A recent FWC case highlights the fine line between dismissing a casual employee and the employment relationship coming to a natural end. 

Casual employment is often viewed as a flexible arrangement, allowing employers to allocate work as needed and terminate employment without notice.

However, Fair Work requirements and recent reforms to casual employment law mean employers need to tread carefully when ending a casual employment relationship.

This was made clear by a recent case heard by the Fair Work Commission (FWC), where a casual employee successfully challenged his dismissal despite his employer arguing that his casual status meant he was not guaranteed ongoing work.

This case is a good reminder to employers that dismissal claims are not restricted to permanent employees, says Cedric Moutou, HR Consultant at HR Expertise.

“Casual employees are excluded from bringing unfair dismissal claims unless they worked regularly and systematically, had a reasonable expectation of continued employment and worked for more than six months for a non-small business employer or 12 months for a small business employer,” he says.

“However, even if a worker is deemed to be a casual worker, and therefore cannot file for unfair dismissal, they still have access to other types of claims under the Fair Work Act – such as a general protections claim.”

Read more about recent reforms to casual employment law here.

Was the employee dismissed?

The central debate in this case was whether the casual employee was dismissed or whether the employment relationship came to a natural end due to a lack of available work.

In November last year, just four days after the employee had commenced work at a labour hire company, he received an email from his employer telling him that he was “no longer required to return to site”. 

After the employee objected and threatened legal action, his manager wrote that he should “review [his] contract and stop making idle threats”. 

When the employee initiated a claim, the employer argued that no dismissal had taken place, given that the employee’s casual status meant there was no guarantee of ongoing work.

“Casual employment does not offer a firm advance commitment to an ongoing agreed pattern of work. As such, employers have the flexibility to allocate work as required,” says Moutou.

However, the FWC found that the way the employer directly told the worker he was no longer needed constituted ‘termination on the employer’s initiative’, and therefore met the criteria for dismissal per the Fair Work Act. As a result, the employee is now free to proceed with a general protections claim.

This is not the first instance where the “no guaranteed work” defence has fallen short in a Fair Work case involving casuals.

In another FWC case heard last year, the Commission ruled that a casual worker was effectively dismissed after her employer stopped rostering her for shifts without explanation. 

The employee in this case had been working regular shifts on a casual basis for two years when she was removed from the roster, which the employer claimed was due to a drop in business needs. 

However, the FWC found no sufficient evidence of a reduction in available shifts, and found that the worker’s removal from the roster signaled the end of her employment on the employer’s initiative.

“It’s always best to treat team members with respect and dignity when terminating their employment – irrespective of their employment status.” – Cedric Moutou, HR Consultant at HR Expertise

Considerations when terminating casual employment

A key takeaway from these cases is that dismissing a casual employee should always be done transparently. Trying to disguise a dismissal as a natural end to the employment relationship can increase legal risk and cause employers to overlook the legal obligations that come with a dismissal.

If a decision is made to terminate a casual employee, HR’s first step should be to double check that they meet the recently updated definition of a casual employee in the Fair Work Act. 

The new definition, introduced in August last year, states that a person is a casual employee only if, when they start employment:

• The employment relationship has no firm advance commitment to ongoing work, taking into account a number of factors, and
• They’re entitled to a casual loading or specific casual pay rate under an award, registered agreement, or employment contract.

If an employee does not meet these criteria, they will most likely be classified as permanent for the purposes of Fair Work entitlements.

This enlivens a number of obligations and key considerations on the part of employers, says Moutou. 

“[For example], if the employee should be classified as a permanent full-time or part-time employee, as per the criteria under the Fair Work Act, then a notice period or payment in lieu of notice may apply,” he says.

“[What’s more], if the casual label is misapplied and the employee is considered a permanent full-time or part-time employee, and their role is no longer required to be performed by anyone, then a redundancy situation may arise.”

Once it’s been established that the employee meets the criteria for casual employment, the next step is to initiate a structured and procedurally fair dismissal process.

Although casual employees are not afforded the same unfair dismissal protections given to permanent workers during dismissal, Moutou advises going about the process with the same rigour and commitment to fairness as they would with a permanent employee.

“Notify the team member of the reason for termination and grant them the opportunity to respond to it,” he says. “It’s advised to offer a support person to be in attendance at a termination meeting and at any disciplinary meetings in the lead up to a termination.

“The team member’s manager should be encouraged and coached on how to best deliver the termination news to their direct report… [And] the termination letter should also encompass these details, so the employee has a physical record of the steps taken to support them in rectifying the situation.”

An approach like this will help protect the welfare of the employee as well as mitigating potential legal or reputational risk, he explains.

“Termination of a casual employee is not a pleasant process. It’s always best to treat team members with respect and dignity when terminating their employment – irrespective of their employment status.”

All information, content and materials available on this site are for general informational purposes only. The contents of this article do not constitute legal advice and should not be relied upon as such.

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