Shakespeare was right: What’s in a name? Not much when it comes to casual employees

Remember that time we boldly ventured that the Federal Circuit Court got it wrong in Skene v Workpac Pty Ltd [2016] FCCA 3035, and expressed the view that an appeal was inevitable? (see link here)

Well, we were right on the appeal.  However, the Full Federal Court backed the Federal Circuit Court, ruling that an employee who was employed and paid as a casual was still entitled to annual leave entitlements under both the Fair Work Act 2009 (Cth) and the relevant Agreement:  WorkPac Pty Ltd v Skene [2018] FCAFC 131.

Skene Decision

Mr Skene worked for WorkPac, a labour hire company, from April 2010 until April 2012.  He was employed as a truck driver at two different Queensland mines.  The employment agreements signed by Mr Skene all classified him as a casual employee and he was paid the appropriate casual loadings under the Workpac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007.  Given he received the casual loading, he didn’t receive benefits attached to permanent employment such as annual leave.

Sounds pretty clear, right?

However, although Mr Skene was called a casual, engaged as a casual, and paid as a casual, Mr Skene was continuously employed by WorkPac.  He worked a regular and predictable schedule (provided to him 12 months in advance), with minimal variation or modification in his pattern of work.  Given the fly in-fly out nature of one of his roles, it was also expected that he would be available for work and could not turn down a shift offered to him.

The Full Federal Court affirmed the FCC’s decision that Mr Skene was entitled to payment of annual leave on termination.

Why, I hear you ask?  The Full Federal Court harked back to the common law casual definition of old:   ‘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” is the essence of casualness.’  In practical terms, the Federal Court stated that this would manifest as ‘irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability’. 

And so, we have gone full circle.

Where to from here?

Forget the sensible, pragmatic and industrially relevant decision of Telum Civil (Qld) Pty Ltd v Construction, Forestry, Mining and Energy Union [2013] FWCFB 2434, in which the Full Bench found that a casual engaged and paid as such, who received the benefit of a casual loading to compensate them for entitlements otherwise applying to permanent employment, would be double dipping if they then sought to recover entitlements associated with permanent employment.

Instead, it’s time to do an audit of your “casual” employees to determine whether the reality of the engagement reflects the name.

Other strategies for managing the uncertainty?  We recommend an offset clause in all “casual” employment contracts, to minimise the impact of what we still consider to be double dipping (with all due respect, Your Honours) of accepting the 25% loading, and then claiming the benefits for which it designed to compensate.

And watch this space

Meanwhile, industry bodies have been swift to respond to the Skene Decision, with some industry groups estimating the backpay claims for casuals employed in other similar scenarios could reach $8 billion.  A law firm has announced that it is commencing class action law suits claiming $325 million in casual backpay for 25,000 casual employees.  Unions have similarly been quick to warn bodies such as mining companies that their casual arrangements need to be reviewed.

The Australian Business Industrial and NSW Business Chamber have flagged their intent to modify several Awards as part of the four-yearly review of modern awards to create a new category of employee – perma-flexis.  Neither casuals nor permanent employees, perma-flexis would be entitled to annual leave, personal leave, redundancy payments and notice of termination.  In return, they would be entitled to a 10% loading (instead of the 25% currently paid to casuals) and employers would be free to roster the employees as needed.

Similar provisions have previously been included in other Awards to address concerns about overtime payments for part-time employees.  Although this idea is innovative and may provide more certainty to employers while protecting casual employees, the draft clause wording is yet to be released.  It is therefore unlikely that this situation will be resolved before the casual hiring rush occurs for the holiday season.

So for now, don’t rely on William Shakespeare’s famous line ‘What's in a name? That which we call a rose by any other word would smell as sweet’ when it comes to hiring casual employees.  You may not like how it smells in the end.

Questions?  Don’t hesitate to give us a call.

Authors: Amber Sharp and Jade Bond

Leading Partner: James Mattson