When is a ‘casual’ worker not actually classed as a casual?

Stephen Booth

WorkPac v Skene

There has been much media commentary on the Federal Court's recent decision surrounding the case of WorkPac Pty Ltd v Skene [2018] FCAFC 131.  Much of the dialogue has suggested that the case is novel, and has focused on the concept of double dipping: when someone classed as a casual employee subsequently claims leave entitlements, which the employer feels has been covered by the casual loading included in the employee's pay.

However, the WorkPac vs Skene case essentially reinforces the traditional view of casual employment (this being its irregularity and uncertainty, as opposed to the regularity of part-time or full-time employment), and overturns some recent case law which, to an extent, allowed the label 'casual' to override the true nature of the employment.

The decision reasserts the traditional view that you cannot convert an employee who is really a regular full, or part-time employee into a casual simply by calling the employee 'casual'.  It is crucial to look at the actual facts of the employment relationship in deciding what the real nature of the relationship is.

This outcome is not surprising, given the circumstances of Mr Skene's employment.  He was engaged as a fly in/fly out "Casual Field Team Member" at a mine, under a contract and enterprise agreement which included that classification.  His employment was full-time (12.5 hours a day, 7 days on, 7 days off) and entirely predictable as he was on a 12 month roster.  In turn, he was paid at a rate of $50 (later $55) an hour, said to include "a loading in lieu of leave entitlements".  

When Mr Skene's employment ended, he claimed annual leave on the basis that, in reality, he was not a casual employee, and that he therefore qualified for annual leave under both the Fair Work Act ('the Act') and the National Employment Standards.

The Full Federal Court agreed with him and held that where the Act refers to 'casual employment', it means casual employment in the traditional sense of irregular and uncertain employment.  As the Act takes priority over modern awards, enterprise agreements and employment contracts, the meaning of 'casual' in the annual leave provisions in the Act cannot be altered by any of those subsidiary instruments, nor  by use of a title which did not reflect reality.

Double Dipping

As there was no clear evidence that Mr Skene had in fact been paid a casual loading (there had been no dissection of his hourly rate into ordinary base pay/casual loading in his contract or anywhere else), there was no basis on which to calculate the alleged loading, so as to offset it against his claim for leave.  In addition to this, Mr Skene was not in fact a casual, therefore WorkPac was not required to pay loading - so if it chose to do so, it did not give rise to double dipping.

In the process, the Federal Court overturned a line of cases in the Fair Work Commission which have since held, although as modern awards usually define a casual employee as one who is 'engaged and paid as such', parties can rely on the combined use of a 'casual' title and an apparent agreement between the parties as to the casual nature of the employment, regardless of the circumstances, to class the relationship as casual.  'Engaged and paid as such' could well be interpreted to mean really engaged and paid as a casual, not just called 'casual'.  To hold otherwise would elevate form over substance.

Where does this leave us?

Standard advice over many years has been that where someone is called a casual, but does not really work on a casual basis, the relationship is vulnerable to be classed as permanent employment, with all the entitlements that flow from that.  WorkPac Pty Ltd v Skene [2018] FCAFC 131 reasserts the validity of that longstanding advice.

What is an employer to do (or not do)?

There are several options:

On this note, it would be wise to include in correspondence relating to pay (e.g. employment contracts, letters of offer etc.) a dissection into base pay plus loading, so that if a claim for permanent employment entitlements is made, there will at least be a basis to claim an offset for the additional amount paid to the employee on the basis that they were casual.

The WorkPac decision has caused considerable activity at high levels:

It remains to be seen whether either of these strands of development will bear fruit, but in the meantime, for most employers the issue will be dealing with the issues above in the face of employee resistance - because casual employees often value the additional ready money more than the potential leave benefits of permanent employment, and will therefore resist being converted to permanent employment.  You may need to work out strategies to deal with this, which will at least involve ensuring clarity about the composition of pay as base plus loading.

What can Coleman Greig's Employment Law team do to help?

Coleman Greig's experienced employment lawyers can review documentation and provide specific advice surrounding your use of casual workers, as well as who is or is not likely to be casual.  Similarly, we can advise on strategies for resolving issues and minimising risks if a dispute arises.

If you would like to speak with a lawyer in our Employment Law team, please don't hesitate to get in touch: