Are you a business owner who employs casual workers? As it turns out, those employees may not be so ‘casual’. A landmark decision in the full Federal Court has left employers in confusion and prompted a review into the true definition of a ‘casual’ employee.
Australian businesses that employ casual workers could be liable to pay them leave entitlements in addition to casual loading. This major change could cost Australian businesses over $8bn in retrospective payments.
This article sets out a summary of the decision in WorkPac Pty Limited v Skene and the implications for your business and casual employees.
WorkPac employed Mr Skene as a casual employee to work at a mine. WorkPac paid Mr Skene an hourly rate, which included casual loading, as well as accommodation and flights to and from the mine.
Upon termination, Mr Skene lodged an application to the court for unpaid annual leave under the Fair Work Act, the National Employment Standards (NES) and the enterprise agreement. The NES set out the minimum entitlements for all employees. However, under the NES, a casual worker is typically not entitled to annual leave.
Mr Skene argued that WorkPac employed him on a continuous permanent basis, rather than under a casual arrangement.
Firstly, the court found that the NES will prevail over other employment documents like a modern award or enterprise agreement unless there is clear wording that states otherwise.
In addition, the court examined the definition of a casual employee at common law (law that comes from decisions by the court rather than legislation). As the Fair Work Act does not contain a specific definition of “casual employee”, the court looked at other factors that indicate a casual employment relationship, including:
- irregular work patterns;
- uncertainty around the period of employment;
- discontinuity; and
- intermittency of work and predictability.
Mr Skene worked a regular roster of seven days on and seven days off and was provided a 12 month roster in advance. Therefore, his work was regular, certain, continuous and predictable.
Accordingly, the court decided that Mr Skene was not a casual. These factors were key to this decision.
The court ordered that WorkPac pay Mr Skene his annual leave entitlements. WorkPac also had to pay penalties.
Lesson: Consider whether your casual employees may actually be counted as permanent staff. Do they have regular, certain and continuous work? If so, you could have to pay any annual leave those staff have accrued. Additionally, they would be entitled to personal leave.
Isn’t This Double Dipping?
Mr Skene’s enterprise agreement did not specify a monetary amount for the casual loading. Therefore, there was no double dipping in this case because there was no evidence WorkPac paid Mr Skene a loading at all.
Further, in looking at the relationship between the NES and the enterprise agreement, Mr Skene met the definition of a full time or part time employee, which does not require a loading. Even if WorkPac paid a loading, this didn’t necessarily make Mr Skene a casual employee.
Lesson: If your casual employees are actually considered permanent staff, you may owe them entitlements such as annual leave and personal leave, even if you have already paid casual loading.
If you employ casual employees, it is essential to review how you engage them. If your casual staff have regular and systematic work arrangements, you may need to back pay leave entitlements.
- how far in advance your casuals receive a roster?
- do your casuals work in predictable, regular patterns?
- is there a commitment to specific hours and days?
Also, if you think your casuals could actually be considered to be permanent staff, consider converting them to full-time or part-time contracts.
Finally, review your employment contracts to ensure that you clearly identify casual loadings in monetary terms. This could help avoid double dipping.
If you have any questions on how to transition your casual team members to a lower risk arrangement or about this change in employment law, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.
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