Federal Court rules ‘regular’ casuals entitled to annual leave

Employers and lawyers are warning of potentially huge liabilities and uncertainty for businesses that engage casuals after the Federal Court last month held casual employees who work regular hours are entitled to annual leave payments.

The Full Court of the Federal Court upheld a decision that Rio Tinto ‘casual’ mine driver Peter Skene was entitled to all the benefits of a permanent employee because he worked regular predictable hours, despite his labour hire employer WorkPac engaging him and paying him as a casual.

As a result, Mr Skene was entitled to payment for accrued annual leave on termination of his casual employment contract, totalling $21,000 plus $6,700 in interest.

The key finding was that Mr Skene’s regular work roster meant that he was not really a casual employee for the purposes of the Fair Work Act. The employer has indicated that the decision will not be appealed to the High Court.

The ruling has alarmed employers who are now calling for the government to change the Fair Work Act to overturn the decision and avoid casual employees double dipping their entitlements by claiming a casual loading in lieu of permanent employee benefits, then also claiming annual leave on top.

In response, the CFMEU national president Tony Maher said the decision meant the end of the so-called ‘permanent casual’ and challenged a “flawed business model based on driving down costs by casualising large portions of the workforce.”

For Australian small and medium-sized businesses employing casual workers in any regular or even semi-regular fashion, the decision has arguably “opened the door” for those employees to argue they are entitled to things such as annual leave.

If you are concerned about whether your business may have unidentified liabilities for casual employees, we suggest that you seek advice from your solicitor or HR consultant in order to:

• Review who in your workforce is legally a casual employee and who is not. Where ‘casual’ employees work a consistent number of hours each week with little variation in their roster, the risk is that they will be viewed as a permanent employee
• Draft future employment contracts to avoid double dipping of entitlements where a ‘casual’ workers is later found to be permanent under the Fair Work Act
• Establish a system of monitoring employee status and conversion from casual to permanent where applicable

Feel free to contact us if this article has raised any questions for you – we will direct your enquiry to the appropriate people or further reading.