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Part 4: Modern Award Series – Categories of employment

February 18, 2018

If you’ve been following our Modern Award Series, you should by now be certain when a Modern Award will cover your employees, what Modern Award applies and how your employees will be classified under an applicable Modern Award.

Following on from Part 3 of this series, it will be necessary to consider in what capacity you will require your ongoing employees, being on a full-time, part-time or casual basis. In most Modern Awards, employers are required to advise their employees in writing of their classification (usually upon commencement) and any subsequent changes that are lawfully made.

Each category of employment carries different implications for the business and it is a requirement of the Modern Awards that employers inform each employee of their employment status at the time they are first engaged.

In practice, the lines between each category may sometimes become blurred. For example, part-time employees may be relied on to fill in shifts or work additional hours where other employees are unavailable. However, under most Modern Awards, there is little room for flexibility with part-time employees, creating non-compliance risks.

Accordingly, it is important to ensure that you understand the three categories of employment and act in accordance with the applicable Modern Award when engaging your employees.

What is a full-time employee?

Full-time employees are defined across most Modern Awards to mean “an employee who is engaged to work an average of 38 hours per week”. The full-time basis for employment ought to be reflected in any contract of employment.

Employers who offer full-time employment to their staff must, therefore, ensure that they are performing an average of 38 hours per week. Depending on the terms of the employment contract, an employer may be required to compensate an employee for any additional hours at applicable overtime rates (unless for example, an annualised salary has been agreed).

Serious risks can arise where employees are told that they are “casual”, but are consistently engaged to perform an average of 38 hours per week and there is no formal record or employment contract to confirm what was agreed.

Full-time employment attracts a number of benefits prescribed by the National Employment Standards including, but not limited to, annual leave, personal leave and public holiday pay.

In the retail and fast food industries, full-time employment is most common amongst those exercising a level of managerial responsibility, such as your Shop Managers and Area Managers. Such employees will have a fixed schedule of their working hours which offers more stability within the business (noting that it is important to be aware of the rostering conditions in any applicable Modern Award such as, consecutive days off, maximum daily hours, notice requirements and more).

What is a part-time employee?

Part-time employees as defined by the Modern Awards are commonly misunderstood.

Most Modern Awards provide that a part-time employee is an employee who works less than 38 hours per week and has reasonably predictable hours of work. It is important to familiarise yourself with the specific requirements of the Modern Award (or Modern Awards) that apply in your business. Some Modern Awards prescribe specific conditions for part-time employees, for example, the number of hours of work guaranteed each week and when those hours of work are to be performed each week. A Modern Award might also require the start and finish times for each shift to be agreed and when breaks are to be taken. These specific conditions must be reflected in writing (for example, in a contract of employment) before the part-time employee is first engaged.  

Like full-time employment, part-time employment also attracts a number of benefits prescribed by the National Employment Standards including, but not limited to, annual leave, personal leave and public holiday pay. However, these entitlements accrue on a pro rata basis and in accordance with an employee’s ordinary hours of work.

Part-time employment is best suited to those employees who can provide certainty as to their availability. Assuming a part-time arrangement suits the operational requirements of the business, you might consider that engaging those employees on a part-time basis is ideal. 

What is a casual employee?

Casual employment is a common feature of the retail and fast food industries having regard to the dynamics of the retail and fast food workforces and due to casual employment being flexible in nature. Employers have considerably more freedom to engage casuals in accordance with the business’ needs and are not restricted by overly stringent rostering conditions save for minimum shift engagements. Importantly, minimum shift engagements for casual employees vary between the Modern Awards.

The Modern Awards unhelpfully define casual employees as “an employee engaged as such”. The Courts have held that there a number of factors which ought to be considered in determining whether an employee is a casual employee or not, such as the number of hours worked per week, whether rostered hours were regular and consistent, whether the employee was by paid the hour and more.

However, the law in this regard is constantly changing. Simply calling an employee a “casual” and paying them a casual loading does not, of itself, mean that the employee is a true casual employee. For example, significant hours of work with consistent starting and finishing times over an extended period may resemble part-time or full-time employment and call into question the true nature of an employee’s engagement.

Generally, each engagement or shift constitutes a separate contract of employment and therefore casual employees are not generally entitled to ongoing employment. This principle also works in reverse, such that a casual employee is not required to make themselves available for a shift.

Most Modern Awards provide that casual employees are paid a casual loading of 25% in addition to an ordinary hourly rate. The purpose of a casual loading is to compensate a casual employee for the benefits associated with full-time employment, such as annual leave, personal leave, public holiday pay and notice. Further, most Modern Awards also provide casual employees with an entitlement to overtime rates in certain circumstances.

Additionally, regular and systematic casuals with at least 12 months of service are entitled, under some Modern Awards, to request a conversion to full-time or part-time employment. Whether an employer is required to grant the request is subject to a number of considerations by the employer. We recommend you seek advice in circumstances where a casual employee requests conversion to full-time or part-time employment.  

Casual employment is a common feature of the industry because it provides employers with flexibility in circumstances where operational requirements of a business requires a scalable workforce. Casual employees can be asked to work at short notice, with no guarantee of regular hours and are suitable for irregular and short-term work demands.

What should I do if I have incorrectly classified my employees?

If you are uncertain whether you have correctly classified your employees, you are advised to contact the NRA.

It will be necessary to consider each employee’s roster, timesheets and contract of employment in totality, for the purposes of determining the true nature of their engagement.

Similarly, if you are an employer who has not entered into contracts or employment with your staff, you are advised to contact the NRA.

Contracts of employment are essential to managing the employment-related disputes and the risks arising from non-compliance with workplace laws.

The above article is prepared for the purposes of providing general information only and before determining which modern award covers your business, you should seek advice from NRA that is specific and tailored to your individual circumstances. 

Please do not hesitate to contact NRA on 1800 RETAIL (738 245) anytime during usual office hours for assistance.

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