Casual uncertainty: Federal Court decision states that casual employees may be entitled to annual leave

21 September 2018

A recent decision of the Full Federal Court has emphasised to employers that they should be cognisant about the way that they engage “casual” employees in order to shield themselves from being liable in circumstances where a casual employee may claim that they should receive the annual leave entitlement under the National Employment Standards (Fair Work Act 2009 (Cth)).

This case is a clear warning to employers to make sure that they carefully document the basis upon which a casual employee is engaged, and, ensure the employee is treated as a casual employee as the term casual has been traditionally understood.

In the case of WorkPac Pty Ltd v Skene [2018] FCAFC 131, Mr Skene, a dump-truck operator employed by WorkPac on a casual basis, claimed that he was entitled to payment of annual leave upon termination of his employment.1 WorkPac’s principal argument was that by virtue of the fact that Mr Skene was a casual employee, he therefore had no entitlement to annual leave.

The Full Federal Court disagreed with WorkPac’s position and held that the circumstances of Mr Skene’s employment were such that he was not a casual employee, so that he was entitled to be paid annual leave. The Court found that the “essence of casual employment was missing” pointing to Mr Skene’s pattern of working 12.5 hour shifts on a 7 days on, 7 days off continuous roster arrangement as “regular and predictable“, “continuous” and “not subject to significant fluctuation“. Further, Mr Skene was provided a roster 12 months in advance, such that there was an expectation that Mr Skene would be available on an “ongoing basis” to perform the duties required of him in accordance with his roster. The Court also highlighted that Mr Skene’s employment contract did not allocate any part of his rate of pay to a casual loading.

The Court found that it was not significant to have employed the employee as a casual or that casual loading is paid. The substance of the relationship must be assessed. An employee will only be casual if there is a “natural commitment” to continuing and indefinite work.

This decision highlights that it will be difficult for employers to classify and treat employees as casual when they work regular hours and there is an indication, through an advanced roster or otherwise, that they will be working on an ongoing basis. The Court reinforced that the indicators of casual employment include an “irregular work pattern, uncertainty, discontinuity, intermittency of work and unpredictability”. Moreover, it is a reminder to employers that a description by an employer of an employment relationship as casual is not itself determinative.

The Court did not determine the issue of whether an employee may “double dip” by retaining the casual loading and also being entitled to annual leave, but did suggest that such an employee was not entitled to casual leave loading in the first place.

Lessons for employers

The Court’s decision highlights that employers should consider the following points when engaging a casual employee or dealing with a casual employee:

  • Ensure that work will not be continuing or indefinite;
  • Ensure that there is clear intention that the employee is to be casual employee and working arrangements are irregular or intermittent;
  • Clearly outline the payment of casual loading in the employee’s employment contract;
  • Ensure that the employment contract is not drafted in a way that allows for potential “double dipping”; and
  • Ensure that there is an element of uncertainty, discontinuity, intermittency of work and unpredictability in the employee’s pattern of work.
Casual conversion requests

Employers should also be aware that from 1 October 2018, a casual conversion clause will be inserted in to modern awards.2 Accordingly, employers must provide their “regular casual employees” with the opportunity to convert their current employment to full time or part-time employment. If a request is received in writing, a regular casual employee is one who has worked a pattern of hours broadly over the prior 12 months that the employee could continue to perform as a full time or part-time employee. The conversion clause should be considered by employers that have casual employees that work regular and systematic hours, particularly in light of the WorkPac decision.

Employers will need to provide a copy of the conversion clause to their existing casual employees by 1 January 2019, and will need to provide the conversion clause to any casuals employed after 1 October 2018 within 12 months.

Further, employers may only refuse a conversion request made by a casual employee if they have consulted with the employee and can demonstrate that there are “reasonable business grounds” for doing so.

The clause opens up the opportunity for unions or employees to take a refusal of the Fair work Commission to have the employer’s refusal tested. This goes beyond the limited rights or employees who have their requests for flexible working hours refused by an employer under the Fair Work Act 2009 (Cth).

Reasonable business grounds include that the employee’s position will cease to exist or the hours of work will be significantly reduced within the next 12 months.

This article was written by Brad Swebeck, Partner and Jessica Lim, Graduate.

1 WorkPac Pty Ltd v Skene [2018] FCAFC 131

2 4 yearly review of modern awards – Part-time employment and Casual employment [2018] FWCFB 4695 (9 August 2018)

Brad Swebeck

P: +61 2 9334 8781


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