One Minute Summary
In the first two decisions that we examine, the Fair Work Commission confirms that even though each engagement of a casual employee is a new contract, not offering further shifts is a decision the employer makes which can then fall within the termination provisions of the Fair Work Act.
The third decision highlights the need to treat regular and systematic casuals as if they are permanent employees for the purpose of having a valid reason to terminate. In this case the employer ceased to provide a young casual fast-food employee with shifts and gave a vague unsupported reason to the Commission of not meeting performance standards. Wirth contradictory evidence the Commission did not accept this reason and awarded the former casual employee over $10,000 in compensation.
While regular and systematic (casual) employees can access unfair dismissal protections after 6 or 12 months they can access the General Protections immediately after commencing employment. Employers need to be careful when reducing or changing regular casual shifts.
Can a casual be terminated or does their employment end naturally at the end of each engagement.
In this ER Update we examine several Fair Work Commission decisions which provide some guidance on whether an employer actually ‘terminates’ casual employment or whether this occurs through no further shifts being offered to the person.
In the first case a casual disability employee filed a General Protections claim under the Fair Work Act against their former employer after being advised by letter that ‘after a review of staffing arrangements and operational needs’ the employee would not be offered any further shifts thereby ending the engagement.
In the initial proceedings the key jurisdictional question was whether a termination had in fact taken place. If a termination had taken place, then her General Protections claim could proceed and be heard on its merits.
The former employee argued that her employment had been terminated when she received the letter. The employer contested that a termination had not taken place as she had been employed on a casual basis with no guarantee of ongoing work. Each work occasion was therefore a separate contract of employment. Her employment contract stated that as a casual employee there was no guarantee of ongoing or regular work.
The employer provided several reasons for no longer providing shifts to the employee including ‘operational necessity’, ‘participant directed feedback’ and complaints from clients.
The employer argued no written or verbal notice of termination had been issued stating that each individual shift constituted a separate contract that concluded naturally at the end of each engagement. This gave the employer the right to cease offering new shifts without it constituting a dismissal.
Under the Fair Work Act a dismissal occurs when “the person’s employment …had been terminated on the employer’s initiative” (or when someone resigns but was forced to do so.)
The Commission found that the employer’s letter to the employee “leaves no room for doubt that employment is being brought to an end by the employer with immediate effect." This was supported by the separation certificate stating employment had ceased for reasons of shortage of work.
The Commission rejected the argument that casual status prevented a finding of dismissal stating, ‘While casual employees may be engaged over separate contracts employers can choose to continue or discontinue the arrangement entirely.’
This decision allowed the casual employee to pursue their General Protections claim.
Similarly in the second Fair Work Commission decision the employer argues that no dismissal had taken place because the labour hire employee had been employed as a casual.
The employer had emailed the employee stating “Please be advised that you are no longer required to return to site” with no reason being given.
In proceedings the employer provided documentation that the employee ‘was engaged as a casual with no reasonable expectation of continuous or ongoing work”.
In examining the employer’s argument, the Commissioner stated an “employer-initiated termination occurs when "the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship."
The Commission added that the employment contract clause which stated ‘the employer does not give casuals any advance commitment to continuing work ….is not required to offer any further work’ is not a loophole which means casuals cannot be terminated.
The Commission stated it was clear that the employee’s employment had been ended at the initiative of the employer.
Does terminating a casual require a valid reason?
Having determined that stopping the further engagement of casual employees constitutes a termination at the employer’s initiative we now examine whether terminating a casual requires a valid reason.
In this case a young casual employee, who had been engaged on a systematic and regular basis for approximately 14 months, suddenly experienced a substantial drop in her allocation of shifts at a fast-food outlet.
After unsuccessfully seeking to get more shifts, she lodged an internal complaint alleging discrimination in work allocation. While the complaint was being examined at head office the local managers told her no shifts were available but told her she was still employed.
After several months unsuccessfully seeking an outcome to her complaint from head office, she lodged a General Protections claim with the Fair Work Commission.
During proceedings the employer stated the employee had not been allocated work as she “did not meet performance standards and that there had been a breakdown in the working relationship”. The employer provided no evidence to support this statement to the Commission.
The former employee responded with written statements from ten colleagues indicating strong work performance.
The Commissioner concluded she was a hard-working employee and that there was no valid reason for her termination.
The Commission was also scathing against the employer calling out the lack of professionalism and inaction dealing with the employee’s complaint.
The Commissioner stated the dismissal was harsh, unjust and unfair and awarded $10,252 in compensation, noting that the amount would have been higher except the Fair Work Act restricted the amount of compensation to what she had earned to the last 6 months of her employment. The last 6 months included reduced shifts and no shifts thereby decreasing the potential compensation payable.
Commentary
While the above decision acknowledged that casuals appear to have a new employment contract on each engagement their employment contract does not ‘naturally’ come to an end at each engagement. Not engaging such employees for further shifts is still a decision made by the employer which can constitute a ‘termination’ under the Act.
This is where the law of contract is overruled by the Fair Work Act of employment being terminated at the initiative of the employer.
Secondly, a decision to terminate a regular and systematic casual employee for cause will be subject to the same scrutiny as a permanent employee by the Fair Work Commission. In coming to a decision in relation to the amount of compensation the Commission stated the young casual employee would likely have worked with the fast-food outlet for another 12 months.
Employers also need to be careful in how and why they change casual employee’s allocated shifts.
Regular and systematic casual employees can access unfair dismissal protection under the Fair Work Act after 6 or 12 months depending on their employer’s size. However, such employees can access the General Protections after just one day’s work.
One of the complexities with the above matters is - what constitutes a regular and systematic casual as against what I call a ‘casual casual’? I’ll try and answer that question in upcoming Employee Relations Updates.
It is recommended that employers seek professional advice in relation to termination decisions to minimise the risk of large compensation payments for simple errors.
Kind Regards
Michael Schmidt
M 0438 129 728
[email protected]
www.hunteremployeerelations.com.au
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