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A “Casual” was really a permanent employee and entitled to annual leave

A recent decision of the Full Bench of the Federal Court held that a labour hire employee engaged as a casual employee was entitled to annual leave payments.

The employee was a dump-truck operator working in coal mining from 17 April 2010 to 17 July 2010 in a ‘drive in, drive out’ position, and then again from 20 July 2010 to 17 April 2012 in a ‘fly in, fly out’ position, working 12 hour shifts on a seven days on, seven days off roster. His pay rate was a flat rate of $50 per hour and the WorkPac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007 applied to his employment. During the second engagement, there was a work roster which was set out 12 months in advance. Upon termination in April 2012, the employee was not paid untaken annual leave.

In the Federal Circuit Court, he argued that he was a permanent employee and entitled to payment of unused annual leave. The NES provides annual leave for all employees ‘other than a casual employee’.

The Federal Circuit Court held that Mr Skene was not a casual employee for NES purposes and was entitled to payment of unused annual leave on termination. The Court said that the employment was not casual employment because it was regular and predictable, with working arrangements set up to 12 months in advance, the employment was continuous, the ‘fly in, fly out’ nature of the work meant the employee would be available to perform his duties under the roster and the work was not subject to changes from one period of time to the next.

The employer was ordered to pay compensation and interest for untaken annual leave, calculated on the full loaded rate of pay. The Court found the employee was a casual employee under the Workplace Agreement.

On appeal by the employer, the Full Bench of the Court held that what defined casual employment was the ‘absence of a firm advance commitment as to the duration of the employee’s employment or the days the employee will work’, as opposed to casual employment where work patterns were irregular, uncertain, intermittent or unpredictable. The Full Bench said the payment of a casual loading did not decide whether an employee is casual, although it is one factor.

There are now concerns this decision entitles casual employees to both a casual loading and permanent employment entitlements. However, it was not clear whether the employee was paid a casual loading, given his contract allocated no part of his pay to a casual loading or as money paid in lieu of annual leave, so the Court did not have to decide this issue. The Full Bench said that even if the employee was paid a casual loading when he need not have been, this would not negate a finding he was a permanent employee.

The Full Bench found the employee was a permanent employee under the NES and the Workplace Agreement and did not have to decide if he had certain entitlements as a casual under one instrument and entitlements as a permanent employee under another. If that was the case, there would be the risk of an employee being found to have both entitlements. How such claims will be determined is unclear and will only be decided by further case law or by amendment of the Fair Work Act.

This case confirms that courts and tribunals look beyond the words of documents to determine the legal status of an employment relationship. This might cause a situation where the employment starts as casual employment, but develops into full-time or part-time employment even if the parties consider the employment is casual.

Employers should consider the true nature of the working arrangements of their casual employees to ensure ‘casual’ is a correct description and that casual employment contracts are worded to ensure a court will agree.

WorkPac Pty Ltd v Skene [2018] FCAFC 131


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This article is by way of general information only and is not intended to be relied upon on as legal advice for your situation. For advice on your circumstances, please contact us on 07 5597 3366 or complete the ‘Contact Us’ form below.