Employers need to now be on alert as recent cases suggest that employees employed as casual employees but who work fixed hours with a continuation of employment may in fact be treated by the Courts as full time employees and therefore entitled to the same benefits (e.g. annual and sick leave) as full time employees.
In Queensland many business owners use casual employees as it is believed to be a flexible work arrangement with less risk if they need to downsize their work force. It is important for all business owners to know the difference and be able to distinguish between casual and full/part-time employment, as it has significant implications as to what entitlements must be paid to that employee. Employers should be aware that the description of an employee as a casual and the subsequent payment of casual loading, will not necessarily establish that the employee is in fact a casual.
Why it is important?
This issue will predominately arise in unfair dismissal disputes, where a casual employee asserts they should have been entitled to full/part-time benefits (e.g. sick and annual leave) because their employment consists of characteristics significantly similar to full/part-time employees. Generally speaking, it is also harder to dismiss a permanent employee and if the employee was incorrectly classified as a casual, their dismissal will likely be unfair resulting in compensation or reinstatement orders being made.
Typically, when people think about casual employment, terms that arise are: irregular work patterns, uncertainty and discontinuity. Unfortunately, the term ‘casual employment’ is not defined in the Fair Work Act, nor is it defined by the modern award or enterprise agreement.
In the absence of a statutory definition, the courts have interpreted the term ‘casual’ to mean an employee who works only on demand by the employer, has little expectation of the continuation of work or guaranteed income and has the ability to accept and reject work at their convenience. Importantly, a feature of this type of employment is that, without notice, the employee’s services may be terminated.
Generally, casual employees do not receive any of the benefits of annual and sick leave that full/part-time employees do. The concept of this type of employment seems simple, however the ‘market or industry’ definition of casual employment has transformed the definition into something different. In some occupations, casuals are seen to work fixed rosters, work full-time equivalent hours and expect the continuation of work and income. This confusion between the legal definition and market definition leads to misinterpretation about whether an employee is a casual or not.
The Recent Decisions
Early this year, the Federal Court of Australia handed down the significant decision of WorkPac Pty Ltd v Skene, which regarded a labour hire employee that inevitably challenged the ‘permanent casual’ mode of employment seen in mining industries. It was found that a casual employee, who had worked regular rosters set in advance, was in fact a permanent employee. Consequently, the employee was entitled to annual leave under both the National Employment Standards and the enterprise agreement which in turn, applied to his employment.
This case highlights the need for employers to review the substance of their employment relationships and how their casual employees are engaged in practice. Even if employees prefer to be classed as a casual, due to the immediate benefit of the additional 25% loading, it will not override the question at law as to whether the employee, is a true casual or not.
More recently, another decision regarding labour hire workers who perform regular and consistent shifts, has been brought to light. In the vital decision of Star v WorkPac Pty Ltd, the Fair Work Commission reinstated a labour hire worker due to an unfair dismissal. The reasons provided were, despite her enquiries, no explanations were received by the employee as to her termination. It is highlighted here, that even though the employee is employed through WorkPac she engaged in work at a site operated by BHP. When BHP alerted WorkPac that the employee was no longer required at the mine site, WorkPac dismissed her from their employment agreement. BHP were ordered to reinstate her, even though they were not her direct employer.
To determine the difference, you may need to ask yourself…
- Does the employee have irregular work patterns, with uncertainty, discontinuity, intermittency of work and unpredictability?
- Is there a firm advancement of mutual commitment to ongoing employment?
- Is there certainty over the period which the employment will be offered?
If the employer fails to correctly distinguish between casual and full/part-time employment, compensation may be payable to the employee. The employee may also be able to receive an order from the Fair Work Commission to be reinstated back into their place of employment.
These recent decisions confirm approaches by courts to look beyond the words of an agreement/contract in order to establish the legal nature of the employment relationship. Importantly, it can include a situation where the employment commences as a casual employment but develops the characteristics of full-time or part-time employment in the future.
Therefore, it is recommended that employers should review how their casual employees are engaged. Where practical, consider offering full-time or part-time employment and/or changing the work arrangements.
If you need more information of if you need assistance or advice on your uncertainty about the categorisation of casuals in your business please call us on (07) 4724 1016 or email [email protected].dh
  FCAFC 131.
  FWC 4991.