On the 16th of August 2018, the Full Federal Court delivered a judgment that may have wide-ranging impacts for casual employees and their employers across Australia.
It decided that despite what a casual contract may say, an employee may actually be considered permanent if they meet certain requirements. It also decided an employee’s status can morph from casual to permanent due to work patterns. The decision means a large number of employees currently considered casual could in fact be permanent, having a range of impacts on their rights.
Below we look at the case in more detail, and how the changes may impact you, if you are a casual worker of the employer of casual workers.
Casuals under the Fair Work Act previously
Previously a growing number of Fair Work Commission cases had recognised casuals working on regular patterns or a long term basis. The Commission found in a variety of cases that where an employee was called a casual and paid casual loading, they could legitimately be considered casual regardless of their actual pattern of work. This position had been endorsed as recently as 2017.
Workpac Pty Ltd v Skene
On Thursday, the Full Federal Court officially dismissed this approach to casual employment. The Court held in Workpac Pty Ltd v Skene that the determination of whether an employee is casual must be assessed by ‘the real substance, practical reality and true nature of the relationship.’
This means that to be considered casual:
- There must be no certainty about the period of which the employment is offered and
- There should be an informality, uncertainty and irregularity about the engagement.
Therefore if an employee has a level of certainty, regularity and predictability about the hours worked this is inconsistent with being considered a casual.
In this case the Court found that Mr Skene – a labourer who had been hired as a casual to work a regular roster of 7 days on 7 days off, was entitled to annual leave on termination of his employment, regardless of the fact that he had signed a casual employment contract.
The Court also noted that whether an employee is paid casual loading will not be determinative of whether the employment is casual. The Court will rather look at whether the intent of the parties to make the employment casual has been ‘put into practice’ by assessing the actual pattern of work.
Going further, the Court found that employees may be considered casual when they are initially hired, but this can morph into permanent status if the characteristics of the employment changes.
What does this mean for you?
The impact of this court decision may be significant for a range of employers. Regular or long term ‘casuals’ who are really permanent staff may automatically become entitled to:
- Paid annual and personal leave;
- Notice of termination; and
- Redundancy entitlements.
Employers should review their casual work force to determine whether these employees may actually be considered permanent. Employers who are found to be misusing the casual employment classification may be liable to significant costs upon the termination of the employee in question.
Furthermore, ‘Casual’ employees who may be classified as permanent should review their work arrangements and consider their rights.