Landmark casual entitlement decision stands as law

02 January 1970

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Further to our previous communication entitled Landmark decision: Casual entitled to Annual Leave, the employer in this matter, WorkPac Pty Ltd, has confirmed its decision not to appeal the decision of the Full Court of the Federal Court (the Court).

This confirms the Court’s decision has the standing of law, which will be influential in matters with similar facts. To reiterate, the decision determined a casual worker gained access to both the loading he received for casual work and the annual leave entitlement that the casual loading is meant to be in lieu of.

As we outlined in our previous update, regardless of award or enterprise agreement conditions, if an employee has a regular and predictable pattern of work with an expectation of ongoing engagements, they may be considered permanent as opposed to casual.

As a result of the decision, a large number of employees currently described by employers as ‘casuals’ could in fact be permanent for the purposes of the National Employment Standards (NES).

Background and decision

Detailed discussion of the key elements of the decision, and the Court’s deliberation, can be found here.

In summary, the Court upheld that Mr Skene was not a casual for the purposes of the NES, he was not a casual for the purposes of the WorkPac agreement and he was entitled to an annual leave payment in lieu upon termination under the NES.

The primary judge compensated the employee $21,054.69 as a payment in lieu of annual leave upon termination and a further $6,735.03 in interest. The matter has been remitted to the Federal Circuit Court for re-determination of compensation payable to Mr Skene and the pecuniary penalties to be imposed on WorkPac.

Implications for Business

Given this decision will not be tested by further appeal to the High Court, there is increased potential for immediate and profound impact on Australian business. 

The Australian Chamber of Commerce and Industry, of which the Victorian Chamber is a key member, is actively engaging with Government, members of the opposition and cross benchers to address the issue as a priority and to provide clarity and greater certainty for employers and employees. A potential option available to Government is an amendment to avoid ‘double dipping’ by employees.

Our sister Chamber, the NSW Business Chamber has also made application to the Fair Work Commission to introduce a new employment category of ‘perma-flexi’ in a range of awards.

Our recommendation to employers still applies, namely to revisit their arrangements to review and ensure that casual arrangements are truly casual, particularly including that there is ‘the absence of a firm advance commitment’.

Practical suggestions for employers in managing this issue include:

Clarity in employment contractsincluding unambiguous statements about the amount and purpose of casual loadings, and the entitlements they are designed to offset. To reinforce this understanding, the casual loading should be separated out from the base rate of pay as a quantifiable figure to ensure employees are genuinely aware of the loading as a component of their wages and that the loading relates to this element of their employment.

Regular reinforcement of the casual nature of employmentincluding as may be practicable when accepting shifts and/or processes around recommencing employment after a break in continuity. 

Inform affected employees of their right to seek casual conversion and remind them routinely, subject to meeting the criteria under some modern awards and enterprise agreements, if relevant. It may be prudent for employers to actively offer permanent opportunities to some casual employees, if the employer has capacity to do so and if the true nature of the employment could otherwise be ambiguous. Employers should take reasonable steps to avoid any perceived coercion or misrepresentation.

Declining the opportunity to convert to permanent full time or part time employment may serve as the employee’s reaffirmation of the casual arrangement and could provide a reference point for employers, should the employee attempt in future to be retrospectively categorised as a permanent employee. 

Clarity of commitment, or otherwise, to future rostered work, including a statement to casual employees, when issuing future rosters, that all working hours and shifts are subject to change and may be declined by the employee.

Ensure rosters are truly casual, meaning that opportunities for a range of working hours and shifts are fairly distributed among employees and the employer can maintain a strong labour pool by ensuring an effective spread of existing skills and genuine opportunities for capability development among casual employees.

This could be facilitated by rostering systems that allow staff to ‘bid’ for available rosters and reinforce that each shift is accepted in isolation from the previous or next shift.

The above are suggestions that may assist going forward in the absence of immediate legislative reform. Equally, employers will need to be cautious with existing employees and that they are not exposing their business to a claim of adverse action.

Conclusion

Essentially, this decision finds the payment of a casual loading will not displace the payment of a NES derived entitlement if the ‘true’ relationship is of a permanent nature and employers may end up paying both.

Clear terms and conditions in employment contracts and the obligations within relevant industrial instruments are always necessary, however what is now critical are the practices that are applied within the relationship including around rostering, patterns and expectations of ongoing work. This decision as it stands also highlights that while relationships may start out as casual, or be agreed by all parties as casual, it is the true nature of the relationship that is determinative. It was also highlighted that this may change over time and as such regular assessment is required.

We encourage members to contact the Advice Line to discuss this or any other workplace relations matter. We will continue to update members on this matter.

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