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DOUBLE-DIPPING PROVISIONS – CASUAL EMPLOYEES

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The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 offers employers greater certainty and protection from the threat of double-dipping practices in relation to casual employees.

WHAT IS DOUBLE-DIPPING?

Until recently, if a person:

1.       was employed as a casual employee; and 

2.       was paid casual loading in lieu of certain entitlements such as paid annual or personal leave; BUT

3.       that person was, in fact, a permanent (or “other than a casual”) employee-

then that employee may have been able to claim payment for benefits which he or she was entitled to accrue, despite having already been paid casual loading.

Previously, employers have sought (often unsuccessfully depending on the nature of their documentation) to set-off amounts paid to employees over and above the base requirements of an award or enterprise agreement, to satisfy any entitlement of the employee to accrue benefits such as paid annual and/or personal leave. 

Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (“Amendment Act“)

The Amendment Act makes important changes regarding double-dipping by:

1.       limiting the extent of an employer’s liability to an employee for unpaid entitlements; and

2.       limiting the types of matters that can be taken into account by the Court, in if the employer has discharged its liability to the employee.

The Amendment Act inserts, into the Fair Work Act 2009 (Cth), section 545A. That section applies if:

(a)    A person is employed, and the employment is described as casual employment; and

(b)    The employer pays that person a loading amount “to compensate the person for not having one or more relevant entitlements during a period”; and

(c)     That person was not, in fact, a casual employee during that period; and

(d)    That person (or someone on their behalf) makes a claim for payment for “one or more of the relevant entitlements” regarding the period of employment.

If (a)-(d) are satisfied, the Court hearing the claim is required to reduce the amount payable to the employee “by an amount equal to the loading amount”. 

However, the Court may instead reduce the employee’s claim by an appropriate amount equal to a proportion of the loading amount already paid to the employee. In reducing the amount by a proportion, the Court may only consider the term or terms of the applicable award, enterprise agreement and/or contract which:

1.       provide for payment of the loading; and 

2.       specify which entitlement the proportion of loading is allocated to.

Where there is ambiguity about the term/s of the contract or industrial instrument, the Court may also consider what would be the “appropriate proportion of the loading amount attributable to each of those entitlements in all the circumstances”.

Section 545A applies retrospectively.

WHAT DOES THIS MEAN FOR YOU?

For employers- the amendments provide greater clarity regarding the liability for payment of entitlements to an employee who is treated and paid as a casual employee, but who is in reality a permanent employee or “other than a casual”. However, it is critical to ensure that written contracts of employment for casual employees- including any individual flexibility agreements:

1.       clearly identify the parties’ agreed purpose of the payment of casual loading; and

2.       clearly allocate the proportion/s of the loading paid to the employee’s specific entitlements. 

Payment of loading “in lieu of” entitlements may not satisfy the statutory and industrial requirements, and may expose you to a risk of double-dipping by an employee.

If you are an employee or employer and require assistance with understanding or applying the recent double-dipping provisions or require assistance with updating your employment contracts, please contact our Workplace Law Team.

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Tiana Daly

With over 15 years legal experience, Tiana Daly heads up our Workplace and Employment Law team and is able to advise on the ‘Fair Work’ Framework.