In a case likely to ring alarm bells for employers, the Full Court of the Federal Court was required to determine in WorkPac Pty Ltd v Skene [2018]1 whether an employee of a labour hire company who the employer claimed was engaged and paid as a casual was entitled to annual leave entitlements under section 86 of the Fair Work Act 2009 (FW Act) upon the termination of his employment.

Section 86 of the FW Act provides that casual employees are not entitled to paid annual leave.

Given there is no statutory definition of “casual employee” in the FW Act, in arriving at its decision the Full Court had to consider whether it was the ordinary, legal or industrial meaning of the expression “casual employee” that Parliament had intended should be used for the purpose of section 86 of the FW Act.

The Facts

Mr Skene was employed as a “casual” by WorkPac Pty Ltd (WorkPac) (a labour hire company). He was initially engaged by WorkPac to work as a truck driver at a coal mine in Central Queensland for WorkPac’s client Anglo Coal. This was a drive in drive out position whereby Mr Skene was required to transport himself to the mine (which was about 6 hours from his home) where he worked for a number of days and then drove home where he had a number of days off. He did this for several months and then obtained a fly in fly out position as a dump truck operator, again with WorkPac but at a coal mine operated by its client Rio Tinto. This position, while described by WorkPac as casual employment, involved Mr Skene working 12 hour shifts, on a 7 days on, 7 days off continuous roster, included his flights and accommodation and, which WorkPac argued, included a casual loading. Mr Skene was assigned to a particular roster (the C Crew roster) and was given a copy of his roster that covered the period ending December 2010. In January 2011 Mr Skene was given a new roster which commenced in January and which covered all of 2011.

In April 2012 Mr Skene’s employment with WorkPac was terminated after allegations about his conduct were raised with him. Upon termination he was not paid in lieu of untaken annual leave.

Submissions

The employer argued that in determining whether an employee was a casual employee for the purpose of section 86 of the FW Act, that Parliament had intended the term casual employee be given its “industrial” meaning (which is found/derived from the applicable industrial instrument) rather than its legal meaning (which is found in case law) or its ordinary meaning.

WorkPac contended that given the employment documents provided to Mr Skene described his employment as casual, he was paid as an hourly rate of pay and the applicable industrial agreement provided that one of the categories of employment was casual employment, Mr Skene was a casual employee.

It also argued that if Mr Skene was entitled to annual leave under section 86 of the FW Act he would be allowed to “double dip” given that it said (although this was not established on the evidence) he had already been paid a casual loading as part of his hourly rate to compensate him in part for not receiving annual leave entitlements.

Findings

Following an extensive review of the authorities dealing with casual employment/employees and after considering principles of statutory construction which included the hierarchy of modern awards, enterprise agreements and the National Employment Standards (NES), the court found that the NES was at the pinnacle which meant that it was not appropriate for an industrial instrument to define what is meant by the expression “casual employee” for the purpose of determining minimum statutory entitlements.

The Full Court found that the expression “casual employee” in section 86 of the FW Act should be given its legal meaning and that legal meaning was an employee who has “no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work.”

Given there was no absence of “a firm advance commitment” as to the duration of Mr Skene’s employment or the days (or hours) he worked” (he was part of a roster that was set 12 months in advance) he was not a casual employee for the purposes of section 86 of the FW Act and was therefore entitled to annual leave under the NES.

It is therefore important that careful consideration is given to the characteristics of any proposed employment. If the following characteristics are present then it is likely to be casual employment:

  • no firm advance commitment as to the duration of the employment or the days or hours that will be worked
  • no firm advance commitment from the employer that the work offered will be ongoing or indefinite and no firm advance commitment from the employee that they will accept ongoing employment from the employer
  • informal, uncertain, intermittent or irregular engagements
  • payment by the hour
  • payment of a casual loading in lieu of entitlements to paid leave and
  • termination at short or on no notice.

However, if some of these characteristics are absent, then consideration should be given as to whether full-time or part-time employment (whether for a fixed term or on a permanent ongoing basis) is a more appropriate arrangement.

Simply offering employment on a casual basis and paying someone as a casual (even if this is in accordance with an industrial instrument) will not be enough if the working arrangement does not have the characteristics of casual employment.

It is also important that employment arrangements are regularly reviewed. An arrangement that starts out as casual, can over time morph into an arrangement that is more akin to permanent ongoing full-time or part-time employment. If this occurs conversion from casual to permanent ongoing employment should occur with the appropriate changes made to terms and conditions of employment.