Australia: Surprise Ruling Strengthens Employers’ Say in Casual Worker Classifications

A recent high court decision has overturned a previous federal court ruling that determined flexible workers on regular and predictable shifts were, in fact, employees and not casual workers. The new decision holds that those contractors should be classified as casual employees and, therefore, are not provided with leave entitlements.

The new ruling has caused controversy. Those in favor of the decision commend the court for effectively putting an end to a legislative campaign fighting to stop casual workers who are paid a 25% casual loading in place of paid leave from later seeking back-paid leave entitlements. Those opposed to the ruling believe this decision has lasting, negative implications for employment law and an inequality of bargaining power, and they cite conflicts with the protective intention of the Fair Work Act.

The Fair Work Amendment, introduced in March of 2021, updated the definition of a casual employee to include workers who have received an offer of employment on the basis that their employer makes no firm advance commitment to continuing and indefinite work. The new ruling allows employers to resume casual worker status even if the worker received regular assignments on a continuous pattern of work.

Takeaway: While such a ruling may provide some clarity for employers in the near term, companies should maintain visibility into their casual worker population and identify those who are on recurring flexible work agreements and may be at risk of misclassification in the future.

Australia: Surprise Ruling Strengthens Employers’ Say in Casual Worker Classifications

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