22 August, 2018
Workpac Pty Ltd v Skene [2018] FCAFC 131 (16 August 2018)
What you need to know
A Full Court of the Federal Court of Australia has found that the industrial meaning of the term "casual employee" has not been incorporated into the Fair Work Act 2009 (Cth) for the purposes of the National Employment Standards.
Casual employees with regular predictable hours may be entitled to the same statutory entitlements under the NES as permanent employees, regardless of whether they are engaged and paid on a casual basis.
What you need to do
- Monitor closely developments in this area including the outcome of any possible appeal or legislative changes to deal with this decision.
- In the meantime, ensure that your organisation accrues statutory entitlements under the NES, such as annual leave, for casual employees with regular predictable hours.
- Consider reviewing the terms of engagement of casual employees and their roster arrangements. You may also wish to consider other workforce models, such as labour hire workers.
What is this decision about?
A casual employee sought declarations that he was entitled to annual leave in accordance with the relevant enterprise agreement, and that the employer contravened the FW Act by failing to pay annual leave under the NES.
Not a casual employee under annual leave provisions of the FW Act
The Court held that the employee was engaged "other than as a casual" employee (ie. a permanent employee) because of the regular nature and stability of his employment, and the expectation that his employment would continue for a considerable length of time. The employee had worked 12 hour shifts on a "7 days on, 7 days off" roster for over 12 months.
The Court rejected the approach taken by a Full Bench of the Fair Work Commission in Telum Civil (Qld) Pty Limited v Construction, Forestry, Mining and Energy Union [2013] FWCFB 2434 that "casual employee" under industrial instruments means one who is identified as a casual at the time of engagement and paid a casual loading. Commonly within industrial instruments casual employees are those "engaged and paid as such". The Full Court said the approach in Telum failed to account for employees not covered by enterprise agreements or modern awards, and was not expressly adopted by the legislature. It considered that if Parliament wished the term "casual employee" to have a meaning other than its legal meaning, it should have clearly specified this.
The Full Court stated that the "essence of casualness" is the absence of a firm advance obligation to provide ongoing work and therefore a capacity for an employee to have access to rest and recreation. It considered that the indicia of casual employment included irregularity, uncertainty, unpredictability, intermittency and discontinuity in the pattern of work of the employee, and that the employer's need for further work to be performed in the future is not reasonably predictable. It expressed the view that an employee cannot be both casual and full-time or part-time (i.e. permanent) in the same employment.
Not a casual employee for the purposes of the Agreement
The Court also found the employee was entitled to annual leave because he was not a casual employee for the purposes of the enterprise agreement that applied.
In construing an undefined term in an enterprise agreement, the Full Court held there is a presumption that parties intended to use its ordinary and usual meaning. In this case, this meant construing "casual employment" according to its usual legal meaning, rather than any common industrial meaning.
The matter was remitted to the Federal Circuit Court for the calculation of compensation and any pecuniary penalty.
Implications
The decision of the Full Court will have substantial implications for labour models adopted by many organisations across industries. Close to 25% of the Australian labour force is engaged as casuals, and casual employment is significantly used in the agriculture, mining, manufacturing, construction and utilities and personal service industries. Over 40% of casuals are engaged for period of greater than 1 year. Such casual employees may be engaged for significant periods of time on regular rosters.
The common industrial approach is that a casual is "engaged and paid as such". The nature of the agreement between the employer and the employee, the payment of a casual loading, and the ability on both sides to terminate the arrangement on short notice, have typically been considered to characterise casual employment.
The Full Court accepted these were factors indicating the intention of the parties, but was not determinative of the true nature of the employment relationship.
The decision may cast doubt over these engagements, and economic viability of businesses who have structured their arrangements on a common, and until now, well accepted approach. That is particularly the case where there is regularity in the pattern of work of the employees.
The decision gives rise to a number of implications including employees making back pay claims for leave and other entitlements, potentially double-dipping where they have received a casual loading.
Making the case: Insights from Geoff Giudice
The Full Federal Court has found that the accepted industrial meaning of the term "casual employee", time-honoured in the Commission's awards, has not been incorporated into the FW Act for the purposes of the NES.
This conclusion was reached despite the unfair dismissal provisions in the FW Act which make it clear that a person employed on a regular and systematic basis with a reasonable expectation of continuing employment may still be a casual employee.
The decision obviously has wide implications and merits further attention in the High Court and/or the Parliament.
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