Employer in hot water due to mischaracterising casual employment

Emma • February 18, 2019

Employers are left scrawling following the Federal Court’s decision which effectively redefines casual employment

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Employers are left panicking about back pay for their own casual employees after the Federal Court of Australia ruled that a casual employee was in fact a permanent employee.

Paul Skene, a fly-in, fly-out (‘FIFO’) worker brought the claim against his former employer, WorkPac Pty Ltd. Paul had been employed as a casual employee for approximately 2 years at the time his employment ended.

  • The position was advertised as casual employment

  • He was promised permanent employment following a 3-month probationary period

  • He was offered a flat rate of pay

  • His employment package was headed “Notice of Offer of Casual Employment”

  • Initially he was provided with Terms & Conditions of the Employment Document, the contract catered for employment on an ‘assignment-by-assignment basis’

  • He was given a 12-month roster in advance and he worked in accordance with this roster

When Mr Skene’s employment ended in April 2012 he claimed annual leave entitlements from WorkPac under his employment contract and under an enterprise agreement (formerly known as an ‘EBA’ or ‘collective agreement’).

Trial 1

The Federal Circuit Court of Australia (‘the FCCA’) came to the conclusion that Paul’s status of employment was consistent with permanent employment under the overarching legislation but amounted to casual employment pursuant to the enterprise agreement and therefore, was casual employment.

Trial 2

WorkPac then appealed the FCCA decision to the Federal Court of Australia. The 3 judges unanimously overturned the judgement in the FCCA decision in relation to the enterprise agreement and held Paul was a casual employee. The judges held that the definition of a casual employee which has evolved through case law determined the status of an employee, not the definition given in the enterprise agreement.

What is a casual employee’?

In the words of the judges, a casual employee is an employee that:

“has no firm advance commitment from the employee to continuing and indefinite work according to a agreed pattern of work. Nor does a casual employee provide reciprocal commitment to the employer”.

The common characteristics of a casual employment relationship are:

  • Irregular work pattern (influential but not determinititve)

  • Uncertainty

  • Discontinuity

  • Intermittency of work

  • Unpredictability

How do employers safeguard against confusing the status of employment?

  • You describe the employee as a casual in the contract of employment

  • You pay a casual loading

  • You have a short notice of termination period

  • You have the employee work varied hours

  • You do not grant a casual employee paid leave of any kind (other than long service leave where applicable)

  • Re-evaluate employment arrangements every 3 months to ensure that your casual employees are in substance, casual by ensuring work practices marry up with the terms of contracts.