Continued casual controversies: ‘Casual’ Employee awarded Annual Leave entitlements

Casual employment in Australia has received a large degree of scrutiny in recent years, with unions raising widespread concerns regarding increasing casualisation of the Australian workforce and the associated insecurity of casual engagements. Conversely, employers recognise the benefits of the casual workforce, including flexibility to roster staff consistent with fluctuating work demands. Casual employees traditionally receive a casual loading on the rates paid to their permanent counterparts, in recognition of the entitlements they do not receive (such as paid annual leave and sick leave).

In last year’s review of modern awards, the Fair Work Commission determined that all modern awards should include terms regarding conversion of casual employees to permanent employment (which will take effect from 1 October 2018).

Additionally, as reported by HR Legal recently, we have seen varying decisions regarding whether employees should receive redundancy pay with reference to prior periods of regular and systematic casual service.

Against the backdrop of these developments, in a recent case which has been received with widespread concern by employers, a casual employee engaged through a labour hire company was found to be a permanent full-time employee. The employee was awarded over $21,000 as back payment of unused annual leave after the termination of his employment. This was despite the employee having been paid 25% casual loading throughout his employment.

At the crux of this decision was that while the employee was offered ‘casual’ employment, this was not accurately recorded in his contract of employment. The employee was rostered pursuant to a “7 days on, 7 days off” roster, which was established a full year in advance.

The employer sought to argue that all parties were aware that the employee was a casual and that he was receiving the higher casual rate as per the relevant enterprise agreement.

However, when the Full Court of the Federal Court scrutinised the employment relationship in its context, it found that notwithstanding the implication of a casual relationship, the regular and expected working pattern gave the ultimate impression of full time, permanent work. Consequently, the employee was awarded back pay representing unpaid and untaken annual leave.

Employer representative groups are already in the process of contacting lawmakers to address the apparent ‘double-dipping’ outcome, where employees can be paid a casual loading and still be recognised as permanent employees.

Until the issue is settled or clarified, it is more important than ever to ensure that onboarding processes for casual employees including written employment contracts firmly establish the casual status and entitlements, consistent with the underpinning enterprise agreement or award.

Case Study:  WorkPac Pty Ltd v Skene [2018] FCAFC 131

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.