As an Employer, knowing whether your employees are Casual or Permanent is critical because, if you get it wrong, the cost to your business can be disastrous.
The question is seemingly simple but, like many aspects of running a business, the answer isn’t always straight forward. Casual employees may not be locked out of the benefits provided to permanent employees.
In this article we consider when a long-term casual will be deemed to be a permanent employee (and thereby entitled to the benefits of permanent employment).
What is casual employment?
The Fair Work Act 2009 (Cth) doesn’t define “casual employment”. However, a casual employee is excluded from a number of benefits in the National Employment Standards including the accrual and payment of annual leave, personal leave and redundancy pay.
On the other hand, “long term casuals” have access to benefits such as parental leave and the opportunity to request flexible working arrangements.
This lack of definition means that, to really understand whether someone is a casual or permanent employee, we need to consider two sources – Modern Awards and what the Courts have said.
Many Modern Awards define a casual employee as one that is “engaged and paid as such”. This generally means that:
- The casual employee is paid a loading of 25% for all hours worked.
- The casual loading is paid instead of annual leave, paid personal/carer’s leave, notice of termination, redundancy benefits and the other attributes of full-time or part-time employment provided for in the award.
- The employment is terminable with one hour’s notice by either the employer or the employee.
If you simply refer to an award, you would be forgiven for assuming that long-term casuals who perform work in a regular and systematic way are considered to be casual employees.
What the Courts Say
In contrast, when considering employment matters, the Courts apply the following principles:
- Whether an employee is a casual employee is a question of fact
- There is a notion of informality or flexibility in the employment
- The employer can elect to offer employment on a particular day or days
- The employee can elect whether or not to work
- No certainty over the period over which this employment will be offered
- Uncertainty and irregularity of the engagement
- “The essence of casual employment 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, but that is not inconsistent with the possibility of the employee’s work pattern turning out to be regular and systematic”
What this means is, that despite the terms of their initial engagement and a payment of a casual loading, long-term casuals who perform work in a regular and systematic way may not be considered to be casual employees.
So, as an Employer, the question becomes, what happens in reality? Will a court prefer the caselaw or the award definition of casual employment when determining whether a long term casual employee is entitled to payment for accrued annual leave?
How do I know whether my employee is casual or permanent? The following case study may help to clarify the situation.
A Case Study – Skene v Workpac Pty Ltd  FCCA 3035
In this case, the Judge considered whether an employee hired as a casual, was entitled to annual leave payment when terminated by the employer. Mr Skene was employed as a “casual” dump truck operator at a mine in central Queensland between April 2010 and April 2012.
The evidence showed that Mr Skene’s employment was
- Regular and predictable. His working arrangements and shifts were set 12 months in advance in accordance with a stable and organised roster.
- His employment was continuous save for a short one-week period that he arranged to have unpaid.
- Facilitated by a fly in–fly out arrangement and provision of accommodation. This arrangement was inconsistent with the notion that Mr Skene could elect to work on any day and not work on others without first making arrangements with the mine.
- There was a plain expectation that Mr Skene would be available, on an ongoing basis to perform duties required of him by the roster.
- The work was not subject to significant fluctuations from one day or week or month or year to the next. The hours of work were regular and certain as revealed by Mr Skene’s payslips.
These matters weighed in favour of Mr Skene’s employment being “other than casual”.
On the other hand, the following matters supported the proposition that Mr Skene’s employment was casual:
- The employer designated his employment as casual (in the employment agreement) and Mr Skene was aware of and accepted that designation.
- His employment could be terminated with one hour’s notice.
- He was paid by the hour and accounted for his time through timesheets submitted on a weekly basis.
In this case, the Judge determined that Mr Skene was entitled to be paid accrued annual leave payments under the Fair Work Act on the termination of his employment
Lesson for Employers
Employers may assume that a casual loading compensates casual employees for annual leave. However, you need to regularly review the conditions under which casual employees are engaged and the manner in which they work.
Be cautious as casual employees working a regular roster in a systematic way MAY successfully make a claim for unpaid annual leave in addition to any loading already paid.
Further, be aware that the Employer may also be liable for a pecuniary penalty for breach of the Fair Work Act for failure to pay minimum entitlements to the employee.
Maeve Doyle is a senior employment lawyer with Nexus. If you need further advice or support, she can be contacted on [email protected] or by telephone +612 9016 0141.
This publication is © Nexus Law Group and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.