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Are your casual employees actually casuals?

Written by Benjamin Marshall & Hannah Pelka-Caven, Holding Redlich

The controversial WorkPac decision of the Full Federal Court last week (WorkPac Pty Ltd v Skene [2018] FCAFC 131) has rejected the commonly understood position that an employee designated as a casual under an award or enterprise agreement is a casual for all purposes. Employers who have treated employees as casuals on this basis risk claims for unpaid leave and termination entitlements, as well as significant penalties.

The essence of casual employment

The common law test for whether an employee is a casual is set out in the earlier Hamzy decision (Hamzy v Tricon International Restaurants trading as KFC (2001) 115 FCR 78). Under Hamzy, the essence of casualness is the absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work. There is an absence of a firm advance obligation on the employer to provide on going work and similarly, no firm advance commitment from the employer to offer continuing and indefinite work according to an agreed pattern of work. The Court also acknowledged this is not inconsistent with the possibility of the employee’s work pattern turning out to be regular and systematic.

It is the informality, uncertainty and irregularity of the engagement that gives employment the characteristic of being casual. It may manifest itself in irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability. Those features will commonly reflect the fact that, whilst employed, the availability of work for the employee is short-term and not-ongoing and that the employer’s need for further work to be performed by the employee in the future is not reasonably predictable. However, the absence of these features does not necessarily mean the employment is not casual.

After the introduction of modern awards, which commonly specify that a casual employee “is an employee engaged as such”, many employers have operated on the basis that for award or agreement based employees, the fact that they designate an employee as a casual and pay them a casual loading is sufficient to make them a casual at law. In doing so, they have committed to employ them on an ongoing, regular and systematic basis. WorkPac rejects that interpretation, and affirms Hamzy as the correct test for all employees.

Although the parties may intend to create a casual relationship, a court or tribunal asked to consider a purported casual employment arrangement will look beyond the label and undertake an objective assessment of the employment and surrounding circumstances to consider whether that intent has been put into practice and, if achieved, has been maintained.

Application to WorkPac

In WorkPac, the Court found that a labour hire employee engaged as a “casual” and supplied to work as a dump-truck operator at a mine, was not a casual because his employment was:

  • regular and predictable (i.e. his working arrangements and shifts were set 12 months in advance in accordance with a stable and organised roster)
  • continuous, save for one period of seven days that went unpaid but which was arranged with the host employer; and
  • facilitated by the fly in, fly out arrangement and the provision of accommodation at no cost to himself, which was inconsistent with the notion that the employee could elect to work on any day and not work for others without first making the necessary arrangements with the host employer.

There was a clear expectation that the employee would be available, on an ongoing basis, to perform the duties required of him in accordance with his roster, until such time as the assignment was complete. The work undertaken by the employee was not subject to significant fluctuation across days, weeks, months or even years. The hours of work were regular and certain.

The Court also found that the employee was not adequately designated as a casual under the relevant enterprise agreement, but made the broader finding that award or agreement designation was insufficient to determine an employee’s entitlements under the Fair Work Act.

Importantly, on appeal, the Full Federal Court imposed penalties for the employer’s failure to meet permanent employment obligations (contrary to the initial decision of the Federal Court not to impose penalties) based on ignorance failing to excuse breaches of the law.

Although the findings are specific to these facts, they have much broader implications for all employers who engage casuals.

The future

It is likely that WorkPac will be appealed to the High Court. Craig Laundy, the Minister for Small and Family Business, the Workplace and Deregulation, has also stated he is "reviewing the decision carefully, including any broader implications". It is possible the Federal Government may decide to intervene to amend the Fair Work Act and effectively overturn WorkPac, even if the High Court does not.

Despite this, employers must exercise caution in relation to a purported casual arrangement and ensure it is not giving firm advance commitments as to how long or when it will employ a casual. For existing casuals, that have not been engaged with this requirement in mind, legal advice should be obtained as to the best way to manage the situation.

ACC Australia and Holding Redlich Round Table Discussions:

Businesses are now reviewing their contingent workforce practices in light of the introduction of casual conversion rights in key modern awards and recent decisions that challenge traditional concepts of a casual employee. Join ACC Australia and Holding Redlich at a series of roundtable lunches to discuss the impact of these changes and how to ensure you are prepared.

Click here for Victorian Round Table, the New South Wales Round Table and for the Queensland Round Table.




(This article has been republished from the Holding Redlich website)