Before terminating a casual employee, make sure you’ve done your due diligence to avoid breaching your legal obligations.

Terminating a casual employee is a sensitive topic and is probably an undertaking that most people working in HR or management would want to avoid unless absolutely necessary. 

However, termination of employment is unavoidable in business, as there will be instances where a team member exhibits bad behaviour, their performance is not up to standard, or challenging times for your business require budget cuts. 

Irrespective of the reasons for needing to terminate a team member, you need to clearly understand the steps to follow in order to treat the person with dignity and respect – and to keep your business out of legal hot water. 

Casual employment does not offer a firm advance commitment to an ongoing agreed pattern of work. As such, employers have the flexibility to allocate work as required.      

Furthermore, if a team member is truly a casual employee as per the Fair Work Ombudsman’s (FWO) criteria, then termination of that team member can occur without notice. Casual employees can also leave without providing any notice to their employer.            

As a precautionary measure, the team member’s contract and industrial instrument (modern award) need to be checked in case further detail of their employment status is specified there. 

This article will cover the appropriate way to terminate a casual employee, and unpack other information that might be helpful, including how to understand if a team member is truly a casual employee or not.

What defines a casual employee?

As of late, there has been a lot of scrutiny around how employers engage employees, as part of the latest Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth). This includes amending fixed-term contract regulations and the casual conversion pathway within the National Employment Standards. The latest reforms are focused on curbing the ability of employers to hire team members as gig or long-term casual employees. 

These changes are significant steps in redefining how employers should evaluate their workforce requirements and, in turn, how they engage employees. It is therefore crucial to understand your obligations as an employer to avoid any associated penalties from the FWO. 

Casual employees are team members who have accepted an offer of employment with the knowledge that there is no commitment to ongoing work or an agreed pattern of work. 

Casual employees work irregular hours, and their shifts vary from week to week to suit the employer’s needs. 

Under the recent casual conversion laws, casual employees who have been employed for more than 12 months need to be offered the opportunity to convert to full-time or part-time permanent employment. However, further eligibility criteria will apply. You can read more about that here.

Risk of unfair dismissal

An unfair dismissal is when an employee is terminated from their job in a harsh, unjust or unreasonable manner.      

However, casual employees are excluded from bringing unfair dismissal claims unless they: 

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

Essentially, this means they have been misclassified as a casual employee. If a ‘casual employee’ meets the above criteria, they are entitled to lodge a claim for unfair dismissal. The outcome of the claim will depend on the individual facts and circumstances of the case. 

Risk of general protections claim

However, even if a worker is deemed to be a casual worker, and therefore cannot file for unfair dismissal, they still have access to other types of claims under the Fair Work Act, such as a general protections claims. General protections laws extend to full-time, part-time, casual and fixed-term employees, including potential employees (job applicants). 

General protections laws protect employees in situations where workplace rights are affected from the following:      

• Harmful (adverse) action
• Coercion
• Undue influence or pressure
• Misrepresentation

Therefore, a casual employee could lodge a general protections claim if they are of the view that their employer has taken adverse action against them for having exercised, or having proposed to exercise, a workplace right.

The term ‘workplace right’ is defined by the FWO as when a person:

• Is entitled to a benefit or has a role or responsibility under a workplace law, workplace instrument (such as an award or agreement) or an order made by an industrial body.
• Is able to initiate or participate in a process or proceedings under a workplace law or workplace instrument.
• Has the capacity under a workplace law to make a complaint or inquiry.

“Casual employees are team members who have accepted an offer of employment with the knowledge that there is no commitment to ongoing work or an agreed pattern of work.”

Things to consider before termination      

If you are unclear as to whether your team member is a permanent employee or casual employee, you should proceed with caution and treat them as you would a permanent employee.  

Consider the following before proceeding with the termination:      

• Did you have a valid and lawful reason for termination?’It’s advised that you ensure the reason for termination is not deemed harsh, unjust or unreasonable. Ensure you have a valid reason related to the employee’s performance or conduct.
• Did you follow a procedurally fair disciplinary process?Notify the team member of the reason for termination and grant them the opportunity to respond to it. Provide the team member with the opportunity to bring a support person if they request it.
• Do I need to pay a notice period?Casual employees, as defined by the FWO, are not entitled to a notice period or payment in lieu of notice under the FW Act. If the employee should be classified as a permanent full-time or part-time employee, as per the criteria under the FW Act, then a notice period or payment in lieu of notice may apply. Verify their employment contract and applicable industrial instrument (modern award) for specific obligations regarding a notice period.
• Is redundancy applicable?Most casual employees are not entitled to redundancy. However, if the casual label is misapplied and the employee is considered a permanent full-time or part-time employee, and their role is no longer required to be performed by anyone, then a redundancy situation may arise.

The basics of a termination meeting

Below are some of the basic things to consider when preparing for the termination of a casual employee:

• Offer a support person to be present

It’s advised to offer a support person to be in attendance at a termination meeting (and at any disciplinary meetings in the lead up to a termination). This may work in your favour should you get called in front of the FWC. It is not a legal requirement to offer someone a support person. However, employers cannot deny someone the chance to have a support person present in a meeting.

• Provide 24 hours’ notice

Provide the team member with 24 hours’ notice of the meeting and provide adequate information about what the meeting will entail (e.g. disciplinary meeting), so they can prepare themselves for the meeting and find a support person if they so desire. 

• Empower managers to advise of termination

The team member’s manager should be encouraged and coached on how to best deliver the termination news to their direct report. It is recommended to highlight specific examples of previous attempts utilised to rectify the situation (e.g. performance improvement plans, training or formal warning(s) issued). The termination letter should also encompass these details, so the employee has a physical record of the steps taken to support them in rectifying the situation. 

• Keep it to the point

It’s best to cut to the chase in this situation and mention termination as soon as possible. Share the decision to terminate their employment with the team member and explain why, but don’t go into excessive details unless the situation warrants it. 

Need help brushing up on HR laws and compliance around? AHRI’s short course, Introduction to HR Law, will give you an understanding of the key elements of legislation, regulation and practices HR needs to be across.

Terminating casual employees summary

In the circumstance where you need to proceed with the termination of a casual employee, first and foremost ensure they are a casual employee as per the criteria under the FW Act. 

In the instance where the team member is a permanent employee despite the ‘casual’ label given to them, it is critical to ensure the termination of employment is for a valid reason and certain rules, such as notice, and severance pay are adhered to. 

It’s always advisable to ensure entitlements owed to the employee are processed within seven days of termination. 

Termination of a casual employee is not a pleasant process. It’s always best to treat team members with respect and dignity when terminating their employment – irrespective of their employment status. 

As the saying goes, “People won’t necessarily remember what you said, but they will remember how you made them feel”. Taking a fair and kind approach, irrespective of whether an employee has grounds for lawful termination, might help you avoid reputational damage to your business in the long term. 

Cedric Moutou is a HR professional with 12+ years of experience. He has worked with various industries, from start-ups to large global organisations.