Key takeaways for employers
Employers can no longer assume that casual employees are not entitled to benefits afforded to other employees, particularly paid annual leave.
Employers should take the following steps:
- generally engage casuals on a short term and not ongoing basis;
- ensure that contracts for casuals are carefully drafted and contain appropriate set off provisions;
- regularly review their workforce (including any labour hire workers) to assess whether there are any circumstances that might indicate that particular employees should no longer be categorised as casual employees;
- seek legal advice where there is any uncertainty about the categorisation of casuals.
Defining casual employment
On 16 August, 2018 the Full Federal Court upheld a decision of Judge Jarrett of the Federal Circuit Court, that a casual employee was entitled to paid annual leave because the true nature of his employment indicated ongoing employment.
According to the Full Court, the question of whether a person is a “casual employee” is determined by a number of indicia, including the regularity of work patterns, certainty of work, continuity of service, intermittency of work and its predictability.
For employment to be categorised as casual in nature, the availability of work must be short-term and not-ongoing, and the employer’s need for further work to be performed by the employee in the future should not be reasonably predictable.
While employment arrangements may initially commence on a casual basis, that casual employment can morph over time to become full-time or part-time because its characteristics have come to reflect those of ongoing part-time or full-time employment.
WorkPac Pty Ltd v Skene
In WorkPac Pty Ltd v Skene, Mr Skene was engaged as a casual employee by Workpac Pty Ltd, a labour hire company, to work on an assignment as a “fly in, fly out” dump-truck operator at a coal mine operated by Rio Tinto Coal Australia Pty Ltd in Central Queensland. Mr Skene’s letter of offer confirmed his casual employment status with WorkPac Pty Ltd, stating that it was an “Offer of Casual Employment” for an assignment of 3 months’ duration. A transitional industrial agreement, WorkPac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007 similarly categorised him as a casual employee.
During his assignment, Mr Skene worked a 7 days on/7 days off continuous roster which was regular and predictable and set 12 months in advance. The work was continuous (except for one period of 7 days’ unpaid leave arranged directly with Rio Tinto), his fly in/fly out arrangement and accommodation was fully paid for, he was expected to be available to Rio Tinto on an ongoing basis, his work did not fluctuate and his hours of work were regular and certain, which was reflected in Mr Skene’s pay slips from WorkPac Pty Ltd.
Mr Skene’s rate of pay was a flat rate per hour which was not expressed to be inclusive of casual loading and was not set off against any minimum entitlements payable under the NES or the workplace agreement. The assignment continued for approximately 22 months.
The Full Court found that while Mr Skene’s employment contract clearly stated that the engagement was “Casual Employment”, Mr Skene was not a “casual employee” at law for the purposes of annual leave entitlements in the NES or under the workplace agreement. On an objective characterisation, his work was ‘regular and predictable’, ‘continuous’ and it was ‘not subject to significant fluctuation.’ For example, there was an expectation that Mr Skene would be available, on an ongoing basis, to perform the duties required of him in accordance with his roster which was set 12 months in advance. The fact that Mr Skene himself considered that he was a casual employee, that he was paid by the hour and that his employment could be terminated on one hour’s notice were supportive of casual employment but not determinative.
Accordingly, Mr Skene was entitled to receive annual leave or be paid an amount in lieu of that leave entitlement. WorkPac had failed to meet those entitlements and was liable for compensation payable to Mr Skene as well as for pecuniary penalties. The amount of compensation and level of penalty was remitted to the Federal Circuit Court for re-determination.
The Full Court made a number of other important observations:
- the NES has primacy over terms and conditions of employment provided by all other instruments, including an enterprise agreement, modern award or a contract of employment;
- the provision of a casual loading in an industrial instrument is not inconsistent with the accrual of an annual leave entitlement;
- the question of whether an employment arrangement is casual in nature is viewed in the totality of all the relevant indicia, similar to the Hollis v Vabu independent contractor/employee assessment;
- employers are not entitled through their contractual or industrial arrangements to unilaterally determine whether an employee is categorised as a “casual employee” as this would lead to arbitrary and capricious results; and
- the failure to provide annual leave entitlements to employees is a serious contravention worthy of the imposition of a penalty - ignorance of the law is no excuse and employers are obliged to properly explore in advance the legality of their employment arrangements.