What we can assist with

• Collating a list of all employees who have continuous service
• Reviewing periods of continuous employment to determine any periods of a break in service
• Determining average weekly earnings to calculate the LSL entitlement
• Quantifying the LSL entitlement for all eligible employees and adoption of AASB 119 where required to comply with Australian Accounting Standards)
• Preparation of journal entries to accrue LSL’s at month/year end to book in your financial accounts
• Advice around the payment of LSL where an employee requests a period of LSL while still employed, upon termination or resignation.  What are considered ordinary times earnings and is Superannuation Guarantee to be paid
• Review of payroll systems to provide you with comfort:
  • Employees are set up correctly
  • LSL settings applied correctly
  • Accuracy of weeks and dollar amounts accrued
  • LSL taken has been recorded correctly to reduce entitlements

What information would we require in respect of your employees to undertake a review of any potential LSL liabilities ?

• Employment start date
• LSL calculation date
• Dates and types of any breaks in service
• Weeks of LSL already taken
• Ordinary pay (usually for those employees who work normal weekly hours)
• Highest Average Weekly Earnings (usually for those employees who are casual or seasonal workers):
  • Total earned in last 52 weeks
  • Total earned in last 260 weeks
  • Total earned for the period of continuous employment

No sensitive payroll data required such as employee names, tax file numbers, addresses, date of births, taxing details.

FAQs

If we had an employee who is contracted casually, however works on a regular basis with the impression to work at least 4 days a week and we have offered a FT/PT position, however was declined by the individual and requested to remain casual. Are we at any risk with this?

A casual employee is not required to accept an offer to convert. Employers should keep a record of all offers made and all acceptances and rejections. Employers should also ensure their employment contracts are up to date and maximise protection against possible future claims.

Does casual rate loading (25%) cover annual leave and long service entitlements

Where a casual employee is not required to convert to permanent staff under the Fair Work Act, they will remain as a casual employee.  A casual employee is not entitled to annual leave and similar leave for personal, bereavement, parental etc.  The casual rate loading is paid to compensate the employee for not having an entitlement to paid leave breaks.

The casual hourly rate loading does not include an amount to cover long service leave and an employer cannot include a loading to compensate for non-payment of long service leave.

A casual employee is entitled to long service leave where their employment is considered continuous and has exceeded the minimum service period.  Where this applies and the casual employee takes long service leave, the average weekly earnings is calculated on the casual employee’s current pay rate including the loading component.

How does this apply to small business with only one or two employees where one employee is casual?  The casual employee has been steadily employed and receiving 25% loading.

A small business employer (an employer with fewer than 15 employees at a particular time, taking into account the employees of associated entities of the employer) is covered by the new casual employment provisions in the Fair Work Act 2009 (Cth).

The primary exception is that a small business employer is not required under the new provisions to offer permanent employment to casual employees.

How about we have employees transfer from our corporate or sister companies overseas? Will the service years start from they start with the overseas employer?

It will depend on the applicable State LSL Act and the terms of the employee’s contract.  We set out below some examples of the State Acts and recommend that you review the applicable State Act for any employees who transferred from an overseas related entity.

In Victoria, the LSL Act provides for ‘one employer’ that includes a related corporation or a corporation with substantially the same directors and/or same management, the employment will be continuous.  The Victorian Act does not limit the geographic location of the related corporation.

In Queensland the LSL Act has a similar provision for the meaning of same employer and does not limit the location of the related entity, although the employee must be in Queensland at the time of termination or taking of leave.

In WA, there was a case, Venier’s case, where the court ruled to exclude the employee’s 26 years overseas employment with a related entity.

If in education we have casual sports staff managing kids sport that is seasonal, summer sport and winter. The coach works in summer coaching students tennis at the College in consecutive years is this considered continuous for LSL?

The employment of the casual sports staff will be considered continuous where the absence is due to seasonal factors.  The absence will not break service even where it is longer than the required 12 weeks under the LSL Act (Vic) 2018.

So, LSL pay is calculated differently depending on whether the leave is being taken during service or being paid out when employment ends?

The calculation of long service leave is the same for an employee who takes long service leave or is paid out on termination of employment.  The calculation is based on the employee’s average weekly earnings (taking the highest of average earnings of 52 weeks, 260 weeks, or the entire service period) x the weeks accrued based on the employee’s service period.  Where the long service leave is paid out on termination, there is no superannuation payable under the Superannuation Guarantee Administration Act (SGAA) 1992. 

If an employee refuses conversion, must you offer again after another 12-month period?

Not under the Fair Work Act 2009 (Cth). However, the employee will retain a right to request conversion in the future.

Do we need to look at LSL for long term casuals that have been terminated in the last few years eg  in 2020

Short answer Yes.  Where a casual employee has terminated and their previous employment provided for continuous service exceeding the legal entitlement to long service leave, either on a pro-rata or full entitlement basis.  The employee would have generally have 6 years to make a claim after the date of termination under the law of limitations under the Statutes Act.

Have casual employees always been entitled to LSL? If not when did it begin?

Short answer Yes.  In Victoria, the LSL Act 2018 (2018 Act) applies from 1 November 2018 and replaced the LSL 1992 (Vic) Act. (1992 Act)

Under the former 1992 Act, amendments were made with effect from 1 January 2006 to specifically include casual and seasonal employees.  Prior to 1 January 2006, the Act did not include specific reference to casual employees, although the courts had determined over the past decades that many casuals were entitled to long service leave where they had continuous employment with one employer.

The 2018 Act did include specific changes for absences that would not constitute a break in service, e.g. paid and unpaid parental leave up to 104 weeks.

If you are taking over a business do your casual workers start from zero?

The answer depends on what has been negotiated in the business sale agreement.  Generally, where an employee remains with the business after sale, the new employer is responsible for the employee’s long service leave entitlement.  The period of employment with the old employer transfers to the new employer and becomes liable for the entire service period.  It is common in sale contracts for the long service leave entitlement to be documented and quantified and the purchaser reduces the agreed business sale price by the assumption of the liability representing the after-tax cost of the long service leave accrued.  This would include the casual employees where they satisfy the continuous employment requirement.

Further in relation to a sale of business, where an employee is dismissed by an old business owner and employed by the new business owner within 12 weeks of their dismissal to do work which is substantially the same as for the old employer, the employment is deemed continuous.

How do you terminate a casual employee?

Issue a letter of termination to the casual employee to state the contract of employment has been terminated.  Generally the contract of employment will not have a notice period.

Do ‘normal’ on-costs apply to LSL payouts?

Long service leave is considered rateable remuneration for the applicable State payroll tax and Workcover laws.  This covers both long service leave taken and leave paid out on termination.

Unused long service leave paid out on termination is not subject to the minimum superannuation contributions under SGAA 1992.

Are there template letters offering casual conversion and a template letter to say they are not eligible for casual conversion?

The Fair Work Ombudsman provides template letters to assist employers. Alternatively, you can seek advice to obtain a letter tailored to your organisation.

How about the company that has no part time or full-time positions available due to COVID-19.  Does the employer still have to move a casual who is willing to convert to PT or FT?

The focus of the casual conversion provisions is not on whether there is an ‘available’ position.

In relation to an eligible employee, an employer should consider whether if during at least the last 6 months, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time employee or a part-time employee (as the case may be).

An employer is not required to make an offer of conversion to a casual employee if there are reasonable grounds not to make the offer. The Fair Work Act 2009 (Cth) sets out a non-exhaustive list of grounds that are reasonable grounds for deciding not to make an offer.

Is there ‘regular employment’ of a roster done around someone’s university timetable so that they are not refusing shifts.  They are offered shifts around their timetable each semester during the COVID lockdown.  We have not rostered most of the casual to work for the last 3 months or more, do I have to still give them the casual conversion?

In relation to an eligible employee, an employer should consider whether if during at least the last 6 months, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time employee or a part-time employee (as the case may be).

You should consider the pattern of work of the employee in the last 6 months and consider whether the employee could the employee could continue to work as a full-time employee or a part-time employee (as the case may be) without significant adjustment.

Get in touch

For any specific questions regarding your situation or to discuss navigating these changes for your organisation, reach out to one of our experts.

Steve Allan 

E sallan@sw-au.com

Sharon Burke

E sburke@sw-au.com

Janelle McPhee

E jmchpee@sw-au.com

Legal expert

Alison Baker 

E alison.baker@hallandwilcox.com.au

The post Webinar FAQs: Changes to the treatment of casualised workforce  appeared first on SW Accountants & Advisors.

Employers are required to review and reassess their casual employment arrangements before 27 September 2021. Discover what this change means for your business and what you need to do to prepare.

Experts from SW and Hall & Wilcox discussed:

• How casual employment is defined
• What are the new casual conversion rules?
• Who is entitled to long service leave
• What employers need to prepare now
• Calculation of entitlements
• Record keeping
• Underpayments

Expert speakers

Steve Allan Director, SW	Sharon Burke Director, SW
Alison Baker Partner, Hall & Wilcox	Janelle McPhee Associate Director, SW

Contact us

If you have any queries or would like more information, please contact the Marketing team via marketing@sw-au.com.

Click here to find out more about our upcoming and past events.

The post Spotlight | Changes to the treatment of casualised workforce appeared first on SW Accountants & Advisors.

Review required for casual labour contracts

It is a common misconception that casual employees are not entitled to any personal, annual and long service leave based on the premise that they receive a loading on hourly rates as compensation.

Following the landmark decision handed down by the High Court of Australia in the Workpac Pty Ltd v Rossato case and statutory changes to the Fair Work Act 2009 (FWA) in March 2021 with retrospective effect, employers are required to review and reassess their casual labour contracts. Particularly where there is regular and systematic work provided and the employee’s contract has a commitment to future work.

Leave entitlements can be a minefield for employers, especially when relating to casual employees. To help you understand the potential risks and obligations, we have set out below the current position for annual leave and long service leave.

When is a casual employee entitled to annual leave?

An employee’s entitlement to annual leave is prescribed in the National Employment Standards (NES) within the FWA.  In general terms, a casual employee is not entitled to annual leave and generally other types of leave, i.e. personal leave etc. On 27 March 2021, the FWA was amended to include the definition of casual employment. The amendments have retrospective effect and provide a 6 month transition period.

A casual employee is defined as someone who has accepted a job offer from an employer knowing that there is no firm advance commitment to ongoing work with an agreed pattern of work.

A casual employee will be classified as permanent where there is a ‘casual conversion’. This will apply where the employee has completed 12 months of service. There is an exemption for small business where they employee less than 15 employees at a particular time.

Who is entitled to long service leave?

Long service leave in Australia is covered under Australian State legislation. In most instances, an employee will be covered by the Long Service Leave Act (LSL) in the applicable State where they work, although various industry sectors have separate Acts, e.g. construction and cleaning industries.

All State LSL Acts provide that full time, part time, casual, seasonal and fixed term employees are entitled to long service leave. The entitlement is subject to an important provision that their employment is ‘continuous’, i.e. no breaks in service. The contentious issue for casual employees is whether their services meets the definition of continuous employment. This definition varies between the LSL Acts although all contain the same principles with differing periods of time.

Continuous means there must not be an absence of more than 12 weeks (except for NSW, SA, WA and NT limited to 2 months) between any two instances of employment, unless:

• the employee and the employer agree before the start of the absence
• the absence is in accordance with the terms of the engagement
• the absence is caused by seasonal factors
• the employee has been employed on a regular and systematic basis and has a reasonable expectation of being re-engaged.

The key issue for employers to address is whether their current contractual arrangements with their casual staff provide for regular, certain, continuing, constant and predictable work.

By comparison, casual employment that would not be continuous is one where the work allocated to the employee is unpredictable, irregular, intermittent and not pre-allocated.

What should employers do?

• Conduct regular reviews of existing casuals to determine whether they have continuous employment and are entitled to long service leave. Remove casuals from employment lists when they are no longer needed (offboarding) and document this in writing
• Review onboarding processes to firm up the casual employment arrangement including documenting in the written employment contracts. For example, avoid where practicable any commitment to future work, provide the choice to refuse work, the ability for changes or fluctuation in the days and hours of work and termination at short or on no notice
• Ensure payroll software systems accurately calculate and record the accrual, what long service leave has been taken by employees and the amount they have been paid during the leave period
• Ensure the financial reports reflect long service leave liabilities for long-standing casual employees. Consider including payment of future provisions in cashflow forecasts
• Upon termination of a casual employee, ensure the full amount of the long service leave entitlement is paid out on the final day of employment

Record keeping

Employers must keep accurate records during the entire period of employment, retain these for at least seven years after the employment ceases and must be kept in the form prescribed by the regulations made under the applicable LSL Acts.

An employer must not refuse a request from an employee to provide their Long Service Leave record and criminal penalties may apply.

Calculation of entitlement

Casual and seasonal employees accrue long service leave in the same way as part-time and full-time employees.

An employee is entitled to be paid their long service leave based on their ‘ordinary pay’, ie: actual pay received for working his or her normal weekly hours and ordinary time rate of pay at the time the leave is taken or is to be paid out on termination.

The long service leave entitlement for casuals who do not have normal weekly hours, is calculated by averaging the hours of work.

If the casual does not have an ‘ordinary rate’, perhaps due to piece work rates, then averaging requirements will also apply. The calculation of rates vary between the States. For example, in Victoria the rate will be the greatest of the average earned over either the last 52 weeks, 260 weeks or entire period of employment.

Get in touch

Reach out to one of our payroll experts below for guidance on how you can navigate these changes.

Contacts

Sharon Burke

E sburke@sw-au.com

Janelle McPhee

E jmchpee@sw-au.com

The post Changes to treatment of casualised workforce appeared first on SW Accountants & Advisors.