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Are your casual employees really permanent employees?

By Nikki Holden

Supervised by Troy Wild

Peak Services Legal  

A landmark decision of the Full Bench of the Federal Court will cause employers throughout Australia to re-examine the engagement of their casual employees. Last week, the Full Court of the Federal Court in WorkPac Pty Ltd v Skene [2018] FCAFC 131 held that the determination of whether an employee is truly a casual employee must be decided by looking at “the conduct of the parties to the relationship and the real substance, practical reality and true nature of that relationship…” [1], regardless of the terms of an applicable employment agreement and/or industrial instrument (i.e. Enterprise Agreement or Award).

In this case (Mr Skene) was employed as a casual employee performing duties as a dump truck operator from April 2010 to July 2010 and then again from July 2010 to April 2014 for WorkPac (a labour hire company) working at a coal mining operation in central Queensland. Mr Skene worked a roster of 12.5 hours per shift on a 7 day on, 7 day off continuous roster arrangement.

Mr Skene brought proceedings against WorkPac arguing that:

  1. He was a permanent full-time employee of WorkPac and entitled to annual leave in accordance with the WorkPac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007 (Agreement) and ss. 87 and 90 of the Fair Work Act 2009 (Cth) (FWA); and

  2. Pecuniary penalties should be imposed against WorkPac for contravention of the FWA and Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth). [2]

WorkPac contended that Mr Skene was a casual employee and therefore not entitled to annual leave under either the Agreement or the FWA.[3]

Mr Skene was successful at first instance in the Federal Circuit Court and later successfully defended an appeal of WorkPac before the Full Bench of the Federal Court. 

This decision effectively overturned the 2010 decision of the Fair Work Commission (the Commission) in Telum Civil (Qld) Pty Ltd v CFMEU, where the Commission held that provided an employee was engaged as a causal in accordance with the terms of the applicable industrial instruments and paid a casual loading, they could be considered a casual employee, notwithstanding their actual nature of engagement or pattern of work which may indicate to the contrary.

The Full Bench set out the test to be applied when considering if an engagement is truly a casual engagement:

1. There should be no certainty about the period over which the employment is offered; and

2. There should be an informality, uncertainty and irregularity about the engagement.

The Full Court also found that employees who commence their engagement as casual can later be considered permanent:

“an employment which commences as casual employment may become full-time or part-time because its characteristics have come to reflect those of an ongoing part-time or full-time employment.”[4)

What does this mean for employers?

So what does this mean for employers? Essentially, a large number of employees currently engaged as “casuals” could be found to be permanent employees after examining the true or actual nature of the engagement. This will mean that those deemed permanent employees will attract all entitlements of permanent employees including annual leave, personal leave and redundancy entitlements for each year of service.

The 2010 decision in Williams v MacMahon Mining Services Pty Ltd [2010] FCA 1321 also means it will likely be difficult for employers to establish an offset claim on the basis that a casual leave loading is paid in lieu of entitlements, including the entitlement to annual leave.

Council’s should re-examine their casual engagements on a case by case basis and assess whether a transition to permanent employment is needed.  Peak Services Legal can assist in managing any exposure to risks in that regard, including conducting a whole of Council risk assessment and advising on strategies on how to avoid such risks.

Please contact Peak Services Legal on 07 3000 2148 for further assistance.

 

[1] Workpac Pty Ltd v Skene [2018], per Tracey, Bromberg and Rangiah JJ at para 180.

[2] Ibid, at para 9.

[3] Ibid, at para 10.

[4] Workpac Pty Ltd v Skene [2018], per Tracey, Bromberg and Rangiah JJ at Para 178.