY paperwork. Give up the calculator for good this EOFY! Get rid of the pay rates headache, and get ready for a stress-free EOFY with Tanda. Simply sign up for a free trial with Tanda to see what the award rates increases means for your business: www.tanda.co/award-interpretation For more information regarding Fair Work’s updates, visit the Fair Work Commission website.

Awards & Rostering    |    read

Penalty Rates Decision: Sunday and Public Holiday Penalty Rates to be cut

Fair Work Penalty Rates Decision Source: The Fair Work Commission The Fair Work Commission has today announced that Sunday and Public Holiday penalty rates are to be cut across Hospitality, Retail, and Fast Food Awards, while Saturday penalty rates are to remain the same. Changes to Sunday Penalty Rates Sunday penalty rates for full time and part time hospitality workers will be reduced from 175% to 150%, rates for casuals will remain the same at 175%. Level 1 Employees under the Fast Food Award will see a reduction in Sunday penalty rates from 150% to 125% for full-time and part-time employees. Casuals will have a reduction from 175% to 150%. No changes will be made to Sunday penalty rates for Level 2 and Level 3 Employees under the Award. Full time and part-time retail workers will have Sunday penalty rates reduced from 200% to 150%. Casual Sunday rates for retail will also be reduced from 200% to 175%. Changes to Public Holiday Penalty Rates Public holiday rates for full-time workers in hospitality will be reduced from 250% to 225%, with no change for casual Public Holiday penalty rates. Changes to Public Holiday rates will come into effect July 1, 2017. However, The Commission has stated that the immediate implementation of updated Sunday penalty rates would create undue financial distress for Sunday workers. As such transitional arrangements for Sunday penalty rate changes will be made in the coming months. The decision was handed down after more than eight months of deliberation, and comes after The Productivity Commission recommended bringing Sunday penalty rates into line with Saturday rates in 2015. This is the biggest Industrial Relations decision The Fair Work Commission has made in recent years. It is hoped that reducing penalty rates will bring  about more ‘positive employment effects’ for businesses, and will “lead to increased trading hours, an increase in the level and range of services offered on Sundays and Public Holidays and an increase in overall hours worked.” With the outcome of the decision expected to come into play later this year, it is crucial that business owners have the correct tools and processes in place to update changes to wage rates correctly, and better manage their labour costs to capitalise on the penalty rate reductions.

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About the author

Enrique Estagle

Enrique was the former editor-in-chief of Tanda's Blog.

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Events & Media Industry Insights

Greens MP introduces franchise wages bill

A new bill called the Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees) Bill 2015 was introduced to Parliament last week. The bill, sponsored by Melbourne Greens MP Adam Bandt, is a direct response to the recent 7-Eleven saga, in which the Fair Work Ombudsman has already found over $600,000 in underpaid wages […]

Awards & Rostering

Australian Minimum Wage Update for 2016

With the End of Financial Year fast approaching, it’s time for you to start thinking about minimum wage and what is required of you as a business owner for the New Financial Year. Fair Work Australia has recently released its decision on national employment standards, which include wage increases for Modern Award rates. As of July […]

Awards & Rostering

Penalty Rates Decision: Sunday and Public Holiday Penalty Rates to be cut

Fair Work Penalty Rates Decision Source: The Fair Work Commission The Fair Work Commission has today announced that Sunday and Public Holiday penalty rates are to be cut across Hospitality, Retail, and Fast Food Awards, while Saturday penalty rates are to remain the same. Changes to Sunday Penalty Rates Sunday penalty rates for full time […]

More Resources

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