Recent Fair Work Woes – Annual leave for casual employees

Casual employees may get paid more on an hourly rate in exchange for amongst other things the inability to gain access to “paid” annual leave. A recent case however may cast some doubt on this.

The Federal Court of Australia (FCA) has recently ruled in Workpac v Skene that an employee engaged as a truck driver on a fly-in fly-out basis was not a casual employee despite being engaged on a casual contract. The decision has been received with controversy given that the employee had received casual loading during his employment yet was granted compensation reflecting accrued annual leave in line with the National Employment Standards (NES) upon termination. The decision thus creates a situation whereby an employee is capable of ‘double dipping’, being paid a casual loading in lieu of leave entitlements while also being entitled to annual leave.

In its judgment, the FCA noted that the essence of a casual employee is “the absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work”. Suggestions of such factors include:

  • a roster that changes every fortnight;
  • unpredictable shift lengths; or
  • the employee’s ability to decline a shift if allocated.

These factors all contribute a certain element of uncertainty that is characteristic of casual employment as distinct from the certainty of permanent employment.

Nonetheless, certain characteristics of the employee’s engagement were found to be clearly suggestive of permanent employment. These included:

  1. A roster covering a period of 12 months was provided in advance;
  2. Regular flights were booked by the employer for the employee’s schedule;
  3. There were set start and finish times for the employee;
  4. A permanent room was assigned to the employee onsite; and
  5. Despite the fact that timesheets were required due to his casual status, the timesheets submitted revealed little, if any fluctuations in time worked.

An additional factor included the inability of the employee to reject shifts given that the employee was on a fly-in fly-out basis with no realistic ability to decline shifts once flown onsite. Indeed, the shifts were structured in a way that they had to be worked, indicative of “advance commitment”.

The finding of a permanent employment relationship was made notwithstanding the employer’s written letter of offer which clearly set out:

  • the employee was engaged on a casual basis;
  • a mutual understanding between the employee and employer that the employment was on a casual basis; and
  • the payment of a casual loading.

The FCA favoured applying a “totality approach” whereby various factors are weighed in the characterisation process, an approach that bears significant similarity with the approach in distinguishing employees from independent contractors. The combined factors were decisive in finding that the employment relationship was one with regularity and systematic in nature. As such, the FCA ultimately found that the employment was one of permanent nature, and not that of casual.

Whilst the decision may be somewhat controversial, it is important to note the extraordinary circumstances of the case which are not usually applicable to normal casual employees. It would be exceptional for a casual employee to be allocated a 12 month roster in advance, or to have numerous flights booked in advance in contemplation of work. It does however carry significant repercussions for employers that engage casual employees, particularly on a fly-in fly-out basis or where lengthy rosters are provided in advance.

Are you one of those employers? Could your company be at risk because of this decision? NB Lawyers, the lawyers for employers can offer an obligation free consultation to discuss how we can assist you with any concerns you may have regarding your casual employees.

Written By

Jonathan Mamaril
Principal
NB Lawyers – Lawyers for Employers
jonathanm@nb-lawyers.com.au
+61 (07) 3876 5111

ASSISTED BY

Dan Chen
NB Lawyers – Lawyers for Employers
danc@nb-lawyers.com.au
+61 (07) 3876 5111

About the Authors

Jonathan Mamaril is the principal and director of NB Lawyers, the lawyers for employers, and a specialist in employment law. Over the last ten years, Jonathan has helped hundreds of employers understand their legal requirements, mitigate risk and liability, protect their reputation and achieve their goals for business growth and expansion.

Dan Chen is a lawyer at NB Lawyers, the lawyers for employers, and specialises in employment law. Dan is passionate about assisting business owners, small and large understand their obligations under Australia’s complex workplace relations system.