Employment & Safety Update – 17 February 2021

Proposed amendment to the Fair Work Act to formalise “set off” of casual entitlements


The Federal Government recently introduced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (the Omnibus Bill).

One aspect of the Omnibus Bill clarifies when a Court must set off the 25% casual loading against amounts claimed for National Employment Standards (NES) entitlements like annual leave.

Despite the proposed amendment, it will remain “best practice” for employers to review their casual employment arrangements to ensure that:

  1. Appropriate arrangements are made for casual employees who might be working on a regular and systematic basis. Depending on the situation, this could include formally making the employee “permanent” to avoid uncertainty; and
  2. Employment agreements and payroll reflects that the casual loading is identified as being compensation for not receiving the NES entitlements.

What is the issue?

Disputes can arise where someone is employed as a casual but finds themselves working on a regular and systematic roster. In some cases, those employees can claim for entitlements such as annual leave and personal/carer’s leave.

Currently, whether or not the 25% casual loading can be “set off” against claims for other NES entitlements depends on the facts of a particular case.

In the high profile case of Workpac Pty Ltd v Rossato [2020] FCAFC 84, the Full Court found that the wages paid to an employee could not be set-off against an entitlement to annual leave or personal/carer’s leave, even though the employee had received a 25% loading to his salary over the relevant period. This decision is under appeal in the High Court.

The Government’s “Casual Loading Offset” regulations had been introduced in late 2018, albeit with limited practical success.

The Proposed Amendment

Under the Omnibus Bill, a Court must reduce (by an amount equivalent to the loading) any amount payable to an employee for entitlements, where:

  • a person is employed in casual employment; and
  • the person is paid an identifiable amount to compensate them for not having a relevant entitlement; and
  • during the employment period, the person was not a casual employee (e.g. where a determination is made by a Court); and
  • the person makes a claim to be paid an amount for one or more of the relevant entitlements.

The proposed amendment makes it clear how a Court must treat the loading and narrowly prescribes when the Court must do so. It will provide certainty that employers can off set the casual loading in some circumstances.

If the Omnibus Bill passes, disputes may still arise where there is an argument about whether the compensation for the relevant NES entitlement is a properly “identifiable amount”. The proposed amendment may not reduce litigation on the issue.


Current best practice is to clearly identify and apportion in each casual employment contract the specific NES entitlement is being allowed for, by the 25% loading. Employers should still actively review casual employment contracts and ensure that the amount paid in respect of an NES entitlement is able to be separately identified.

If you have any queries or would like further information regarding this update, please contact:

Joe Mullavey
M: 0416 794 061
E: jmullavey@pageseager.com.au

Published: 17 February 2021

Copyright © 2020 Page Seager. Privacy Statement Privacy Policy