A driver employed as a casual employee under a labour hire arrangement has been found to be entitled to annual leave payments under the Fair Work Act. This case is a reminder to employers to ensure that all employment arrangements adequately reflect the day- to-day requirements of the employee’s job.

Background

WorkPac Pty Ltd (WorkPac) operated a labour hire business supplying labour to operators of coal mines in central Queensland. Paul Skene was employed by WorkPac as a dump truck operator under the Workpac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007 (WorkPac Enterprise Agreement).

Mr Skene commenced employment with WorkPac on 16 April 2010. Prior to his commencement, he received a “Notice of Offer of Casual Employment”. He also executed an employment agreement titled “Casual or Fixed Term Employee—Terms and Conditions of Employment…”.

Mr Skene’s initial role was a “drive in drive out” position, which required him to drive from his home to Dawson Mine in Queensland. He was required to work on rotation for a number of days, followed by a series of consecutive days of rest at home. The terms of his “casual” employment agreement included a 12-month probation period, and the ability for WorkPac to terminate his employment by giving one hours’ notice.

In June 2010, Mr Skene applied for a “fly in fly out” position with WorkPac at a coal mining operation in Clermont, Queensland with one of WorkPac’s clients, Rio Tinto. His application was successful and he finished working at Dawson Mine on 17 July 2010, before starting induction for his new assignment at Clermont Mine later that month.

He was given a further “Notice of Offer of Casual Employment”, containing details of his pay rate and hours for the Clermont Mine role. As the employment agreement between Mr Skene and WorkPac was on an “assignment by assignment” basis, his original employment agreement was stated to continue to apply to his employment at Clermont, on the same terms and conditions as for the Dawson Mine role.

Mr Skene performed work in accordance with the Clermont Mine roster, which involved seven-day working weeks, including weekends and public holidays if required. During his working weeks, Mr Skene stayed in camp-style accommodation on site, and at the end of the week was flown home from Clermont Mine at Rio Tinto’s expense. Mr Skene received rosters for Clermont Mine 12 months in advance, and was paid by WorkPac each week.

In April 2012, Mr Skene’s employment was terminated by WorkPac for misconduct. On termination, Mr Skene was not paid any amount in respect of untaken annual leave, on the basis that he was a casual employee. Mr Skene commenced proceedings against WorkPac,1 contending that he was entitled to six weeks’ paid annual leave, firstly, pursuant to clause 19.1.1 of the WorkPac Enterprise Agreement, and secondly, pursuant to the Fair Work Act 2009 (Cth) (FW Act).

Reasoning of the Court

Judge Jarrett of the Federal Circuit Court considered each of Mr Skene’s contentions.

The WorkPac Enterprise Agreement

Judge Jarrett first considered the WorkPac Enterprise Agreement, in particular clause 5.5.6, which allowed WorkPac to inform the employee of the “status and the terms of their engagement”. His Honour was satisfied that the heading “Notice of Offer of Casual Employment” confirmed that Mr Skene had the employment status of a casual worker for the purposes of the WorkPac Enterprise Agreement. 

Accordingly, he was not entitled to annual leave under the WorkPac Enterprise Agreement.

The Fair Work Act

Section 86 of the FW Act limits the application of the FW Act’s annual leave provisions to all “employees, other than casual employees”. Despite finding that Mr Skene was a casual employee for the purposes of the WorkPac Enterprise Agreement, his Honour found that Mr Skene could still be “other than a casual employee” for the purposes of section 86 of the FW Act.

On this question, Judge Jarrett examined the application of common law principles in order to make his determination, as the FW Act does not define “casual employee”.

His Honour rejected WorkPac’s argument that the definition should be determined according to traditional industrial instrument and award definitions, in which a casual employee is one “who was engaged and paid as such and nothing more”.

His Honour instead applied the approach described in MacMahon Mining Services Pty Ltd v Williams2 , in which casual employment was characterised as having an element of “informality, uncertainty and irregularity”3 and having “an absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work”. 4

The Court agreed with MacMahon that the question of whether an employee is a casual employee is a question of fact. Accordingly, his Honour considered it necessary to undertake an analysis of the circumstances of Mr Skene’s employment.

Factors indicating “other than casual” employment

Numerous factors weighed in favour of Mr Skene’s employment at Clermont Mine being something “other than casual”. Judge Jarrett took into account that Mr Skene’s employment:

• was “regular and predictable”;

• was continuous except for a period of seven days’ unpaid leave;

• was “facilitated by a ‘fly in fly out’ arrangement” with all expenses paid;

• was accompanied by an expectation from his employer that Mr Skene would be “available, on an ongoing basis, to perform the duties required of him in accordance with his roster”; and

• did not permit him to choose to work any particular shift or hours offered by WorkPac.5

Factors indicating casual employment

On the other hand, in favour of Mr Skene being a casual employee, his Honour noted that:

• Mr Skene was “paid by the hour”;

• “his employment was terminable on one hour’s notice”; and

• WorkPac had “designated the employment as casual” and Mr Skene was “seemingly aware of and accepted that”. 6

The Court’s decision

Judge Jarrett was ultimately convinced that Mr Skene should be seen as “other than a casual employee” for the purposes of section 86 of the FW Act. His Honour found, “There is no absence of a firm advance commitment as to the duration of Mr Skene’s employment or the days (or hours) he would work. Those matters were all clear and predictable. They were set 12 months in advance”.7

The amount of compensation was left to be agreed between the parties.

Bottom line for employers

• Employers should regularly review their employment agreements to ensure that they reflect the true nature of the work performed by each employee, particularly where a standard form contract is used. This should include consideration of whether that work is (still) performed on a casual, fixed-term, or permanent basis.

• It is not enough to label an otherwise permanent employment arrangement as “casual” in the employment documents. Courts will look behind such labels to the actual nature of the work. Employees labelled as “casual” may still be caught by section 86 of the Fair Work Act if the nature of their work is continuous, predictable, and determined in advance. 

Key points

• When determining if an employee is a casual employee under the Fair Work Act 2009 (Cth), the Courts will look beyond what the employment contract says and will look to the actual nature of the employment relationship and work performed by the employee.

• To avoid unexpected liability for annual leave and other entitlements, employers should regularly review their employment arrangements to ensure that any “casual” employees are truly working on a casual basis.