Due to a recent court case, organisations which employ “casuals” may need to recognise a provision or disclose a contingent liability for leave obligations at 30 June 2020.
A landmark judgement in May 2020 by the Full Court of the Federal Court on the WorkPac Pty Ltd vs Rossato (WorkPac vs Rossato) case, ruled that an employee previously considered by their employer as “casual” worked regular and predictable shifts and was entitled to paid annual, personal/carer’s and compassionate leave. The higher pay rate received (casual loading) could not be used to offset leave entitlement obligations.
The case, along with WorkPac Pty Ltd vs Skene (WorkPac vs Skene) from 2018, set a precedent for other “casual” workers to also claim unpaid entitlements.
If an organisation has “casual” employees, there may be leave obligations to provide for or a contingent liability to disclose in the 30 June 2020 financial report.
An analysis of an organisation’s casual employment arrangements against the principles and approach set out in the WorkPac vs Rossato and WorkPac vs Skene cases will be required to determine whether present (and therefore a provision) or possible (and therefore a contingent liability) obligations exist. Organisations may consider obtaining legal advice to support this analysis.
The interpretation of the definition of “casual” employees will be treated as a change in estimate on the basis that the Courts findings provide new evidence of how the law should be interpreted and not an error at 30 June 2020, as such no restatement of prior periods will be required.
ASIC has updated their guidance on ASIC focus areas for 30 June 2020 to indicate that companies should provide for additional employee entitlements for past and present “casual” employees who were employed in circumstances covered by the Federal Court cases.
Refer to the attached Reporting Update to find out more.
If you have any questions, please reach out to your usual KPMG contact.
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