The recent decision about casual employment in WorkPac Pty Ltd v Skene has received a lot of publicity. The Full Court of the Federal Court confirmed a decision that an employee who was hired under a casual employment contract was in fact a permanent employee, based on the substance of the relationship and working arrangements.
Importantly, this decision does not change the legal criteria used to distinguish between casual and 'other than casual' employees. However, the decision makes it clear that employees may be awarded back payment for leave entitlements, even where they have been paid a casual loading and classified as a casual in accordance with an enterprise agreement.
Mr Skene was employed by the labour hire company WorkPac Pty Ltd from 2010 to 2012. He worked in two Queensland mines during that period on a 'fly in, fly out' basis.
Mr Skene's employment conditions were contained in a Notice of Offer of Casual Employment and he was also covered by an Enterprise Agreement. Mr Skene's employment was on an assignment-by-assignment basis, terminable with one hours' notice and he was paid a flat hourly rate. However, Mr Skene's roster was provided 12 months in advance. He worked 12.5 hour days with the same crew as a dump-truck operator, seven days rostered on followed by seven days off.
Upon termination of his employment in April 2012, Mr Skene claimed annual leave entitlements from WorkPac pursuant to the Fair Work Act and under the Agreement, on the basis that despite being called a casual employee by WorkPac, his working arrangements were those of a permanent employee.
First decision: Skene v Workpac Pty Ltd  FCCA 3035
The primary judge found that Mr Skene was a casual employee in accordance with the Agreement. This was because the Agreement required WorkPac to assign a status to each employee (such as full‑time or casual) and set out the applicable rates of pay. As WorkPac had designated Mr Skene a casual employee upon his engagement, he was not entitled to annual leave under that Agreement.
However, the primary judge concluded that under the National Employment Standards, Mr Skene was a permanent employee and entitled to annual leave. The judge considered that Mr Skene's employment was regular, predictable, continuous and based on the expectation that Mr Skene would be available at all times during the 'fly in, fly out' period, (logistically to the exclusion of other employment).
Second decision: WorkPac Pty Ltd v Skene  FCAFC 131
On appeal, the Full Court examined the meaning of casual employment which is not defined in legislation, and considered whether the concept could be defined by the common law (as argued by Mr Skene), or the industrial understanding developed by modern awards and enterprise agreements (as argued by WorkPac).
The Full Court unanimously confirmed that Mr Skene was a permanent employee and entitled to be paid out his accrued annual leave under the NES, and overturned the primary judge's decision in relation to the Agreement. Their Honours found that the Agreement did not define what a casual employee was, and applied the common law definition.
Who is a casual employee?
The Court held that the term 'casual employee' has acquired a legal meaning referrable to particular indicia, including:
- no firm commitment to the other party;
- irregular work patterns;
- a lack of continuity;
- intermittency of work;
- unpredictability; and
- uncertainty as to the period of employment.
These all amount to flexible work, which is the essence of casual employment.
The description in the contract, payment of casual loading, submission of timesheets and short termination notice period were all factors indicating casual employment, but not decisive in this instance.
The Court said that where an employee successfully establishes an entitlement to annual leave but they have been paid a casual loading, then an employer may be able to claim a set-off against the amount.
However, WorkPac was unsuccessful in offsetting the amount because the Agreement did not specify that the flat hourly rate WorkPac paid Mr Skene included a casual loading amount.
This decision requires employers to be aware of the substance of their employees' working arrangements, rather than the way they are described at the commencement of a contract. Employers should:
- continuously review contracts against actual work practices to ensure that employees are properly characterised;
- review rostering practices and amend them if required, remembering that casual employees are characterised by their irregular and intermittent work patterns, not the label given to them or the fact that they are paid casual loading;
- consider offering part- or full-time contracts to those who work regular hours and seriously consider casual-conversion requests made in accordance with an award or enterprise agreement; and
- review contracts to ensure that casual loadings are clearly identified in monetary terms so that casual loadings may be able to be set off against annual leave entitlements if a claim is made.