EMPLOYMENT LAW UPDATE - December 2018
Costly casuals: The real price of failing to practically classify your employees
A recent decision of the Full Court of the Federal Court of Australia has highlighted the need for employers to be vigilant in the practical classification of their casual employees.
The decision of WorkPac Pty Limited v Skene  FCAFC 131 has demonstrated that simply deeming an employee a ‘casual’ and payment of a casual loading will not automatically result in an employee being classified as a casual for the purposes of the Fair Work Act 2009 (‘the Act’) or the employee’s relevant industrial instrument.
Mr Skene was employed by Workpac Pty Limited (‘Workpac’), a labour hire company. He was engaged as a dump truck operator in a mine in Central Queensland.
Mr Skene was a fly in, fly out worker and performed work at the mine from 17 April 2010 to 17 July 2010 and then again from 20 July 2010. On 24 April 2012, Mr Skene’s employment with Workpac was terminated.
Mr Skene brought proceedings in the Federal Circuit Court of Australia seeking payment for unpaid annual leave under the National Employment Standards (‘NES’) and his relevant enterprise agreement.
At first instance, Judge Jarrett held that Mr Skene would be considered a casual employee within the definition of the relevant enterprise agreement as the agreement allowed Workpac to describe him as such at the start of his employment.
Mr Skene was therefore deemed to have no entitlement to annual leave in accordance with the enterprise agreement. Judge Jarrett did however determine that Mr Skene had an entitlement to annual leave under the Act.
Both parties appealed the decision.
Workpac appealed on the basis that the Court had erred in finding that Mr Skene was a casual employee. While Mr Skene appealed on the basis that he was entitled to annual leave under the relevant enterprise agreement. Mr Skene also sought the imposition of pecuniary penalties against Workpac which were not imposed at first instance.
The Full Court of the Federal Court of Australia examined the case of Mr Skene and his ‘casual employment’ in detail.
The Court noted that there was no definition of a ‘casual employee’ contained within the Act and in those circumstances the Court had to determine the appropriate definition of a casual employee.
In defining a casual employee, the Court looked at the ‘essence of casualness’ and what distinguishes it from part time and full time employment, a concept that was first referred to in Hamzy v Tricon International Restaurants  FCA 1589.
The Court held that whether a person is a casual is objectively determined and the indicative factors in deciding whether an employee is a casual are whether the employee’s engagement is one of:
Irregular work patterns;
uncertainty, discontinuity, intermittency of work and
The Court examined the patterns of work of Mr Skene and noted that it was regular, predictable and not subject to significant fluctuation. Indeed there was a roster system which required Mr Skene to perform duties that was set some 12 months in advance.
The Court therefore determined that Mr Skene was not a casual employee for the purposes of the Act or the enterprise agreement.
With respect to the enterprise agreement, the Court held that it was the common law definition of ‘casual employee’ which would apply rather than any categorisation imposed by Workpac at the commencement of Mr Skene’s employment.
In their determination, the Full Court made it clear that the NES contained in the Act prevailed over modern awards and enterprise agreements and further that the minimum standards that are set out in the NES cannot be excluded by a modern award or an enterprise agreement.
The matter was remitted to the Federal Circuit Court of Australia for the Court to determine the compensation payable to Mr Skene for unpaid annual leave and to determine any pecuniary penalties that should be imposed on WorkPac in respect of its failure to meet those entitlements.
LESSONS FOR EMPLOYERS
The key takeaway from Workpac v Skene is for employers to regularly assess any ‘casuals’ in their business and the pattern of work performed.
The decision highlights that all employers with casual workers must review the substance, reality and true nature of those employment relationships and how their casual employees are engaged in practice. A failure to do so could result in a significant cost to employers.
This is particularly apparent in light of the Court’s view in Workpac v Skene that Mr Skene was entitled to receive both what Workpac deemed a ‘casual loading’ and annual leave. Therefore seemingly allowing Mr Skene to ‘double dip’.
The Court reached this conclusion on the basis that the contract relied upon by Workpac did not specifically identify a designated amount or percentage of Mr Skene’s wages which were identified as a casual loading.
As the contract did not allocate any part of the rate of pay to a casual loading or as monies in lieu of paid annual leave, Mr Skene was entitled to receive both what Workpac deemed the ‘casual loading’ and annual leave.
Workpac v Skene is a timely reminder to all employers to examine any casual employment relationships in the workplace and how those employment arrangements are expressed in contract. The failure to do so can be very costly for employers.
MILLY KHAN & ANDREA WILLITS
For additional information, advice and/or assistance contact our Workplace Relations Team on (02) 8324 7500 or alternatively email Simon Berry (Partner) on email@example.com Andrea Willits (Senior Associate) on firstname.lastname@example.org.