Important developments in casual employment relationships
A decision by the Full Federal Court has changed the way employers must look at casual employees, many of whom may now be considered permanent.
Prior to the decision in Workpac Pty Ltd v Skene (Workpac decision) it was commonly accepted that if an employee was described as a casual employee and paid the additional 25% loading under an Industrial Award or Enterprise Agreement, they were for all purposes, a casual employee.
The Workpac decision has challenged this accepted view. The Full Federal Court found that the determination of whether an employee is a casual must be conducted by assessing “the real substance, practical reality and true nature of the relationship” as opposed to simply adopting the description the parties have given to the relationship. The Court further found that if the “employment relationship has a level of certainty, regularity and predictability about the hours to be worked, then it is inconsistent with being a casual employment relationship”.
Impact of the Workpac decision
It is anticipated that this Full Court decision may impact the employment arrangements for over two million employees who have been or are currently engaged as casual employees.
The primary consequences are that in order for an engagement to be considered casual:
- there should be no certainty about the period over which the employment is offered; and
- there should be an informality, uncertainty and irregularity about the engagement.
The Court’s decision does not mean that all casual employees are now entitled to accrue annual leave (or receive payment for unpaid leave) as the particular circumstances of the arrangement between Mr Skene and Workpac were key to the decision. Mr Skene’s roster was set twelve months in advance on a 7 days on and 7 days off arrangement. Therefore, there was no uncertainty as to the duration of the employment or irregularity about the days Mr Skene would work. This level of certainty or regularity is not a feature of most casual employment relationships.
Takeaways for employers
In light of the Court’s decision, employers should review the actual working arrangements of any casual workers to determine if the relationship could in fact be regarded as a permanent arrangement. We advise employers take the following precautions:
- engage casuals on a short-term basis because an ongoing relationship may signify that the worker is a permanent employee
- ensure that contracts for casuals are carefully drafted
- regularly review your workforce to assess whether there are indicators that casual employees have shifted to permanent status
- seek legal advice where there is any uncertainty about the categorisation of employees
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