The Federal Circuit Court has shattered the notion that
engaging casual employees is the most cost-effective solution to
meeting spikes in workloads, which could impact on workforce
structuring and the employer's bottom line.
Like a department store during the Christmas period, a research
institute collating data after a clinical trial, or a pub on
weekends, employers may experience increases in customers or
workload which require additional staff. But to engage someone on a
permanent basis is a significant commitment, particularly where at
other times of the year the employer won't always have work for
them to do.
The answer, of course, has traditionally been to engage some
casual employees. While they cost more per hour than a permanent
employee, that's because they are paid a loading (usually 25%)
to compensate for the fact they don't have an entitlement to
take paid annual leave (and other forms of paid leave). But unlike
a permanent employee, they can work on an ad hoc or on-call basis,
by the hour if needs be, and the employer doesn't have to be
too concerned about staff shortages at busy times nor about the
legal ramifications when the employer no longer requires their
services (especially where the casual employment is not regular and
systematic extending beyond six months). It's the perfect
"no commitment" solution to all your employment needs....
at least it was.
In a decision handed down in late 2016 in Skene v Workpac Pty
Ltd  FCCA 3035, the Federal Court determined that Mr Skene,
who was defined as a "casual" under the relevant
enterprise agreement, was nevertheless a permanent employee for the
purposes of the Fair Work Act. As a result, notwithstanding that Mr
Skene already received a casual loading under the enterprise
agreement, he was entitled to take paid annual leave under the
National Employment Standards (NES).
The common law characteristics of a casual employee
In reaching this decision, Justice Jarrett relied on common law
characteristics of a casual employee for the purpose of determining
whether Mr Skene was a casual employee and therefore excluded from
annual leave entitlements under NES. These include:
that the employer can elect to offer employment on a particular
when offered, the employee can elect to work;
there is no certainty about the period over which employment
will be offered;
informality, uncertainty and irregularity of engagement;
absence of any firm advance commitment as to the duration of
the employee's employment or the days or hours the employee
In this case Mr Skene's employment, which was regular and
systematic, did not bear the common law characteristics of a
"casual" and he was therefore deemed by the Court to be a
"permanent" employee and entitled to annual leave under
The decision appears to be at odds with established case law.
There are authoritative decisions of the Full Bench of the Fair
Work Commission and of the Federal Court which endorse a contrary
view, which is that regard must be had to the definition of casual
employee in an instrument made under the Fair Work Act (such as an
award or enterprise agreement) for the purposes of determining
entitlements under the Fair Work Act. Those decisions hold that if
an employee meets the definition of casual employee under the award
or enterprise agreement then they are to be regarded as a casual
employee for the purposes of the NES, and are not
entitled to paid annual leave.
Where to now?
The Workpac decision is currently subject to an application for
leave to appeal to the Federal Court.
If it is allowed to stand it will perpetuate an artificial
notion that the NES confers entitlements that are in
addition to more beneficial entitlements conferred by an
enterprise agreement, and sanction double-dipping into paid leave
This would make regular and systematic engagement of casual
employees an uneconomical and impractical option for employers in
many circumstances and there will be a need to radically rethink
the way in which employers address demands for more staff over busy
periods. The appeal is due to be heard on 22 March 2017 and Clayton
Utz will keep you updated once a decision is published. For the
time being though, watch this space!
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
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