Regular Casual Employees Entitled to Annual Leave

The Full Federal Court recently delivered a decision entitling an employee engaged and paid as a ‘casual’ employee to annual leave under the National Employment Standards in the Fair Work Act 2009 (Act).  This has been reported widely in the media, for the consequences that this decision will have on business across the country employing casual workers.

The facts

The employee, Skene, was employed over a seven year period on mine sites by a contracting agency (labour hire), WorkPac. His contract of employment with WorkPac confirmed that the offer was for casual employment. Skene was paid a flat all-inclusive rate of $50 per hour and provided with a 12 month roster. The WorkPac enterprise agreement contained express provisions excluding casual employees from all paid leave entitlements.

The primary judge held that Skene was entitled to annual leave under the Fair Work Act 2009, but not under the WorkPac enterprise agreement.

The decision

On appeal, the Full Court considered two main issues:

1. What is the correct definition of ‘casual employee’ under the Act; and
2. Whether ‘designating’ an employee as casual in a modern award or enterprise agreement is sufficient to lawfully make the employee casual.

The meaning of casual employment is not defined in the Act. WorkPac argued that the ‘industrial’ understanding, derived from technical definitions in modern awards and enterprise agreements, was the correct interpretation of ‘casual employee’. The Full Court rejected this argument and held that the appropriate definition was the common law definition of casual employment.

In arriving at this conclusion, the Full Court held that, without express intention to the contrary, the National Employment Standards in the Act must be considered the ‘pinnacle’ of employment standards, and therefore prevail over the ‘artificial’ definitions in modern awards and enterprise agreements.

The Court confirmed that the ‘essence of casualness’ was “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.

Skene’s work was predictable, on-going, regular and systematic. Therefore, Skene did not fall within the common law definition of ‘casual employment’ and was therefore not excluded from annual leave under the National Employment Standards in the Act.

The Full Court made it clear that employers cannot rely on a declaration in a modern award or an enterprise agreement that an employee is casual if, when viewed objectively, the employee is not a casual employee.

WorkPac argued that if Skene was entitled to annual leave under the National Employment Standards, he would be in effect ‘double-dipping’, because he received a loaded rate of pay that included the casual loading to compensate for paid leave.

The Full Court dismissed this argument on the basis that if the National Employment Standards are the ‘pinnacle’ and the hierarchy between them and modern awards and enterprise agreement is followed, the issue does not arise because there is “nothing in the FW Act that requires employees who are not casual employees and thus entitled to annual leave under s 87 to be paid a casual loading.”

Implications

Employers that engage casual employees on an on-going, regular or systematic basis should review and assess their employment arrangements.  This includes business looking to merge with, acquire business or transfer businesses or undertakings.  You should obtain specific advice about potential annual leave entitlements and any other entitlements attaching to permanent employment.

While speculation surrounded the possibility of an appeal to High Court, recent reports suggest that an appeal will not be pursued by WorkPac.

For the full judgment see: WorkPac Pty Ltd  v Skene [2018] FCAFC 131