A Duck called Goose is still a Duck – the meaning of “casual employees” in the Fair Work Act 2009 and employees covered by enterprise agreements
HLS LEGAL | September 19, 2018
On 16 August 2018, the Full Federal Court (the Full Court) conclusively found that the term “casual employees” in s 86 of the Fair Work Act 2009 (Cth) (FW Act) has an acquired (that is, a traditional) legal meaning in general law.
The Full Federal Court held that employees will not be “casual employees” merely because their employer has designated them a casual employee with reference to a modern award or enterprise agreement.
Instead, consideration of the character of the engagement and relevant indicia is key to determining whether employees are “casual employees”.
The term “casual employees” in s 86 of the FW Act is significant as it is used to exclude “casual employees” from receiving annual leave entitlements under the FW Act’s National Employment Standards.
The case – WorkPac Pty Ltd v Skene  FCAFC 131
The decision of the Full Federal Court in WorkPac Pty Ltd v Skene  FCAFC 131 (the Full Court Decision) was relevantly an appeal of Skene v WorkPac Pty Ltd  FCCA 3035 (the First Instance Decision).
In the First Instance Decision, the primary judge first considered whether Mr Skene, an employee of Workpac Pty Ltd (WorkPac), was a casual employee for the purposes of the WorkPac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007 (Agreement).
Having found Mr Skene was a casual employee for the purposes of the Agreement because WorkPac had expressly employed him as a casual employee by reference to the Agreement, the primary judge considered whether Mr Skene was also a casual employee for the purposes of s 86 of the FW Act.
The primary judge found that Mr Skene was not a casual employee for the purposes of s 86 of the FW Act because Mr Skene’s work, which was according to a roster, was regular, predictable and continuous. Further, Mr Skene’s work did not significantly fluctuate.
The primary judge ordered that WorkPac pay Mr Skene annual leave in accordance with the National Employment Standards but not under the Agreement.
In the Full Court Decision, the Full Federal Court considered the grounds of appeal raised by both parties in relation to the First Instance Decision.
Relevantly, WorkPac’s ground of appeal was that the primary judge had incorrectly found that Mr Skene “should be seen as other than a casual employee for the purposes of s.86 of the Fair Work Act”.
WorkPac argued that “casual employees” for the purposes s 86 of the FW Act were employees designated as such by their employer pursuant to a term of an industrial instrument which provides for the engagement of casual employees.
Was Mr Skene a casual employee for the purposes of s 86 of the FW Act?
The Full Court confirmed that Mr Skene was not a casual employee for the purposes of s 86 of the FW Act by confirming and expanding upon the primary judge’s reasoning.
The Full Court held that whether an employee is a casual employee requires consideration of the character of and indicia traditionally used to define casual employment, subject to any adjustment required by the FW Act.
The Full Court described the character of casual employment as the absence of a firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
The Full Court explained that the assessment of this advance commitment is objective and should be undertaken by reference to the circumstances applicable to the employment created by the contractual terms and the regulatory regime (including the FW Act, awards and enterprise agreements).
The Full Court stated that the key indicia that indicate an absence of this advance commitment are irregularity, unpredictability, intermittency and discontinuity in the work pattern of the employee.
The Full Court stated that the payment of a casual loading may indicate an intention of the parties to create and continue an advance commitment to a casual employment relationship but that this factor is not determinative.
That is, there is still a need to examine whether the intent has been put into practice and maintained.
In this respect the Full Court noted that:
“An employee cannot be both a casual employee and full-time or part-time employee at the same time in the same employment”
“It is also necessary to bear in mind that employment arrangements may change during the course of an employment. What is agreed to at the commencement of an employment is relevant to the characterisation process, but an employment which commences as casual employment may become full-time or part-time because its characteristics have come to reflect those of an ongoing part-time or full-time employment.”
Usefully, the Full Court compared the logic of the assessment of casual employment to the logic used in the multifactor assessment at law to determine if a person is an employee or a contractor.
Was Mr Skene a “casual FTM” for the purposes of the Agreement?
The Full Court held that Mr Skene was not a “casual FTM” for the purposes of the Agreement and that it did not matter that WorkPac had designated Mr Skene as a “casual FTM” pursuant to the Agreement.
The Full Court held that the language of the Agreement did not permit WorkPac to designate Mr Skene as a “casual FTM” and that the primary judge should have found that Mr Skene was a “permanent FTM” and entitled to annual leave under the terms of the Agreement.
The Full Court reasoned that as the Agreement did not define “casual FTM”, it was possible to infer that the traditional meaning of casual employment also applicable to s 86 of the FW Act was intended to apply to the Agreement.
Further, the Full Court held that the Agreement only permitted WorkPac to “inform” an employee of their status which was not the same as permitting WorkPac to specify or determine the employee’s status.
Result of the Full Court’s findings
As the Full Court found that Mr Skene was not a casual employee for the purposes of s 86 of the FW Act or a “casual FTM” under the Agreement, the Full Court held that Mr Skene was entitled to annual leave under the Act and the Agreement.
In respect of penalty, the Full Court held that WorkPac should have been subject to a penalty and that the primary judge’s decision not to subject WorkPac to a penalty despite finding that Mr Skene was entitled to annual leave under the National Employment Standards was incorrect.
The Full Court Decision provides authoritative clarification around the meaning of “casual employees” in the FW Act and where casual employment is provided for in enterprise agreements in the same or similar terms to the Agreement.
Employers need to be mindful that:
- merely designating an employee as a casual employee will not make the employee a casual employee for the purposes of the FW Act or any modern award or enterprise agreement with similar terms to the Agreement; and
- the essence of casual employment is the absence of a firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
The focus on the advance commitment to continuing and indefinite work according to an agreed pattern of work should not greatly impact casual employees employed for short-term and discrete projects or where the employer’s need for work to be performed by the employee in the future is not reasonably predictable.
These circumstances are likely to satisfy the characterisation of casual employment put forward by the Full Court.
However, it is clear that employers should not employ employees as casual employees where there is a firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
That is, employers should be wary of extended casual employment arrangements.
Should an employer incorrectly engage an employee on a casual basis (that is, the true nature of the employment is found to not be casual for the purposes of the FW Act) the employer will be exposed to substantial liability for the back payment of entitlements and pecuniary penalties.
Accordingly, it is important that an employer takes steps to:
- seek advice on the appropriate basis to engage its employees and how this is best reflected in the written terms and conditions of employment (the employment contract); and
- seek advice in respect of mitigating risk where employees will be or are currently engaged as casuals.
HLS Legal provides comprehensive advice to employers in respect of contracts of employment and can advise on strategies to mitigate these risks associated with casual employees.
If you would like advice on such matters, please contact us on (08) 9322 5202.
This article is intended to be informative only and does not constitute legal advice. If you are concerned about your individual circumstances, please contact a lawyer.