Termination of casual employees requires careful consideration to ensure compliance with workplace laws and protect your business from potential legal challenges.

This guide outlines the appropriate process for terminating casual employees, including understanding the classification of casual employees and addressing key legal obligations.

What Defines a Casual Employee?

The latest amendments to the Fair Work Act emphasise the importance of correctly classifying employees. These changes aim to limit the misuse of casual employment arrangements and ensure fairness.

Under the Fair Work Act, a person is a casual employee if, when they start employment:

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

As the above suggests, this requires consideration of the true nature of the employment relationship and any mutual understanding, not just what is in the employment contract.

Casual employees who have worked regularly and systematically and meet other specific eligibility criteria can request to convert to permanent part-time or full-time employment if they have been employed for at least 6 months (or 12 months for small business employers).

While the requirement for employers to offer this in writing has been removed, employers must still comply with their obligations under the National Employment Standards (NES).

Risks of Unfair Dismissal Claims

Casual employees generally cannot bring unfair dismissal claims unless they:

• Worked regularly and systematically.
• Had a reasonable expectation of continued employment.
• Worked for more than 6 months for non-small business employers (or 12 months for small business employers).

If an employee meets these criteria, they may have been misclassified as casual. In such cases, they could be entitled to lodge an unfair dismissal claim.

Recent case history shows that if your employee generally has advanced notice of their working hours (such as a roster), the employment would be considered systematic.

So, while all casual employees have some rights, long-term casual employees have more rights and a higher chance of succeeding in an unfair dismissal claim.

If there is uncertainty about an employee’s status, employers should handle the termination process as they would for a permanent employee.

Key Considerations Before Termination of Casual Employees

Before proceeding with the termination of a casual employee, ensure the following steps are taken:

1. Do You Have a Valid Reason?
   • Termination must be based on a valid reason related to the employee’s performance, conduct, or operational requirements.
2. Was a Fair Process Followed?
   • Notify the employee of the reason for termination.
   • Allow the employee to respond to the reason provided.
   • Offer the employee the option to have a support person present during discussions.

Note: If the employee’s status as a casual is unclear, provide them with an opportunity to improve their performance or conduct before termination.

1. What Notice Is Required?
   • True casual employees are not entitled to a notice period under the Fair Work Act.
   • If the employee’s classification is uncertain, provide notice to avoid potential legal disputes.

Steps for Terminating a Casual Employee

1. Confirm the employee’s classification as casual under the Fair Work Act criteria.
2. Ensure the termination is justified and procedurally fair.
3. Communicate the decision respectfully, treating the employee with dignity.
4. Document the process to maintain a record of compliance.

Key Take Aways 

Terminating a casual employee is a sensitive process that requires careful adherence to workplace laws. Begin by confirming the employee’s classification. For employees classified as permanent despite being labelled casual, ensure compliance with notice and severance requirements.

Termination is rarely easy, but treating employees with respect and fairness—regardless of their employment status—will help maintain your business’s reputation and minimise legal risks.

For more information about your rights when terminating a casual employee, we can help on an hourly basis or via a monthly membership subscription. Either way, you can access a consultant to answer your questions and draft and review your documents. Call us today on 0419 659 388 or visit our Contact Us page.