Are your part-timers really part-timers? Another reason it’s time for a compliance check!

There is no more important time than now for employers to ensure they know and effectively manage the correct legal categorisation of their workforce and the attendant entitlements and obligations. Casuals, contractors and now part-timers have all been the flavour of the month for the Fair Work Ombudsman (FWO).

Luxottica Retail Australia Pty Ltd, trading as Sunglass Hut, has been the latest target of the FWO, having recently entered into an enforceable undertaking relating to hundreds of underpaid part-time employees.

Between 2010 and 2016, Sunglass Hut failed to agree on a regular pattern of work in writing with its part-time workforce, in breach of the requirements in the General Retail Industry Award 2010 (Retail Award). As a result, the company did not pay overtime rates for work performed outside the regular pattern of work, to the value of $2.3 million. The underpayment affected 620 former and current employees and spanned across 253 Sunglass Hut stores in Australia.

In September, Sunglass Hut entered into an enforceable undertaking with the FWO, which requires the retailer to back-pay and apologise to employees, make a $50,000 contrition payment and undergo audits at its expense over the next three years.

This is the latest in a spate of high profile underpayment cases pursued by the FWO.  While casual employment has been the subject of scrutiny for some time now, in addition to employers falling foul of overtime requirements in respect of salaried employees, employers need to be equally careful to ensure part-time employees are appropriately engaged.

Part-time employment  

When engaging part-time employees, the Retail Award stipulates the following:

1. A part-time employee is an employee who works less than 38 hours per week and has reasonably predictable hours of work.
2. The employer and part-time employee must agree, in writing, on a regular pattern of work, specifying at least: the hours worked each day, which days of the week the employee will work, the actual starting and finishing times of each day, that any variation to such hours will be in writing, that the minimum daily engagement is three hours and the times of taking and the duration of meal breaks.
3. Any agreement to vary the regular pattern of work will be made in writing before the variation occurs.
4. All time worked in excess of the hours as agreed or varied will be overtime and paid for at the rates prescribed as overtime rates in the award.

These obligations and requirements are not unique to the Retail Award.  Many other modern awards and enterprise agreements contain similar obligations.

The key is that employers must ensure part-time employees have a regular pattern of work (where required by the relevant industrial instrument).  They cannot be used as “de facto” casual employees, with a roster that varies from week to week but without the benefit of the casual loading.  Failing to agree on, and in practice provide, a regular pattern of work could expose an employer to significant overtime payments, as was the case with Sunglass Hut.  There is also a risk that the employees may be found to be properly legally categorised as casuals, resulting in a back payment of the casual loading.

Risk mitigation

To minimise the risk of getting it wrong, employers must:

1. understand all of their obligations arising under an applicable modern award or enterprise agreement;
2. in relation to part-time employees, understand the parameters imposed on part-time hours and implement a regular pattern of work, if required;
3. ensure that a regular pattern of part-time hours and any variation to such hours is agreed in writing with the employee (this may be referenced in an employment contract); and
4. ensure all employment records and payslips are accurate and contain all of the details required by the Fair Work Act 2009 (Cth) and the Fair Work Regulations 2009 (Cth).

In addition, employers must continue to ensure that independent contractors and casual employees are properly employed as such (see our previous article on this issue here) and start preparing for the changes to modern awards as a part of the four yearly review to be introduced next year, including in relation to annualised salaries.

Gadens’ Employment Advisory team can assist employers in ensuring they are compliant with minimum standards and all workplace laws, including by undertaking compliance reviews and audits and advising on obligations. Get in touch today to talk about an effective labour management system.

Authored by:

Stacey Nicolaou, Lawyer

Emma Moran, Senior Associate

Siobhan Mulcahy, Partner