Are your casual employees really casual?

In a controversial decision with potentially wide-reaching consequences, the Full Court of the Federal Court has upheld an earlier ruling that a labour hire employee who worked as a “casual” truck driver at Queensland coal mines on a regular basis over several years was not actually a casual employee for the purposes of the National Employment Standards, and was entitled to paid annual leave when his employment ended.

The employer, WorkPac, claimed that the employee was designated as a casual under its enterprise agreement as well as in his offer of employment, and argued that finding the employee to be entitled to annual leave would result in “double dipping”, in circumstances where WorkPac had always paid him a higher rate of pay that included casual loading.

In finding against the employer, the Full Court held that the term “casual employee” in the relevant sections of the Fair Work Act should not be taken to have the meaning given to that term by a modern award or enterprise agreement. 

The Full Court instead held that the term “casual employee” in the Fair Work Act has a legal meaning, and that “the essence of casualness is the absence of a firm commitment as to the duration of the employee’s employment or the days (or hours) the employee will work.”

In this case, the employee had been provided with rosters covering 12 month periods in advance, and worked consistent regular hours each pay cycle.   

Commonly, modern awards provide that a casual employee is one who “is engaged and paid as such” and require casual employees to be paid a 25% loading, which is partly to compensate casuals for not receiving paid leave entitlements such as annual leave and personal/carer’s leave.  

The decision raises the issue that employees who have previously been thought to be properly defined and paid as casual employees under an industrial instrument may nevertheless not be casual employees for the purposes of the National Employment Standards, and may still be entitled to paid annual leave and other benefits of permanent employment, despite any casual loading they have already received.

The decision has left Australian industry body AI Group calling for urgent changes to the Fair Work Act to avoid “double dipping” by casual employees, contending that at least 1.6 million casual employees in Australia work on a regular basis and that backpay claims as a result of the decision could reach $8 billion. 

Federal IR Minister Kelly O’Dwyer has also expressed concerns about the potential impact of the decision on small business, and confirmed that the Federal Government is seeking legal advice in relation to the decision and will examine its options.

For further information or advice, please contact:

Jim Rutherford
Principal
T + 03 5226 8579
E: jrutherford@ha.legal

or

Sonia McCabe
Senior Associate
T 03 5226 8558
E: smccabe@ha.legal

or 

Sophie Ware
Associate
T 03 5226 8577
E: sware@ha.legal