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Important recent developments in casual employment

A recent decision of the Full Federal Court has changed the way employers must look at casual employment.  Prior to the decision in Workpac Pty Ltd v Skene (Workpac decision) it was commonly accepted that if an employee was described as a casual employee and paid the additional 25% loading under an Industrial Award or Enterprise Agreement, they were for all purposes, a casual employee.

The Workpac decision has changed this accepted view. The Full Federal Court found that the determination of whether an employee is a casual employee must consider “the real substance, practical reality and true nature of the [employment] relationship”. The Court further found that if the “employment relationship has a level of certainty, regularity and predictability about the hours to be worked, then it is inconsistent with being a casual employment relationship”.

The concerning effect of the Federal Court decision for employers is that where an employment relationship is determined not to be genuinely casual, as was the case for Mr Skene in the Workpac decision, the employee would be entitled to accrued annual leave under section 86 of the Fair Work Act 2009 (the Act). Importantly, the Court also found that the fact that an employee had been paid the casual loading of 25% was “not a legitimate basis for exclusion from the construction of section 86” of the Act under which the entitlement to annual leave arises.  It was not considered to be ‘double dipping’ to be paid both the casual loading of 25% and also accrue annual leave, even though it has generally been held that the 25% casual loading was paid in lieu of certain entitlements including annual leave.

It is anticipated that this decision may impact the employment arrangements for more than 2 million employees who have been or are currently engaged as casual employees.  However, it does not mean that every casual employee is now entitled to accrue annual leave or to receive backpay for annual leave.  The circumstances of Mr Skene’s employment with Workpac were such that there was no uncertainty as to the duration of the employment or the days on which he would work as he was part of a 12 month roster. This level of certainty will not apply to all casual employment.

In an attempt to manage the effect of this Federal Court decision, an application has been lodged in the Fair Work Commission (FWC) to vary a number of Awards to include a new category of employee, the ‘Permaflexi’ employee. Watch this space for updates on the progress of this novel application within the FWC.

Now is a good time for employers to review their casual arrangements to determine if they may be at risk of a claim for back payment of annual leave to employees they believed to be casual.  Caution should also be exercised in entering into new casual arrangements and the focus must now be on the actual working arrangements to determine the true nature of the employment relationship irrespective of what the parties agree to call the arrangements.  We understand that auditing your existing employment practices and/or assessing your future employment arrangements may be a daunting task.  Our experienced consultants with expertise in industrial relations are here to assist you. Understanding your risk and planning appropriately for your future employment arrangements in light of the Workpac decision makes good business sense. If you could be one of the vast number of employers who employ one or more of the anticipated 2 million employees who will be benefitted by the Workpac decision, your potential liability and risk grows each day.

If you require assistance reviewing your casual employment arrangements please contact your usual Hanrick Curran Advisor or alternatively contact Cheryl-Anne Laird in our HR division on 3218 3014 or cheryl-anne.laird@providencehr.com.au

 

Workpac Pty Ltd v Skene [2018] FCFCA 131

 

Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.