WorkPac Pty Ltd v Skene – ‘Casual Employee’ Found to Be Permanent – Is the Sky Falling In?
Last Thursday (16 August) the Federal Court of Australia handed down a decision that has led some to suggest the nation faces Armageddon in the form of millions of casual employees suddenly being entitled to annual leave and other paid leave benefits.
The reality is probably not quite as daunting.
The case of WorkPac Pty Ltd v Skene came before the Federal Court of Australia on appeal from the Federal Circuit Court of Australia. Mr Skene was employed by WorkPac (a labour hire business) as a fly-in, fly-out dump-truck operator on mining operations between April 2010 and April 2014. At issue was whether Mr Skene was a casual employee as WorkPac contended or a permanent employee entitled to annual leave under a 2007 Workplace Agreement and the National Employment Standards (NES). The Court found Mr Skene was a permanent employee entitled to annual leave for the period of his employment.
The Court considered section 86 of the Fair Work Act 2009 (Cth) which provides that the annual leave provisions of the Act do not apply to casual employees. The phrase ‘casual employees’ is not defined. The Court had to determine whether the words were intended by Parliament to be used in their ordinary sense, their legal sense, or a specialised non-legal sense which WorkPac argued was common among federal industrial instruments (i.e. an employee is a casual if he or she is engaged and paid as such). The Court rejected WorkPac’s argument and determined the expression ‘casual employees’ in section 86 of the Act is used in its legal sense.
In considering the proper construction of the words, the Court observed that a ‘casual employee’ describes a type of employment that, at least in part, takes its meaning from other recognised types of employment (i.e. full-time and part-time employment). Noting that the characteristic which distinguishes full-time and part-time employment is the ongoing nature of those employments, the Court stated that ongoing employment:
“…is characterised by a commitment by the employer, subject to rights of termination, to provide the employee with continuous and indefinite employment according to an agreed pattern of ordinary time (as distinct from overtime) work. A corresponding commitment to provide service is given by the employee.”
The Court went on to state:
“In contrast, a casual employee has no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work. Nor does a casual employee provide a reciprocal commitment to the employer. That characteristic, drawn from Hamzy, is what White J referred to in more general terms in South Jin at [71] as “any commitment by the employer or the worker to ongoing employment”. In our view, what is referred to in Hamzy as the “essence of casualness”, captures well what typifies casual employment and distinguishes it from either full-time or part-time employment.
The indicia of casual employment referred to in the authorities – irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability – are the usual manifestations of an absence of a firm advance commitment of the kind just discussed. An irregular pattern of work may not always be apparent but will not necessarily mean that the underlying cause of the usual features of casual employment, what Hamzy identified as the “essence of casualness”, will be absent.”
It perhaps did not assist WorkPac’s case that the Court found its employment agreement with Mr Skene did not designate him as a casual and that it was not clear he was paid a casual loading at all.
This case has many similarities to an earlier case, MacMahon Mining Services Pty Ltd v Williams (‘MacMahon’), which we examined in the March 2011 issue of our Relations newsletter. That case also involved a fly-in, fly-out worker who successfully claimed permanent status and an entitlement to annual leave. The Court in that matter found the applicant, Mr Williams, was not a casual because:
- there was an ongoing expectation that the employee would be available for work subject to the roster;
- the employee’s hours of work did not involve significant fluctuation from one day/week/month to the next;
- there was mutual expectation of continuity of employment;
- the employee was not working for short periods of time on an irregular basis (the employee was actually engaged for a period of 13 months); and
- the employee was not regularly contacted and asked to work, rather the work was organised and he knew when and where he was required, and how he was to get there.
MacMahon also caused concerns amongst employers but did not lead to a flood of claims from casual employees seeking backpay for leave benefits. Employers should therefore not panic. But it is again timely for employers to consider whether each of their casual employees are properly regarded as such. As we commented at the conclusion of our March 2011 article:
In some cases, awards will be extremely vague about the nature of casual employment and may simply state that a casual is an employee “engaged and paid as such”. In the event that an award is not prescriptive about the nature of casual employment, employers should still have regard to the ‘traditional’ principles considered in Williams v MacMahon Mining Services Pty Ltd (discussed above) to determine the appropriate status of a new employee. Ultimately, even if an industrial instrument permits a level of discretion in determining employment status, an employee should not be engaged subject to terms that are contradictory to the true nature of the employment relationship. As His Honour Justice Gray eloquently commented in Re Porter and Transport Workers Union of Australia (1989) 34 IR 179:
“…the parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody else recognise it as a duck…”
WorkPac Pty Ltd v Skene [2018] FCAFC 131
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