Don’t Be Too Casual About Your Casuals
A recent court ruling on casual employment (WorkPac Pty Ltd v Skene  FCAFC 131) has thrown doubt on the common understanding of ‘casual’ and may leave employers vulnerable to claims.
The Full Federal Court decided that Mr Skene, a fly in, fly out worker, was not a casual employee, as stated in his contract and argued by his employer, WorkPac.
The court determined that, for the purposes of the Fair Work Act, the nature of Mr Skene’s employment wasn’t strictly “casual” as he worked set hours and was given a roster 12 months in advance. As a result, it ruled, he was entitled to annual leave and other benefits.
The court also found there was no evidence Mr Skene had actually been paid a casual loading – as argued by WorkPac. This is because it wasn’t expressly specified in Mr Skene’s contract or payslips that his rate of pay included a casual loading. This was a significant factor in the Court’s ruling.
This overall decision demonstrates how difficult it can be for employers to classify and treat employees as “casual” if they work set, structured hours, and have a reasonable expectation of ongoing work.
Furthermore, in making its decision, the Court determined that definitions in the National Employment Standards trump those in all other employment awards or agreements.
The deciding factor
The judges ruled that industrial instruments, or contracts, aren’t the best mechanisms to define whether an employee is, in reality, “casual”. Instead, they said courts should refer to the ordinary, common law definition which identifies the “essence of casualness”. This consists of, among other things:
- No firm advanced commitment as to the duration of the employee’s employment or the days (or hours) the employee will work;
- No firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work (and the casual employee will also not provide a reciprocal commitment to the employer); and
- Irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability.
The court also found that an employee will be entitled to both the benefits of paid annual leave and a casual loading rate in circumstances where the NES prevails. This means that simply asserting that a worker is paid a casual loading is not legally enough to determine that they are, in effect, casual employees. This is especially the case if, in practice, they meet the definition of an ongoing employee and are therefore entitled to paid annual leave (and other entitlements) under the NES. This ruling is a controversial one, as some employers argue it opens the door for casuals to “double dip” by receiving a loading and claiming leave payments.
Some organisations are now pushing for the creation of a new class of worker that takes into account the varied nature of some casual positions. Workers in this so-called ‘perma-flexi’ category would see their casual loading drop from 25 percent to 10 percent, but have access to leave entitlements and other benefits. The NSW Business Chamber has submitted its perma-flexi proposal to the Fair Work Commission, and it’s being fiercely opposed by the ACTU. We’ll keep you posted as updates come to light.
Key takeaways for employers assessing their casual workforce
As a result of the court’s decision, it’s crucial employers with a casual workforce revisit their contracts and employment practices . Here are things to consider;
- Does an employee’s payslip specify their base rate and casual loading separately?
- Does an employee’s contract of employment specify their base rate and casual loading separately?
- Do you or your employee know/think they are casual? Have you properly characterised the employment relationship?
- Does your employee work a regular roster?
- Does the award or agreement define your employee as a casual employee and is this all you are relying upon to confirm the casual nature of the engagement?
- Is there certainty over the period over which employment will be offered?
- Is it clear both the employer and the employee have the right to refuse to offer or to accept further work?
- Does an employee have the right to seek to convert to ongoing employment?
An update on casual conversion
Last year, we updated members about the Fair Work Commission’s decision to insert a new model casual conversion clause into a number of modern awards.
The effect of the model clause means:
- Employers must provide casual employees with written notice of their casual conversion rights within 12 months of their commencement of employment;
- Casual employees, other than an irregular casual employee, have the right to elect to convert to part-time or full-time employment after 12 months of service; and
- An employer must consider any such request and can only refuse a request upon reasonable business grounds.
The key point to remember is that the casual employee must have worked a regular pattern of hours on an ongoing basis which could continue to be worked in a permanent role without significant adjustment. Employers may also refuse the conversion on reasonable business grounds including where the employee’s hours of work will significantly change in the following 12 months.
The new clause came into effect on 1 October 2018.
Contact CCER for help
CCER has developed a range of useful tools and resources to assist you in meeting your obligations, and our dedicated team of Employment Relations Specialists is available to provide advice tailored to your organisation. If you are concerned about the basis of casual engagement or whether benefits have been appropriately provided, CCER can help you to:
- understand who in your workforce is truly casual;
- draft clear and concise contracts to avoid uncertainty; and
- check the casual conversion provisions in your award and help you to establish a system of monitoring and, where necessary, conversion from casual to permanent.
If you have any questions or would like more details as to how we can assist you, including our range of services and easy access resources, please don’t hesitate to get in touch with one of our Employment Relations Specialists at email@example.com or (02) 9390 5255.