IR Alert – Federal Court Rules on What is Not Casual
Employers must urgently rethink its casual workforce in light of the full Federal Court decision that a WorkPac labour hire casual truck driver was in fact NOT a casual employee and was entitled to payment for accrued annual leave.
Justices Richard Tracey, Mordy Bromberg and Darryl Rangiah have upheld Federal Circuit Court Judge Michael Jarrett’s characterisation of a casual worker as an employee entitled to benefits under s86 of the Fair Work Act due to the regular, predictable and systematic nature of his FIFO working arrangements.
The Full Bench found that the driver could not be properly considered a casual employee under the Fair Work Act due to the regular and continuous nature of the fixed seven-day-on, seven-day-off roster he was working. The casual was therefore granted entitlements to accrued annual leave on termination of his employment under the NES.
Employers have decried the decision, stating that it sets a precedent that allows casual employees to “double dip” on entitlements, where they are paid a casual loading in lieu of permanent employee benefits and are then able to legitimately claim the leave that the loading was in substitution for.
Australian Mines and Metals Association chief executive, Steve Knott, commented that the fact “an employee can seek and be awarded annual leave entitlements, after knowingly accepting a higher rate of pay due to being casual, massively fails the pub test… Casual employees…get paid extra loading in lieu of other entitlements, including annual leave. This is widely understood and accepted by all Australians, from teenagers in their first job… to casual mining operators taking home some of the best hourly pay rates in the country.”
The decision opens the door to claims that casual employees are entitled to other entitlements and are therefore entitled to back pay reaching back seven years. While this threatens liability for Australian businesses, it also increases the amount that labour hire companies need to impart to clients to sustain viability with the additional entitlements. Employees relying heavily on casual employment may also be impacted by the resulting uncertainty.
Innes Willox of the Australian Industry Group has called for legislative changes to clarify and crystallise the standard definition of casual employment, that an employee engaged and paid as a casual remains a casual for the purpose of the Fair Work Act. If appeal of the decision is not pursued to the High Court, the position for Australian businesses remains uncertain until such legislative changes are made.
For further information please view: WorkPac Pty Ltd v Skene  FCAFC 131 (16 August 2018).