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News 22 May 2020

Leave entitlements for casuals: Further landmark decision

The Full Federal Court of Australia (the “Court”) has determined a casual employee engaged over 3.5 years on six separate casual contracts was, on the facts, a permanent employee and therefore entitled to paid annual leave, paid personal leave, paid compassionate leave and to be paid for public holidays.

This case upholds an earlier decision, Workpac v Skene [2018] FCAFC 131, which confirmed a casual miner should receive the same leave entitlements and benefits as a permanent employee.

Facts of the case

The employee commenced employment with the labour hire business (the “Business”) in July 2014 and signed six contracts over his tenure. Importantly, the contracts contained the following express terms:

  • The employee was a casual employee;
  • The casual loading paid to the employee was included in the flat rate of pay; and
  • One contract noted the casual loading was in lieu of leave entitlements including paid leave, notice and redundancy pay.

The Enterprise Bargaining Agreement covering the employee also clearly stated the casual loading paid to the employee was in lieu of leave entitlements.

During his six contracts, the employee worked under a roster arrangement. These rosters were often for a lengthy period of time. One roster, for example ran for the period 1 January 2015 to 31 January 2016.

Findings of the Court

The Court ultimately found the employee was a permanent employee even though his contract described him as casual.

In reaching this decision, the Court had regard to the true nature of the relationship and the work performed by the employee.

Integral to how the Court approached determining the true relationship was consideration of: how regularly the casual was engaged; any firm advance commitment to work between the employer and employee; and the predictability of the work.

The Court unanimously found the employee was entitled to back pay of leave entitlements and public holidays over the Christmas period. This case adds mounting case-law which address how Courts are assessing the relationship of casual employees. Casual employees who are deemed “regular and systematic” with a predicable work schedule are increasingly likely to be determined permanent employees with entitlements to paid leave.

Implications for the future

This decision confirms businesses cannot rely on paying a casual loading to avoid or set off a liability to pay entitlements.

The Industrial Relations Minister, Christian Porter, did intervene in the proceedings and has stated “There is of course potential for an appeal….Given the potential for this decision to further weaken the economy at a time when so many Australians have lost their jobs, it may also be necessary to consider legislative options”

Whilst a decision is made as to whether to appeal, businesses should act with caution when engaging casual employees. In addition, businesses should review their current casual arrangements and ensure they are complying with all the relevant provision concerning casual employment in any applicable awards, or enterprise agreements.

If a business considers a casual employee is entitled to paid leave, we recommend advice be sought.

In the meantime, for those employers engaging casuals on a regular basis, the Victorian Chamber recommends the following practical considerations:

Casual conversion

If an employee is covered by an award or enterprise agreement which contains a casual conversation clause, inform them of their right to seek casual conversion and remind them routinely. It may be prudent for employers to actively offer permanent opportunities to some casual employees, if the employer has capacity to do so and if the true nature of the employment could otherwise be ambiguous.

Declining the opportunity to convert to permanent full time or part time employment may serve as the employee’s reaffirmation of the casual arrangement and could provide a reference point for employers, should the employee attempt in future to be retrospectively categorised as a permanent employee. However, this step on its own is unlikely to satisfy the courts a casual employment relationship existed.

Any discussions or agreements must be recorded in writing and regard should be had to the requirements of any applicable award or enterprise agreement.

Rostering

For future rostered work include a statement to casual employees that all working hours and shifts are subject to change and may be declined by the employee.

Ensure a range of working hours and shifts are fairly distributed among employees. Employers can maintain a strong labour pool by ensuring an effective spread of existing skills and genuine opportunities for development among casual employees.

 

Rostering arrangements can be used to reinforce casual employment. This can be through a rostering system that allows staff to ‘bid’ for available rosters. Employers can confirm to the casual that each shift is accepted in isolation from the previous or next shift.

The above are suggestions that may assist going forward in the absence of immediate legislative reform. Equally, employers will need to be cautious with existing employees and that they are not exposing their business to a claim of adverse action.

Conclusion

Clear terms and conditions in employment contracts and other industrial instruments are always necessary, however what is now critical are the practices that are applied during the employment relationship including rostering patterns and managing the expectation of ongoing work. This decision as it stands also highlights that while employment relationships may start out as casual, or be agreed by all parties as being casual, it is the true nature of the relationship, which can change over time that is determinative.

We encourage members to contact the Workplace Relations Advice Line on (03) 8662 5222 to discuss this or any other workplace relations matter. We will continue to update members on this matter. 

[2020] FCAFC 84

 

MCC Contact

Get in touch with the Melbourne Chamber of Commerce

03 8662 5214

members@melbournechamber.org.au

 

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