Changes in Casual Employment

Fallout from WORKPAC  v   SKENE

 

In the last 12 months, there have been major developments regarding the definition of casual employment, and the entitlement of casual workers to annual leave and other benefits under the National Employment Standards (NES).

The most significant development was the decision in Workpac Pty Ltd v Skene [2018] FCAFC 131 in August 2018, where the Full Court of the Federal Court found that a ‘fly-in, fly-out’ worker hired by a labour hire company on a casual employment contract to work at a Queensland mine, was in fact a permanent employee entitled to annual leave under the NES.

The Full Court of the Federal Court held that, whether an employee was a casual employee would be determined not by what is stated in their employment agreement, but by how much the employee’s employment meets ‘essence of casualness’ criteria, which is defined by indicia such as:

  • no firm commitment to the other party;
  • irregular work patterns;
  • a lack of continuity;
  • intermittency of work;
  • unpredictability; and
  • uncertainty as to the period of employment.

The decision in Skene sent shockwaves through the employment sector, as the many small, medium and large businesses who employ casual workers, faced the risk of having to pay millions of dollars in employee benefits due to their workers being considered permanent employees, and therefore, eligible for entitlements under the NES.

In response to Skene, the Federal Government introduced the Fair Work Amendment (Casual Loading Offset) Regulations 2018, in December 2018, which provides that an employer can make a claim to have the casual loading payments made to the employee taken into account when working out the entitlements owing to the employee for the relevant NES entitlements, provided that the following criteria is met:

  • The employee is employed on a casual basis;
  • The employee is paid a casual loading which is ‘clearly identifiable as an amount paid to compensate the person for not having one or more relevant NES entitlements’ (for example, annual leave or personal leave);
  • Despite being classified by the employer as a casual, the employee was in reality, a full-time or part-time employee for some, or all of their employment, for the purposes of the NES;
  • The person makes a claim to be paid for one or more of the relevant NES entitlements that they didn’t receive, for all or some of the time they were incorrectly classified as a casual.

Despite the new regulations, employers must still take extra care to review the substance of their employment relationships, and how their casual employees are engaged in practice.