Don’t be Casual About Casuals

Don’t be Casual About Casuals

In a previous article, I discussed the various traps and pitfalls for employers who are not fully aware of what exactly is a casual employee.  A recent case in the Full Federal Court of Australia has further complicated the issue.

It is important to start at the common law to develop an understanding of casual employees. The common law test – set out clearly in a Federal Court 2001 case – was that the essence of ‘casualness’ is “the absence of a firm advance commitment as the duration of the employee’s employment or the days (or hours) the employee will work”. What this means essentially is there needs to be an absence of an agreed pattern of work. The key characteristics of being casual is that there are irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability. This manifests itself in short-term employment, shifts that change in timing and duration, and uncertainty as to whether or not an employee will be with work from one period to the next.

From that common law test there evolved an understanding that where an employer pays an employee in accordance with an applicable Award, as a casual employee, the assumption or inference arises that employee is casual regardless of the fact that employee in question may actually work in a regular or predictable pattern. This concept was reflected in the decision of the Full Bench of the Fair Work Commission in 2013 where the Commission found that employees who engaged and paid as casuals pursuant to an Award were “casual employees” for the purposes of redundancy provisions of the Fair Work Act.

Dial forward now to this year and the Full Federal Court of Australia decision in WorkPac Pty Ltd v Skene (WorkPac) in which the Full Federal Court effectively reverted back to the common law test stating that regardless of how an employee is treated pursuant to an applicable Award, the significance of a casual employee not having a “firm advance commitment” is not to be underestimated. The Court held that the payment of a casual loading under an Award might reflect the intention of the parties but is not determinative.

What’s that? I am paying these casual employees a 25 per cent loading, so how can they then turn around and claim unpaid annual leave and other entitlements that permanent or part-time employees are entitled to? This is true, WorkPac leaves the question unanswered and it may be the case that an employee may be able to double-dip if they are not really casual but have received the casual loading. Compounding the problem of course is that if an employee makes a claim for underpayment (of annual leave etc) on the basis that they were really a permanent employee and not a casual, the employer may be liable for fines under the Fair Work Act.

The take home here for employers is to closely review and analyse the patterns of employees who are employed as casuals. They need to have the necessary characterisation of casualness or otherwise the employers stand exposed to significant claim for back pay of statutory entitlements.

But wait, it gets a little worse for employers.
From 1 October 2018, included in approximately 80 modern Awards is a “casual conversion clause”. In simple terms, it requires the employer to tell employees they’re entitled as a casual employee to request conversion to permanent employment. These 80 odd Awards include the Fast Food Industry Award, the General Retail Industry Award and the Restaurant Industry Award.

Where a casual employee seeks to convert to permanent employment, the employer may only refuse such a request on reasonable grounds. “Reasonable grounds for refusal” may be many and varied, and the model clause now required to be inserted in the Awards contains a nonexhaustive list including:
• where conversion to permanent employment would require significant adjustment of hours;
• where it is foreseeable in the next 12 months there will be changes to the hours of work/days and/or times that an employee works; or
• where the employee’s position will cease to exist in 12 months.

There are requirements of consultation between employer and employee, and written reasons to be provided by an employer when refusing a casual conversion request. If an employee disagrees with the decision of his or her employer, that employee may then make an application for the dispute to be heard by the Fair Work Commission.

The decision in WorkPac and the changes to Awards commencing 1 October 2018, will have a lasting impact on industries reliant on casual employees. These changes may also restrict an employee’s freedom to work casually according to their financial position, needs and desires … is freedom of employment becoming less free?

Amends to the Insolvency Law Reform Act

Amends to the Insolvency Law Reform Act

On 1 March 2017 the Insolvency Law Reform Act 2016 (ILRA), came into effect, significantly changing the rights of creditors to access information from Trustees and Liquidators.

The Insolvency Law Reform Act amended the Bankruptcy Act 1996 (Cth) and the Corporations Act 2001 (Cth) by adding what have been called the “Insolvency Practice Schedules” (IPS).

Creditor’s rights to request information

Pursuant to the IPS, creditors of a company are able to request the external administrator provide information, produce a document or provide a report in respect of a matter relating to the external administration.  This power can be exercised by an individual creditor or by creditors as a whole.  Generally speaking the external administrator will be required to comply with such a request unless:

  1. The information, document or report is not relevant to the external administration;
  2. In complying with the request the administrator would breach his or her duties in the external administration; or
  3. It would be otherwise unreasonable for the external administrator to comply with the requests.

The Insolvency Practice Rules (Corporations) 2016 also provide further guidelines as to what constitutes an unreasonable request for information, the provision of a report or the production of a document.  These include where the external administrator is acting in good faith and is of the opinion that:

complying would substantially prejudice the interest of one or more creditors or a third party and that prejudice would outweigh the benefits of complying with the request;

the information, report or document would be privileged from production in legal proceedings on the grounds of legal professional privilege;

disclosure of the information, report or document would found an action by a person for a breach of confidence;

the request is vexatious.

What happens if the administrator does not comply?

If an external administrator refuses a request made pursuant to the IPS, and ASIC is satisfied that the request ought to have been complied with, ASIC may make a direction that the external administrator provide the relevant material within 5 business days of notice.  If the external administrator does not comply with the direction made by ASIC, the person making the request may apply to the court for an order that the external administrator provide the information, or alternatively ASIC may apply to the court for an order in response to non-compliance with it directions.  The new legislation places a formal obligation on external administrators to promptly respond to reasonable requests for information by creditors. Of course, while what is reasonable remains subjective, administrators should be mindful that when they receive a request from a creditor or creditors for information, that failure to act and respond promptly may see them breach their obligations and risk being tapped on the shoulder by ASIC or dragged off to court by those creditors to ensure their compliance.

If you have any questions about the Insolvency Law Reform Act or any insolvency concerns contact the team at Aitken Lawyers on 02 8987 0000.

This article contains general information and is prepared without taking into account your specific objectives.  Before acting on the contents, you should obtain the specific legal advice in relation to your own circumstances.

Litigation Funding and the Australian Class Action Regime

Litigation Funding and the Australian Class Action Regime

Over the past two decades litigation funding has become an increasingly critical component of the class action regime in Australia, so it’s no surprise that its regulation (or lack thereof) has garnered increasing attention.  We recently touched on this issue in an earlier blog, and now seek to expand on the issues raised therein and look at what is currently being done to reform the current state of play.

In late 2017 the Australian Law Reform Commission (ALRC), announced it was commencing an inquiry into litigation funding and the fees charged by lawyers in funded class actions, with a focus on access to justice and ensuring that litigants are not exposed to unfair risks and disproportionate costs.

In mid April, the ALRC chair, Justice Sarah Derrington, announced some of the Commission’s preliminary ideas and proposals which included:

  • increased regulation of the litigation funding market

 

  • the requirement that litigation funders obtain and maintain a licence from ASIC, the preconditions of which will include sufficient financial, technological and human resources, and the holding of adequate arrangements to manage conflicts of interest together with annual audits

 

  • the introduction of contingency fees for class actions, subject to a number of limitations, including that the law firm acting on contingency must also indemnify the funded party against adverse costs orders

 

  • increased judicial oversight of fees including giving the Federal Court an express statutory power to reject or amend the rate or percentage of fees charged by funders and introducing statutory caps preventing contingency fees and other costs exceeding 50% of the proceeds available to class members

 

  • ending the practice of funding “closed class” actions and instead initiating all class as open classes

 

  • addressing the issue of multiple class action proceedings by requiring that competing open class actions be resolved early by a court in an expedited case management process during which the court will determine “the most appropriate representative plaintiff, plaintiff law firm, and funder (if any) and which funder (if any) provides the best value for the class”.  In addition to this, a no “mover advantage” to be given to the first law firm / funder to file, although the court will be able set a cut-off date by which all competing matters must be filed.

 

  • Courts to approve costs agreements and funding agreements so that they are legally enforceable as a common fund

 

  • The introduction of specified settlement criteria for judges to take into account in approving a settlement

The above proposals are the first steps in the inquiry which is expected to progress to the formal submission stage in June / July of this year followed by the preparation of a final report in December.

The extent to which the above proposals will be incorporated into the current regulatory framework remains to be seen.  We will keep you updated on what are sure to be exciting developments in the regulation of litigation funding and the class action framework.

If you need assistance with litigation funding or other agreements do not hesitate to contact Aitken Lawyers on 02 8987 0000.

This article contains general information and is prepared without taking into account your specific objectives.  Before acting on the contents, you should obtain the specific legal advice in relation to your own circumstances.

Employers Take Note – Employment Law Changes from 1 July 2018

Employers Take Note – Employment Law Changes from 1 July 2018

In line with the regular annual reviews and changes, there are some employment law changes / workplace entitlement changes, effective from 1 July 2018.  They are:

  1. Minimum wage increased

Effective in the first full pay period after 1 July 2018, minimum rates of pay for adults who are full-time employees covered by Modern Awards increases by 3.5% and for award free adult full-time employees, the minimum wage increases to $719.20 per week or $18.93 per hour.

There are also allowance and expense amounts in modern awards that have been impacted as a consequence of the changes in employment law.

  1. Penalty rates reduced

As you no doubt heard in the media, on Sunday, 1 July 2018, penalty rates under numerous Awards and in particular, the hospitality and retail Awards, have been reduced by 10%, and 15% in other awards.  Ironically, this was also the same day that Federal politicians received a 3% pay rise!

  1. High income threshold increased

The high income threshold for the 2018/2019 financial year has been increased to $145,400.  This means that award and enterprise agreement free employees who earn over the income threshold aren’t eligible to make a claim for unfair dismissal.  As a consequence, the maximum amount of compensation payable for an unfair dismissal claim is 50% of the high income threshold, and has thereby been increased to $72,700.

  1. Tax-free threshold for genuine redundancy payments increased

In some good news for employees made redundant, in the 2018/2019 financial year redundancy payments are tax free to the extent that the first $10,399 is tax-free and thereafter, $5,200 for each completed year of service is also tax free.  For example then, an employee made redundant on 1 July 2018 who has completed 3 years of service with their employer would have approximately $26,000 worth of redundancy payments free of tax.

  1. Superannuation guarantee amnesty

Remember the 12 month amnesty to correct superannuation guarantee payment anomalies or errors commenced on 24 May 2018.  This is an important window of opportunity for employers in circumstances where the Minister for Revenue and Financial Service, Kelly O’Dwyer, has threatened twelve months in jail for those employers who don’t pay the compulsory superannuation when they should.  This amnesty represent a last chance for employers to get their affairs in order.

If you have any questions relating to employment law changes, please don’t hesitate to contact Walter MacCallum, Director on 02 8987 0000. Or email WMaccallum@aitkenlawyers.com.au