EXPLANATORY STATEMENT
Select Legislative Instrument No. , 2018
Issued by the authority of the Minister for Jobs and Industrial Relations
Subject – Fair Work Act 2009
Fair Work Amendment (Casual Loading Offset) Regulations 2018
Purpose
The Fair Work Amendment (Casual Loading Offset) Regulations 2018 (the Amending Regulations) amend the Fair Work Regulations 2009 (the Principal Regulations). The Amending Regulations provide declaratory clarification of existing legal and equitable general law rights to offset payments of identified casual loading amounts in circumstances where a person makes a subsequent claim to be paid one or more entitlements under the National Employment Standards (NES). The Amending Regulations describe the existing general law circumstances in which payments may be taken into account and are intended to facilitate clarity and certainty for employers and employees of their existing rights.
Legislative Provisions
The Amending Regulations are made under section 796 of the Fair Work Act 2009 (the Act), which provides that the Governor-General may make regulations prescribing matters necessary or convenient to be prescribed for carrying out or giving effect to the Act.
Background
On 16 August 2018, the Full Court of the Federal Court of Australia handed down its decision in WorkPac Pty Ltd v Skene [2018] FCAFC 131 (Skene). The Full Federal Court decided that engaging an employee as a casual and paying a casual loading does not mean that an employee will necessarily be a casual employee for the purposes of the NES in the Act.
A key concern following the Skene decision is the potential for ‘double-dipping’ of entitlements. This may occur where an employee has been employed on the basis that the person is a casual employee (including having received a casual loading that compensates for the non-accrual and payment of NES entitlements), but during all or some of the employment period, the person was an employee other than a casual employee for the purposes of the NES, and thus entitled to the NES entitlements for which the casual leave loading was previously paid to compensate.
Where such an employee has clearly received an identifiable loading in lieu of any NES entitlement, an employer could generally be expected to seek to have that loading taken into account against any subsequently claimed NES entitlement. It will then be a matter for a court to determine whether the payment may be taken into account in any particular case.
The Full Federal Court in Skene at paragraph 147 contemplated that an employer may make a claim to offset a casual loading in an appropriate case and the Amending Regulations expressly recognise this.
As the Amending Regulations are declaratory in nature, they apply to employment periods before, on or after the commencement of the Amending Regulations (i.e. when the Principal Regulations are amended). For the purposes of subsection 12(2) of the Legislation Act 2003 (Legislation Act), the retrospective application of the Amending…
Overview
The Fair Work Amendment (Casual Loading Offset) Regulations 2018 were enacted to amend the Fair Work Regulations 2009, providing declaratory clarification of existing legal and equitable general law rights concerning the offset of payments made as casual loadings in situations where an employee subsequently claims entitlements under the National Employment Standards (NES). This legislation was introduced in response to the Full Court of the Federal Court's decision in WorkPac Pty Ltd v Skene, which raised concerns about the potential for employees to receive double compensation. The Fair Work Amendment Regulations were made under section 796 of the Fair Work Act 2009, which empowers the Governor-General to create regulations necessary for the Act's implementation. The policy objective of these amendments is to provide clarity and certainty for employers and employees regarding their existing rights without altering the existing operation of the law or the rights of either party.
These regulations are intended to ensure that employers can claim offsets for casual loadings where employees have been mistakenly classified and subsequently claim NES entitlements, without disadvantaging any party to the employment relationship. The Fair Work Amendment Regulations apply retrospectively, meaning they cover employment periods before, on, or after their commencement, and do not disadvantage any party as they merely declare existing law.
Scope and Application
The Fair Work Amendment (Casual Loading Offset) Regulations 2018 amend the Fair Work Regulations 2009 to clarify the existing rights of employers and employees regarding the offset of payments of casual loading amounts in specific circumstances. These regulations apply to all employers and employees in the Commonwealth, encompassing various industries and employment arrangements. The scope of these regulations is to ensure that where an employee has been mistakenly classified as a casual and has received a loading that compensates for not accruing National Employment Standards (NES) entitlements, an employer can claim to have this loading amount taken into account if the employee subsequently seeks to be paid for those NES entitlements. This applies to employment periods before, on, or after the commencement of the regulations, as they are declaratory of existing law. The regulations do not disadvantage any party and do not alter existing rights or the factors a court must consider in determining the validity of an employer’s claim to offset such payments. Additionally, the regulations do not extend or restrict their application through subordinate instruments but rather aim to provide clarity and certainty regarding the existing legal framework.
Key Provisions
- The Fair Work Amendment (Casual Loading Offset) Regulations 2018 (the Amending Regulations) amend the Fair Work Regulations 2009 (the Principal Regulations) to provide declaratory clarification of existing legal and equitable rights to offset payments of identified casual loading amounts in circumstances where a person makes a subsequent claim for National Employment Standards (NES) entitlements. This is articulated in Regulation 2.03A inserted into the Principal Regulations by the Amending Regulations. Regulation 2.03A(1) sets out the conditions under which an employer may claim to offset a loading amount paid to a person who has been employed as a casual employee but was, in fact, an employee other than a casual employee for NES purposes. These conditions include that the employer must have paid the person an amount identifiable as a casual loading for not having NES entitlements and that the person subsequently claims NES entitlements.
- The Amending Regulations impose no new obligations on employers or employees beyond what is already permitted under general law principles. They clarify existing rights and do not alter the existing operation of the law. Employers are permitted to make a claim to offset a loading amount if the criteria in Regulation 2.03A(1) are met, but it remains for a court to determine whether the payment may be taken into account in any particular case. This is stated in Regulation 2.03A(2) and (3). The regulations do not affect existing rights or the factors a court must consider when determining such claims.
- The Amending Regulations do not introduce new offences or penalties; they are declaratory of existing rights and do not provide for any specific sanctions for non-compliance. However, any claim made by an employer to offset a loading amount that is not permissible under the existing law could potentially be challenged in court. The consequences of such a challenge would depend on the specific circumstances and the determination of the court.
- The Amending Regulations are compatible with human rights as they do not change existing rights or the factors a court must consider in determining whether a payment may be taken into account. The Statement of Compatibility with Human Rights confirms that the Amending Regulations do not engage any applicable rights or freedoms and are therefore compatible with human rights. The retrospective application of the regulations does not disadvantage any party as they are declaratory of existing law.
- Area of Law
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