Unlike full-time and part-time employees who have ongoing employment (or a fixed-term contract), who can expect to work regular hours each week and are entitled to paid sick leave and annual leave, a casual employee will receive a higher hourly pay rate. This ‘casual loading’ is paid because the employee does not get benefits such as paid sick or annual leave.
Although the Fair Work Act 2009 itself does not provide a definition for the term ‘casual employee’, nor is the term generally defined by the applicable modern award, legislatively it is understood that a casual employee is an employee that:
- works on an irregular and unsystematic basis
- has little or no expectation of the continuation of work or guaranteed income, and
- has the ability to accept and reject work as they see fit.
- works only on demand by the employer.
However, in practice, some employers do engage casual employees to work regular hours or the same days each week over an extended period. Unless a casual conversion clause is provided for under an applicable award, long term casuals would remain employed on a casual basis unless they formally change to full-time or part-time employment.
The increasingly common practice of engaging long term or ‘permanent’ casuals on a regular and systematic basis can however blur the lines between whether an engagement is genuinely casual or part-time in nature, increasing the potential for an employee to challenge their employment status and their entitlements. This blurring of the lines was recently highlighted in a controversial court ruling, which has highlighted the importance for employers to correctly determine the actual nature of their employment relationships.
WorkPac Pty Ltd v Skene
WorkPac Pty Ltd v Skene examined whether an employee was a casual employee as his employer believed, or an “other than casual” employee.
The employee had been employed through a labour hire firm as a dump truck driver at coal mines in central Queensland for two periods (17 April to 17 July 2010 and 20 July 2010 to 17 April 2012). He was employed under a fly-in, fly-out arrangement with 12-hours shifts on a “seven days on, seven days off” roster.
The employee contested that he was, in effect, a full-time employee and therefore entitled to have been paid out accrued annual and relevant entitlements at the end of his employment.
This was disputed by the employer who evidenced that the employee had been given a “Notice of Offer of Casual Employment”, and that he had then signed an agreement titled “Casual or Fixed Term Employee Terms & Conditions of Employment”.
The Courts sided with the employee, finding that due to the actual nature of his employment (primarily that his days and hours were dictated by the company and not mutually agreed) that his employment was not casual in nature.
It was found that there was no evidence that:
- the employee could choose which days of the roster periods he would work or not work.
- there was any element of choice in the daily working arrangements
- there was any opportunity for him to choose not to work any particular shift or hours offered to him
At a follow-up hearing in March 2017, WorkPac was ordered to pay the employee a total of $27,789.72 in compensation, including interest. While the employer did appeal the decision, this was dismissed in August 2018. The employer has chosen not to further appeal the finding.
What is casual employment?
Employing and paying an employee as a casual employee does not, in itself, mean the employee is actually a casual employee. Rather, there is a requirement for employers to review and consider the actual nature of the relationship based on the actual requirements of the role and operational practices.
If the nature of the working relationship in practice reflects that of full-time or part-time employment, an individual may able to challenge their employment status and seek back pay for outstanding entitlements.
When assessing the nature of a particular casual employment relationship, courts and industrial tribunals have identified a number of factors that are taken to characterise casual employment. Such factors include, but are not limited to:
- the period of time over which the employment extends — the longer the length of service the less likely the employee is a casual employee;
- the number of hours worked per week — the more numerous the hours worked the less likely the employee is a casual employee;
- the existence of consistent starting and set finishing times/hours of work — the more consistent the hours the less likely the employee is casual;
- whether the employee worked according to a roster system that was published in advance — the more regular and planned are the hours the less likely the employee is casual;
- whether notice was required by the employer prior to the employee being absent or on leave — if so, the less likely the employee is a casual.
What does this mean for employers?
While this decision in Workpac Pty Ltd v Skene will act as a legal precedent for future claims, it is important to note that this does not mean that all casuals will now have an entitlement to paid annual or personal leave. Nor does it mean employers have to backpay current casual employees for such entitlements.
It is recommended however that all employers review the actual nature of their current and future casual engagements to determine whether they could, in practice, be deemed to be permanent employees.
The ability of an employer to direct employees to take annual leave during a period of close-down will be determined by the provisions provided in the applicable modern award, enterprise agreement or, in the case of award/agreement-free employees, the National Employment Standards.
If you intend to temporarily shut down over the Christmas/New Year period, it is essential that you understand your obligations.
Information in HR Advice Online guides and blog posts is meant purely for educational discussion of human resources issues. It contains only general information about human resources matters and due to factors such as government legislation changes, may not be up-to-date at the time of reading. It is not legal advice and should not be treated as such.