The decision that could redefine casual employment

In a decision that could have major implications for employers, the Full Bench of the Federal Court has potentially redefined the approach to determining whether someone is a casual employee in the recent decision of WorkPac Pty Ltd v Skene¹.  In that decision, the Court found that a worker, designated as a casual employee under Workpac’s enterprise agreement, was nevertheless entitled to annual leave.

Mr Skene was hired by WorkPac in April 2010 as a dump truck driver, employed under WorkPac’s enterprise agreement as a casual employee.

After Mr Skene’s engagement with WorkPac ended, he brought a claim, arguing that he had been in reality a permanent full-time employee and was therefore entitled to annual leave and other benefits, or payment in lieu of those benefits.

WorkPac argued that Mr Skene was a casual employee because he was designated as such under their enterprise agreement.  Prior to this decision, the position of the Fair Work Commisison and the courts was that an employee qualified as a casual employee if they were engaged and paid as such, and met the definition of a casual employee in a modern award or enterprise agreement covering the employee, regardless of their hours of work.

However, the Full Bench found in this case that, absent clear language, the enterprise agreement was not the appropriate mechanism for defining whether the employee was, in reality, “casual”, and instead turned to common law indicators such as whether:

• there was a firm commitment made in advance as to the duration of the employee’s employment or the days (or hours) the employee would work;
• the employee had a reasonable expectation of regular and systematic work; and
• the employee worked an irregular work pattern, or there was uncertainty, discontinuity, intermittency of work and unpredictability in the hours the employee worked.

The Court concluded that despite WorkPac engaging Mr Skene as a casual employee in accordance with its enterprise agreement, the fact that Mr Skene was paid a flat rate of $55 per hour (which did not clearly include a casual loading) and rostered to work 12 hour shifts on a 7 days on, 7 days off continuous roster arrangement, meant that Mr Skene’s employment was essentially full-time in nature, and he was entitled to annual leave payments on that basis. 

Lavan comment

The WorkPac decision has upset some common assumptions made by employers regarding casual employees.  The most significant implication is that long-term casual employees may potentially now be deemed to be full-time employees, even if their employment is consistent with casual employment as defined in an applicable modern award or enterprise agreement.

The Court also emphasised that a casual loading is not necessarily indicative of casual employment, and that an employer could essentially choose to pay an employee a form of loading, but this did not necessarily reflect their employment status. 

WorkPac has decided not to appeal the decision to the High Court².  Accordingly, employers and employer groups are calling on Parliament to amend the Fair Work Act to clarify that an employee engaged and paid as a casual under an applicable award or enterprise agreement is a casual employee for the purposes of the Fair Work Act. 

Others have recommended that a new category of employment that sits between casual and permanent work should be created that brings security to casual employees with regular hours, while also meeting the needs of businesses.

If you employ any casuals, please call Lavan’s Employment, Safety & Education team to ensure you fully mitigate any risks arising from this case.