Reduced Full Time vs Casual Employees
Should casual employees be made redundant before full time employees as your business restructures? Do you need to have a formal redunancy process for casual employees? Let’s unpack this and more.
Please see below for a full transcript of the video.
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Transcript
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I’ve got a question here from Miranda, again, thank you for askingit , does the employment status need to be considered full time versus casual. So first of all, casuals are not entitled to redundancy pay, they’re not entitled to notice. But they are still entitled to the provisions of the award in respect to consultation.
So we still recommend a degree of consultation with casuals, if they’re being, if their employment is ending as part of a restructure, they’re just not entitled to the payments and the notice. Full timers and part timers are entitled to both the redundancy pay and notice periods, because those are both forms of permanent employment.
So I guess Yes, you probably would say that the level of process required for a full time and part timer is slightly higher than it would be for a casual, but we would recommend, we would recommend consultation across all three of those categories. And look, we just actually done this one in the in the horse racing industry, we’ve had a series of casuals and full timers that were made redundant as a result of a structural change or trainer no longer needing to train employees.
And that is something that we worked through. And you know, there was a degree of consultation with full timers, which was a bit more than what we did with casual. So again, where this flexibility around that how that happens. But we’d still advocate some level of consultation at all levels.
Are casual to be made redundant before, full timers I get what you’re asking me is, do you make casuals redundant before full timers? I think that’s what you mean. So I’ll answer that. So essentially, look, there’s no hard and fast rule on this. So it really comes down to what is suitable for the structure. And, you know, you may have a casual that’s in for example, if I’m running a HR consulting business, and I have a, an accounts person who works on a casual basis. And let’s say that my consulting business is down, because of whatever reasons, then I may need to end a full time consultants role because they are in Workplace Relations consulting rather than in accounts. So it depends on the role, let’s say the roles are like for like, then I think that there’s probably I think if you go into the commission, and if you’ve terminated a full timer, before a casual, the question will be why the casuals hours were not offered to the full timer, before making that redundancy, either in an offer of alternative employment, or for the basis of beefing up a reduced role back to full time employment. So I think that’s where this planning is very important, is to think about, okay, well what Having said that, that can be balanced against, well, some workforces will need to have a balance of full timers, and casuals. So in a hospitality venue, for example, having all full timers probably isn’t going to work, because you’re going to need to have flexibility around, you know, peak times and trough times, and Saturdays and midweek and those sorts of things. So you’re going to need a degree of full timers and casuals. So I think it’s probably a balance of those two things. Miranda, it’s, I don’t think there’s a definitive yes or no, I think it depends on how would the commission look at it, if it was presented to them? should, in an accounting environment, for example, more likely than not, there’s probably an obligation if the roles are similar to offer the casual hours to the full timer before looking at reducing the full timer’s status. But in the hospitality environment it might be different, because you might looking at, you know, maintaining a degree of flexibility in the structure around rostering of hours, and so on. So I hope that answers that question. And yeah, a very good question. And thank you for asking it.
Got a question here. If if an employee is categorized as a casual, but in essence as a part time long term employee, would this casual still be entitled redundancy payout? So great question, Minnie. And thank you for asking it. And I think that look, ultimately, employees, I want to be clear on one thing, a casual can be still a casual, that’s employed on a regular and systematic basis. So what I hear a lot from, and a lot of uncertainty from clients and our professional advisors is that perhaps a misunderstanding that of casual has been employed for five years on a regular basis is actually a part time employee. No, that’s not actually the case. They they could make a claim they are depending upon how that you know, how about how the how things have played out, but most modern awards these days have an obligation or not an obligation. Have a right for casuals to convert after either six months or 12 months. And what I say to the employer is look, so long as you’re informing the casual employee that they have that right, which some awards do and some awards have that the formal notification requirement. Then the then the casual has the choice, do I want to request conversion at six or 12 months? Or do I want to keep getting my casual rate of pay? Because the obligation or the right is to convert to the full time rate not to convert at the same casual rate, I think the best way of managing those uncertain situations is to make sure that if there is a right to convert under the modern award, that we tell the casual there is that right.
Because then the cap then the onus is on the casual to decide, okay, well, am I converting or not? and if the casual doesn’t convert well, then the employer should be quite comfortable that that employee is just the long term casual, that’s all they are nothing more, nothing more, nothing less. And a long term casual is not entitled to redundancy payments, a part time employee is. Now where there can be some gray areas in and around. This is why it’s important to have proper structures in place. So if you’ve got a casual employee, let’s have an employment contract which makes it clear that they can convert after six or 12 months. And then what that does is sets it up so that the onus is on the casual to make that decision, not not the employer worrying at night about is this person really part time or not. The other thing you can do in this process and again, this is very important in terms of payslips as well, is it clearly defined that the person is a part time employee for the purposes of payslips or a casual for purposes of payslips. So again, those are the sort of things that may be factored into how something like this may play out if it’s disputed, great question Minnie and thank you for asking it.
We have put together this what we call limited time restructure package for anyone who’s looking at undertaking a restructure. And that is and that would offer the following services as part of the restructure package that we will provide you with the restructuring and redundancy plan. We provide you with advice on the payments and the related obligations. We give you the initial meeting plan the initial consultation letter, we would give you advice about the alternative jobs and selection criteria if it’s applicable, we give you advice on the further consultation discussions, the final meeting plan, the final meeting and the discussions and letters around those things. We can organize for you outplacement and EAP. And we can give you a discount for the Fair Work Commission proceedings should you need us to represent you should any matters go before the commission for any for any clients with 1-3 redundancies or one three employees in that restructure costs $1500 plus GST. It’s a limited time offer that we’re offering only for the purposes of this because we come to the end of job keeper. We don’t normally offer this as a one off service. We do have it included in all of our support packages for clients which are essential support performance and risk and HR managers for any clients are interested in ongoing support arrangements. They are included at free of charge as part of those support packages. So if anyone’s interested in those things, please get in touch with this at ondemandhr.com.au and we can talk you through either a limited time restructuring service or assisting you on an ongoing basis with this being at no extra cost for you as part of a monthly support.