Do all Casual Employees now get Annual Leave?
Just paying your employee as a casual is not enough. You need a complying Employment Contract. To see one have a look at the Sample above.
Is your casual employee: casual or permanent? Your answer affects:
1. paid leave
2. notice of termination
3. redundancy pay
4. public holidays
5. access to unfair dismissal laws.
Casual employees don’t get paid annual leave, but…
Casuals don’t get paid annual leave. This is under the relevant State’s Minimum Conditions of Employment or under the National Employment Standard (NES). See the Fair Work Act 2009 (Cth).
In WorkPac Pty Ltd v Skene (2018), the Federal Court looked at whether a person was really casual staff.
What is the essence of a “casual”? There is no promise of ongoing work. Similarly, the employee provides no promise of coming back to work. There is:
* No continuing and indefinite work according to an agreed pattern of work.
* Reciprocal obligations don’t exist.
* No regular work pattern.
* Uncertainty, discontinuity, intermittency of work and unpredictability.
* Often the work is short term. It is not ongoing.
Now, this is not the case for many casuals. Often, particularly, a smaller business employs their staff on casual rates. This is usually 20% higher than the usual rate. This is the casual loading. This saves the Employer calculating and keeping records for annual and sick leave.
The Employment Contract may say ‘casual’. The Employee is paid the casual loading. But that is no definitive in itself. The Court looks to all the circumstances. Also, what starts as casual may become permanent.
The Employer’s argument in WorkPac
WorkPac argued that a “casual employee” is an employee stated as a casual. This is under the relevant agreement or law:
“within the industrial relations system in Australia, it is well recognised that an employee is regarded as a casual employee, for the purposes of identifying and calculating their paid minimum entitlements, if he or she is described or defined as a casual employee under an applicable federal industrial instrument”.
Is the term “casual employee” used in its ordinary, legal, or a specialised non-legal sense? The company WorkPac argues that employers, through the use of an industrial instrument, are entitled to define or describe an employee as casual. That is no longer correct. WorkPac Pty Ltd v Paul Skene changes everything.
Everything changes with WorkPac Pty Ltd v Paul Skene
The Court concluded that industrial instruments are not appropriate to define if a person is “casual”. Instead, the Court turns to the ordinary, legal definition of “causal”.
In the WorkPac case, Paul Skene worked for a labour-hire business. He drove a truck. He was employed as a casual. The Court held that Paul was not casual because:
* Paul’s employment was regular and predictable.
* His working arrangements and shifts were set 12 months in advance under a stable and organised roster.
* His employment was continuous, except for a period of seven days. This is where he went unpaid. This was arranged with the host employer.
* Paul’s employment was facilitated by the fly-in, fly-out arrangement.
* he was provided accommodation. This was at no cost to himself. This is apparently inconsistent with the notion that the employee could elect to work on any day and not work for others.
* The Employer expected that Paul is available, on an ongoing basis. This is to perform the duties required of him. This was set out in the roster.
* The work undertaken by the employee was not subject to significant fluctuation from one day, or one week, or one month, or one year to the next. The hours of work were regular and certain.
Paul was not a casual even though he was paid by the hour.
The Court said it was difficult to characterise casual employment. It relied on the “essence of casualness” set out in Hamzy v KFC (2001) 115 FCR 78:
* The absence of a firm advance commitment as to the length of the employee’s employment. Or the days (or hours) the employee works.
* No firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work (and the casual employee will also not provide a reciprocal commitment to the employer).
* Irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability.
Paul is sacked and now wants annual leave. His Employment Contract is silent on this.
Paul’s employment could be ended on an hour’s notice and his employer labelled the employment ‘casual’ to the employee’s knowledge.
The Court decided the issue on the fact that the employee had no choice in the days and hours he could work at the mine. The Court ruled that it could not be said there was an absence of a firm advance commitment as to the duration of employment or the days (or hours) the employee would work. Those matters were clear and predictable and set 12 months in advance.
Paul was entitled to receive paid annual leave. WorkPac had failed to meet those entitlements. It had to compensate Paul. Paul also got pecuniary penalties.
Why is it safer to use a Legal Consolidated Employment Contract?
The Court stated that the “minimum standards that apply to the employment of employees which cannot be displaced”. The Court found that the NES is at the “pinnacle” of the hierarchy of terms and conditions of employment. It has primacy over terms and conditions of employment. This includes Employment Contracts.
What makes Legal Consolidated’s Employment Contracts more robust? It is that our Employment Contract expressly states that it is read down when a mandatory law applies. Our Employment Contracts don’t go out of date. They are safe.
Our Employment Contracts are drafted to avoid double dipping where uncertainty exists.
Is Paul double-dipping?
In Paul’s case, he seems entitled to both the casual load AND paid annual leave. The Court tells us two things about “double dipping”.
* There was no evidence that Paul was actually paid casual loading.
* The Court applies this approach:
1. If the Employee is really a full or part-time employee, they don’t get casual loading.
2. The Employer may still pay the loading. However, that may not reflect on their real status of employment. Paying the casual loading is not definitive.
3. What if you pay casual loading by mistake?
4. You may have to pay annual and sick leave. Plus you may have to pay other full-time or part-time employee entitlements.
The Court states that the Employee can’t double dip. If they are casual they get the casual loading. And that is it. However, if they are really permanent/part-time and they would have got ‘other benefits’ in excess of the casual loading then the employee gets topped up.
So what should accountants, financial planners and lawyers ask their clients who employ “casuals”?
Many casual employees are now entitled to extra benefits. This may include paid annual leave. The question of whether a person is a “casual employee” is determined by a number of indicia. This includes the regularity of work patterns, the certainty of work, continuity of service, intermittency of work and its predictability.
Speak to your professional adviser about:
1. Is there a mutual commitment to ongoing employment?
2. Does my employee work irregular work patterns, with uncertainty, discontinuity, intermittency of work and unpredictability?
3. Do I or my employees know they are casual?
4. Does the modern award state my employees is casual?
5. Does my Employment Contract clearly state “casual”?
4. Any certainty regarding the period over which employment is offered?
If you are concerned about the basis of casual engagement then Build a Legal Consolidated Barristers & Solicitor Employment Contract. You can build them online. Just press the blue button on the top of this page to get started.
Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
Australia wide law firm
39 Stirling Highway, Nedlands, WA
Mobile: 0477 796 959
Direct: 08 6389 0400
National: 1800 141 612
Email: [email protected]
Legal Consolidated’s Employment Contracts comply with:
ACE Insurance Ltd v Trifunovski (2011) 200 FCR 532
ACE Insurance Ltd v Trifunovski (2013) 209 FCR 146
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27
Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241
Attorney-General (NSW) v Brewery Employee’s Union of New South Wales (1908) 6 CLR 469
Autoclenz Ltd v Belcher  4 All ER 745
Baini v The Queen (2012) 246 CLR 469
Bernardino v Abbott  NSWSC 430
Cetin v Ripon Pty Ltd (t/as Parkview Hotel) (2003) 127 IR 205
City of Wanneroo v Holmes (1989) 30 IR 362
Collector of Customs v Bell Basic Industries Ltd (1988) 20 FCR 146
Comcare v Post Logistics Australasia Pty Limited (2012) 207 FCR 178
CPSU, Community & Public Sector Union v State of Victoria (2000) 95 IR 54
Craig Williamson Pty Ltd v Barrowcliff  VLR 450
Dalgety Farmers Ltd t/as Grazcos v Bruce (1995) 12 NSWCCR 36
Damevski v Giudice (2003) 133 FCR 438
Doyle v Sydney Steel Company Limited (1936) 56 CLR 545
Electrolux Home Products Pty Limited v Australian Workers’ Union (2004) 221 CLR 309
Fair Work Ombudsman v Devine Marine Group Pty Ltd  FCA 1365
Fair Work Ombudsman v Hu (No 2)  FCA 1034
Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd  FCAFC 37
Fair Work Ombudsman v South Jin Pty Ltd  FCA 1456
Geo A Bond & Co Ltd (in liq) v McKenzie  AR(NSW) 498
Haley v Public Transport Corporation of Victoria (1998) 119 IR 242
Hamzy v Tricon International Restaurants trading as KFC (2001) 115 FCR 78
Hewlett Packard Australia Pty Ltd v GE Capital Finance Pty Ltd (2003) 135 FCR 206
Hollis v Vabu Pty Ltd (2001) 207 CLR 21
Informax International Pty Ltd v Clarius Group Limited (2012) 207 FCR 298
Kucks v CSR Limited (1996) 66 IR 182
Ledger v Stay Upright Pty Ltd  FCA 659
MacMahon Mining Services Pty Ltd v Williams  FCA 1321
McClelland v Northern Ireland General Health Services Board  1 WLR 594
Melrose Farm Pty Ltd (t/as Milesaway Tours) v Milward (2008) 175 IR 455
Putland v Royans Wagga Pty Ltd  FCA 910
Re 4 Yearly Review of Modern Awards – Penalty Rates (2017) 265 IR 1
Re Secure Employment Test Case (2006) 150 IR 1
Reed v Blue Line Cruisers Limited (1996) 73 IR 420
Registrar of Titles (WA) v Franzon (1975) 132 CLR 611
Secretary, Department of Social Security v Copping  73 ALR 343
Shugg v Commissioner for Road Transport & Tramways (NSW) (1937) 57 CLR 485
Skene v Workpac Pty Ltd  FCCA 3035
Skene v WorkPac Pty Ltd (No 2)  FCCA 525.
SZTAL v Minister for Immigration and Border Protection  HCA 34
Taylor v The Owners – Strata Plan No 11564 (2014) 253 CLR 531
The State of Queensland (Queensland Health) v Chi Forest (2008) 168 FCR 532
Thiess v Collector of Customs (2014) 250 CLR 664
Thompson v Big Burt Pty Ltd (t/as Charles Hotel) (2007) 168 IR 309
Vidler v Federal Commissioner of Taxation (2010) 183 FLR 440
Williams v MacMahon Mining Services Pty Ltd  FMCA 511
Yaraka Holdings Pty Limited v Ante Giljevic (2006) 149 IR 339