Full Federal Court: ‘Casual’ Employee Entitled to Annual Leave Payments

A recent decision in the Full Federal Court determined that a labour hire employee was entitled to annual leave payments. Typically, casual employees are not entitled to the same entitlements as a permanent employee and are instead paid casual loading. However, following this decision in WorkPac Pty Ltd v Skene [2010] FCAFC 131, simply paying casual loading and stating an employee is a casual may not be sufficient for an employee to be considered casual under the National Employment Standards (NES).

Case Facts

Mr Skene was employed by WorkPac (a labour hire company) as a dump-truck operator on mining operations in Central Queensland. Mr Skene was first employed from 17 April 2010 to 17 July 2010 in a “drive in, drive out” (DIDO) position, and then again from 20 July 2010 to 17 April 2012 in a “fly in, fly out” (FIFO) position working 12 hour shifts on seven days on, seven days off roster arrangements with little flexibility. During Mr Skene’s second stint his roster was at times provided 12 months in advance.

Upon his termination in 2012, Mr Skene was not paid money in lieu of unused annual leave which he challenged arguing that he was in fact a permanent employee under the NES and therefore entitled to such a payout. WorkPac argued that because Mr Skene had executed a document entitled “Casual or Fixed-Term Employee Terms and Conditions of Employment” and his employment contract provided he was employed on a casual basis, Mr Skeen should be deemed a casual employee.

Mr Skene was successful at first instance before the Federal Circuit Court and WorkPac were ordered to pay compensation and interest for the unused leave on a full loaded pay rate. WorkPac subsequently appealed this decision to the Full Federal Court.

Full Court Findings

The basis of the case was whether Mr Skene’s employment fell within the concept of casual employment. As there is no definition for “casual employee” in the Fair Work Act 2009 (Cth) the Court looked to the common law, modern awards and enterprise agreements to determine if there was a uniform understanding. The Court deemed that no such understanding existed in the context of awards of agreements instead relying on the common law to provide a definition. In doing so the Court established several “indicia” of employment:

  • Irregular work patterns;
  • Uncertainty as to the period over which employment is offered;
  • Discontinuity; and
  • Intermittency of work and unpredictability.

On this basis the Court held that an assessment of “the real substance, practical reality and true nature of the relationship” must be undertaken rather than simply adopting the description the parties have given to the relationship

The Court observed that a ‘casual employee’ describes a type of employment that in part takes meaning from other recognised types of employment. Noting that the point of distinction between full-time and part-time employment is the ongoing nature of those employments, the Court stated that ongoing employment:

“…is characterised by a commitment by the employer, subject to rights of termination, to provide the employee with continuous and indefinite employment according to an agreed pattern of ordinary time (as distinct from overtime) work.  A corresponding commitment to provide service is given by the employee.”

In contrast a casual employee was described as having:

“… no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work. Nor does a casual employee provide a reciprocal commitment to the employer …”

In assessing the relationship, the Court noted the following:

  • Mr Skeens employment was predictable with rosters at times set up to 12 months in advance;
  • The employment was regular and continuous (save one period of approved unpaid leave);
  • The FIFO nature of the employment was inconsistent with the notion Mr Skeen had the ability to elect not to work on a particular day or refuse a shit;
  • It was unclear if Mr Skeens was actually paid any casual loading (however the Court held that the payment of a casual loading amount does not necessarily confirm casual status);
  • There was a strong suggestion that the work was not subject to significant fluctuation.

The Court subsequently dismissed the appeal being unable to find any error in the primary judge’s assessment of the relationship factors.

Considerations for employers

The case provides that simply describing your employee as a casual may not be sufficient for them to be classed as a casual under the NES as courts will look beyond the agreement or contract to determine the true nature of the relationship. Employers should be mindful of their working arrangements and review their workplace to ensure that a casual employee will actually be characterised as a casual.

At James Conomos Lawyers, our team is experienced in employment law.  If you need assistance resolving an employment law matter, please call 1800 JCL LAW to have one of our friendly staff navigate you through the conflict resolution process.