Summary
In an appeal heard by the Federal Court of Australia, the Court has made it clear that labelling an employee a casual will not necessarily classify them a casual for the purposes of the National Employment Standards or under their Enterprise Agreement.
In WorkPac v Skene [2018] FCAFC 131, Mr Skene, an employee who was initially engaged (and later terminated) as a casual employee under an enterprise agreement was deemed ‘other than a casual employee’ for the purposes of the Fair Work Act 2009 (Cth) and the enterprise agreement. Upon making this finding, the Court deemed that the employee was entitled to compensation for monies for accrued unpaid annual leave.
Annual leave entitlements
Under s87 Fair Work Act 2009 (Cth), an employee is entitled to payment of annual leave provided they are classified as “other than casual employees” under s86 Fair Work Act 2009.
Who is a casual employee?
The Court rejected the argument that a casual employee is a casual if they are “engaged and paid as such”. Instead, the Full Court of the Federal Court endorsed the principle per Hamzy v Tricon International Restaurants Trading as KFC [2001] FCA 1589 that “the essence of casual employment is the absence of firm advance of commitment as to the duration of the employee’s employment or the days (or hours) the employee will work”. This will require looking at the objective circumstances of an employee’s employment, which may include looking at key indicators such as irregularity, uncertainty, unpredictability, intermittency and discontinuity in the pattern of work or the employees in question. Importantly, the court noted that casual employees may still satisfy this test even if their working arrangements turn out to be regular and systematic.
In Mr Skene’s case, his hours were regular and predictable (as evidenced by roster prepared 12 months in advance), and there was a clear expectation that he would be available for his rostered hours, all factors the Court considered in deeming him a casual employee.
Does it matter if the employee is paid a casual loading?
In Mr Skene’s case, it could not be proven whether Mr Skene was in fact paid a casual loading. Nonetheless, the court considered that the payment and acceptance of a casual loading was not determinative of whether an employee was a casual, but merely pointed to the subjective intent of the employer and employee.
Does it matter what the employee is labelled under their award or enterprise agreement?
The Court indicated that although enterprise agreements may define various classes of employment, an employee’s classification under their enterprise agreement will not determine their classification under the Fair Work Act 2009 (Cth).
How would you determine if you are a casual employee or not?
Whether you will be classified as a casual employee will be determined by assessing the true nature of your employment relationship. Important factors that would point to you being a casual employee would include:
- if you have any discretion in your working arrangements, for example if you have any say in which days of the rostered periods you can or cannot work;
- if a portion of your pay is clearly allocated to a casual loading;
- if there is any degree of irregularity, uncertainty, unpredictability, intermittency and discontinuity in the pattern of work you complete.
Other factors that may be indicative of casual employment may include:
- if you are engaged by the hour on separate and distinct contracts;
- if your contract permits the company to terminate you on short notice;
- if you and the employer regard you to be a casual employee; and
- if you are classified as a casual employee under an award or enterprise agreement (if applicable).
It is important that employers routinely review the true nature of the employment relationships they have with their employees. The failure to recognise an employee’s true nature of employment, for example if a full-time employee was incorrectly classified and regarded as a casual employee, may render the employer liable to compensate their employee for accrued unpaid entitlements as well as pecuniary penalties for failing to fulfil their obligations.