A recent decision by the Full Court of the Federal Court of Australia [WorkPac Pty Ltd v Skene  FCAFC 131] concerning the concept of ‘casual’ employment, has caused an uproar in the business community, as it seemingly had the effect of awarding an employee receiving a casual loading, an entitlement to annual leave and other permanent entitlements, thereby ‘double dipping’.
Whilst this case may create a serious concern for employers regularly engaging casuals, it does not reflect a shift from the previous legal interpretation of what makes an employee ‘casual’. Rather, it contrasts the disconnect between how businesses assume they can operate and a technical, legal, understanding of the term that may be applied by courts in some specific situations.
- Paying a 25% casual loading doesn’t make an employee a casual, just like standing in a garage doesn’t make you a car.
- ‘Casual’ is an undefined term in the Fair Work Act 2009 and is thus a cause for ambiguity (or alternative interpretations).
- If an employee is deemed a permanent, then they may ‘double dip’ - in addition to the 25% casual loading already paid, they will be entitled to annual leave and other associated entitlements.
- It’s not uncommon for businesses in Australia to want the flexibility of casual employment, on an effectively permanent basis.
- Before you start stressing out – this is a fringe case. Don’t roster a “casual” employee for a year in advance. Guaranteed work doesn’t mesh with the ‘essence of casualness’ (which is the technical test).
The case involved an employee (Mr Skene) who had been offered employment on the understanding that he was a casual employee for WorkPac, a labour-hire firm. When the employee was terminated, he claimed he was entitled to annual leave. After the court examined the facts, it determined he was not a casual and a major contributing factor was because he was guaranteed work.
The difficulty presented in this case is that ‘casual employment’ is not defined in the Fair Work Act 2009. Whilst the term “Long-Term Casual” is defined in the Act for the purpose of ‘Flexible Work Requests’, even then it requires some assumptions to be made of its meaning and there are multiple factors to consider.
It is easy to understand the rationalisation an employer might make, that an employee is a casual because a Modern Award or Enterprise Agreement simply says that a casual employee is one who is “engaged and paid as such”. That seems simple – for example, “I’ve ‘engaged’ you as a casual and I’m paying you as a casual”.
The 25% loading is designed to compensate for the lack of entitlements such as annual leave, personal/carer’s leave and uncertainty with ongoing employment. This might tick the boxes under the award, but if the employee has features of permanent employment, then the underlying common law principles still apply because it hasn’t been disturbed by the FW Act (i.e. no definition).
While this case could be considered an extreme example – i.e. Mr Skene was rostered 12 months in advance, 87.5 hours a fortnight, etc., there is no doubt that many employees in areas such as retail, hospitality and elsewhere, have casual employees who work in the long term in a regular and systematic fashion.
It may be a good time to review the working arrangements of your workplace, particularly as the Fair Work Commission decided recently that ‘casual conversion’ clauses will be eventually rolled out into all awards. The provisions will allow casual employees to elect to become permanent once certain conditions are met, such as a regular pattern of work over a 6 month period.
If you have any questions relating to casual engagement and how this may affect your business, please contact ER Strategies on 1300 55 66 37 for more information and to discuss your specific situation.