The Fair Work Commission (FWC) has recently demonstrated a willingness to prefer the provisions of Enterprise Bargaining Agreements (EBA) above general law conventions when determining whether an employee is a ‘casual’ for the purposes of the Fair Work Act 2009 (Cth) (the Act).

The facts and decision at first instance

The FWC Full Bench decision of Telum Civil (Qld) Pty Limited v Construction, Forestry, Mining and Energy Union [2013] FWCFB 2434 concerned a group of employees who had been engaged to work on a specific project. Their employment ceased upon the completion of the project. The employees were engaged for over 12 months, and during that time, worked a regular pattern of hours equivalent to full-time employment. The employees were paid a 25% casual loading in lieu of statutory entitlements.

The question to be determined was whether the employees were ‘casual’ for the purposes of the Act and, thus, whether they were entitled to the benefit of the National Employment Standards, including redundancy pay.

The relevant EBA contained the following provision:

Employees under this Agreement will be employed in one of the following categories:

  • Permanent employees; or
  • Casual employees.

At the time of engagement, Telum will inform each employee of the terms of the terms of their engagement and, in particular, whether they are to be a permanent employee or casual employee.

Casual employees will be engaged by the hour. A person engaged as a casual will be paid a loading of 25% on the permanent employee ordinary time wage rates prescribed in clause 6 of this Agreement. The casual loading will be paid in lieu of and compensate for all benefits such as leave, notice, redundancy and any other full-time entitlements that do not apply to casual employees.

At first instance, the FWC held that the employees were not ‘casual’ for the purposes of the Act because the employees’ work patterns meant that, under the general law, they were not casual.

Appeal

The FWC Full Bench took a different view on appeal. It indicated that it was incorrect to presume that the term ‘casual’ in the Act had the same meaning as ‘casual’ in general law. The FWC Full Bench instead determined that the term ‘casual’ in the Act ‘is a reference to an employee who is a casual employee for the purposes of the Federal industrial instrument that applies to the employee’.

Modern Awards define casual employment as an engagement under the label ‘casual’ and where the employee receives a payment of a 25% loading as compensation for a range of entitlements, which would otherwise be provided were the employment not casual. As an EBA must provide terms to employees that are ‘better off overall’ than the relevant Modern Award, an EBA casual categorisation provision must contain these elements.

The FWC Full Bench held that the clause of the relevant EBA contained these elements: it provided that the label ‘casual’ will be applied from the time of engagement; it provides for a 25% loading; and it provides that the loading is paid as compensation for entitlements which apply to full-time workers but not casuals.

What this decision means for your business

If a clause of an EBA contains all of the above elements then it appears that the clause can be relied upon to validly categorise employees as casual within the meaning of the Act, even if those employees work regular, full-time equivalent hours and would not be considered as ‘casual’ under general law. It also appears that employers without EBAs will be able to rely on the casual categorisation provision of their relevant Modern Award/s in the same way.

However, employers must still have regard to the remainder of provisions in any relevant Modern Award or EBA. For example, the principle in this decision cannot be used to employ a person permanently as a casual if that employee seeks to exercise a right to elect to have their contract of employment converted to permanent employment.