When is a casual employee not a casual employee?

Background

An employee (Mr Skene) worked for WorkPac as a casual employee from July 2010 until his employment was terminated in April 2012. He was provided with a 12 month roster in advance and worked 7 days on, 7 days off, rotating day and night shifts in accordance with that roster.

He was paid a loaded rate which was to be inclusive of casual loading. WorkPac provided Mr Skene with flights to and from the mine and accommodation on site at no cost him.

The Full Court of the Federal Court held that Mr Skene was not a casual for the purposes of either his Enterprise Agreement or the National Employment Standards (NES). Accordingly, Mr Skene was entitled to have been paid out his accrued annual leave on the termination of his employment with WorkPac AND that he was to be paid his annual leave at the loaded rate rather than a base rate exclusive of casual loading.

There were two issues–whether Mr Skene was a casual employee for the purposes of:

  1. The NES – specifically whether he was exempted from the entitlement to annual leave under s86 of the Fair Work Act; and
  2. The WorkPac Enterprise Agreement – specifically whether being informed he was a casual was sufficient to determine objectively his status as a casual under the Agreement.

First issue – a casual under the NES

The Court analysed various authorities and determined that the consistent approach of the Courts was to find that the ‘essence of casualness’ was the “absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) an employee will work”. The indicative factors are whether the employee’s engagement is one of “irregularity, uncertainty, unpredictability, intermittency and discontinuity in the pattern of work“.

The Full Court rejected the correctness of the recent decisions of the Full Bench of the Fair Work Commission which held that a casual is an employee who is engaged and paid as such as per the Modern Awards. The Court reasoned that the NES prevails over Modern Awards and Enterprise Agreements and those instruments could not have modified the definition of “casual employee” under the Fair Work Act.

The Full Court held that the term ‘casual employee’ was defined by its commonly understood legal meaning from decided legal cases.  

Second issue – a casual under the Enterprise Agreement

The Full Court said whether a person is a casual is objectively determined by reference to the “essence of casualness” and that an employer cannot, by its declaration, make an employee a casual at law.

The Court emphasised that the act of informing an employee that they were engaged on a casual basis, did not mean that the agreement was defining them to be a casual.

What about the definition of “long term casual employee” in the Fair Work Act you may ask? “Long term casual employee” is defined to be an employee who is a casual employed on a regular and systematic basis for a sequence of periods of employment during a period of at least 12 months.

The Court decided that the regular and systematic element turned on the engagements, rather than the hours of work.

The ‘double-dipping’ issue

Understandably some employers were shocked, arguing the decision doesn’t pass the ‘pub test’. If an employee is paid a casual loading but is also entitled to annual leave under the NES, then that employee is ‘double dipping’.

The Full Court rejected this notion on the basis that nothing in the Fair Work Act requires payment of casual loading to employees who are not casual employees. In practice however the casual loading will have been paid on the (perhaps erroneous) presumption that the employee is a casual and not entitled to annual leave. In such a situation it may be said that the employee would be compensated twice for the same entitlement.

Lesson for employers

You are at risk of your casual employees being found to be permanent employees, unless your casual employees are employed with that ‘essence of casualness’ determined by the ‘irregularity, uncertainty, unpredictability, intermittency and discontinuity in the pattern of work’.

This case is likely to go to the High Court, but in the meantime, we urge employers on an ongoing basis to consider whether to convert casual employees, who do not have the ‘essence of casualness’ to permanent part-time or full-time contracts.

Where possible the payment of a casual loading could be listed as a separately monetary amount rather than pay loaded rates.  

[WorkPac Pty Ltd v Skene (2018) FCAFC 131]

Disclaimer: This summary is not legal advice and for more information on NES obligations call NECA Legal (WA) Pty Ltd on (08) 6241 6129 or email necalegal@ecawa.org.au.