Australia: Casual employee awarded 15 years of annual leave

The recent case of Apostolides v Mantina Earthmovers & Constructions Pty Ltd [2018] FCCA 279 serves as a useful reminder to ensure that your organisation's award or agreement covered employees are "engaged and paid as such".

In this case the Federal Circuit Court determined that an employee whom the employer purported was a casual employee, was in fact permanent and was owed a payment in lieu of notice and 15 years' worth of annual leave payments.

The case very much turns on its facts, which are, in summary:-

  • There was no written contract of employment or written terms setting out the basis of the employee's engagement;
  • The employee worked full time hours with substantial amounts of overtime for 15 years;
  • The employee had not been paid for public holidays over the course of his employment;
  • There was never any suggestion that he may not be required to work each day or that he had the option to decline to work;
  • The payslips contained no reference to the employee being a casual or a statement that there was a casual loading applied;
  • The employer gave evidence that a casual loading of around 20% had been applied in practice but there was no other evidence to support this;
  • A loading of 20% would have, in any event, been inadequate as the relevant pre-Modern Award, and the Australian Workplace Agreement (AWA) that was in place from 2007 (as an agreement-based transitional agreement) provided for a casual loading of 25%;
  • The employee gave evidence that he had not actually taken any annual leave over the 15 years (the judge found this to be questionable, querying why, if the employee genuinely considered himself to be a permanent employee, he would not have taken leave and questioned the non-payment of such leave); and
  • The employee was listed as 'casual' on the employer's payroll system.

Although there was some evidence suggesting permanency and other evidence suggesting a casual employment relationship, the question of whether the employee was casual or permanent was, the judge found, to be determined by the construction of the terms of the pre-Modern Award (from 2000 to 2007) and the AWA (from 2007 to 2015). The pre-Modern Award (the Quarrying Industry Award) provided that "the contract of hiring of every employee will in the absence of a contract in writing to the contrary, be deemed to be a contract of hiring per week" and "a casual employee is one engaged and paid as such" [subject to some following conditions].

In this case, there was no contract in writing to the contrary (i.e. a contract stating that the employee was a casual). As such the Court found that from 2000 to 2007 the employee was a weekly hire employee and as such, permanent.

There was uncontested evidence given by the employee that, on signing the AWA, the employee was advised that "the Agreement wouldn't change anything". The relevant terms of the AWA included the following:-

"Full-time employment – this means that you are employed on a permanent basis and are required to work an average of 38 hours a week plus reasonable additional hours"; and
Casual Employment – this means an employee who is engaged as a casual employee and whose hours and employment are subject to the employee's availability to work and the Company's needs for their services."

Unsurprisingly, the parties had opposing views on the construction of the AWA. The judge found the subjective intentions of the parties to be of little assistance. The judge took account of the extrinsic evidence, applying it to determine whether the employment was 'permanent' or 'casual' for the purposes of the AWA. He noted that, although the word "permanent" had a degree of circularity about it, its ordinary meaning suggested long term or indefinite employment and would exclude temporary or short term employment. The judge also considered that the employee's employment was also consistent with "38 hours a week plus reasonable additional hours", in-keeping with the definition of full-time employment in the AWA. It was also found that the employee's hours of work were not subject to the employee's availability or the company's need for his services, but rather he was expected to be available for work for 38 hours a week plus overtime. Those factors were inconsistent with casual employment as defined in the AWA. The employee was therefore found to have been a permanent employee for the duration of his employment.

Although the decision in this case turned on its facts and the construction of a pre-Modern Award and AWA, it highlights the importance of making the terms of an employee's engagement clear at the outset and not acting inconsistently with that during the employment. Many Modern Awards provide that a casual employee is "one engaged and paid as such." From a practical perspective it is therefore important that employers:-

  • Check the terms of, and have regard to, the definition of full-time and casual employment in the applicable Modern Award or enterprise agreement;
  • Ensure that there is written contractual documentation which explicitly includes:-
    • a statement that the employment is casual in nature,
    • that the specified casual loading is applied to compensate for the fact that as a casual, the employee has no entitlement to annual leave or personal leave;
    • that as a casual employee there is no entitlement to paid annual or personal leave;
    • a set off clause; and
    • notice provisions making it clear that the employment can be terminated on a limited notice period (the notice will depend on the terms of the applicable Modern Award or Enterprise Agreement but casual employment can commonly be terminated on no notice or 1 or 2 hours' notice); and
  • Ensure that the payslips note that the employee is casual and separate out the applicable casual loading.

For casual employees who are not covered by an award or agreement, the issue will be determined in accordance with not just any contractual documentation but also by looking at the true nature of the relationship.

It is also worth noting that, separate from the question of casual employees' entitlement to loadings and paid leave and the like, for the purposes of unfair dismissal, there is a statutory regime which specifically addresses when a casual employee will have access to the unfair dismissal regime (which is outside the scope of this article).

This case, however, is a timely reminder to review your casual employment contracts, pay documentation and any applicable Modern Award or Enterprise Agreement to ensure that your organisation is not exposed in this area. We are of course available to assist with any review and updating of contracts and/or an audit of your casual workforce.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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