Legal Insights

Casual employment in turmoil

• 12 December 2018 • 3 min read
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A significant case for employers regarding the definition of a casual employee

Both employer and employee groups have reacted in the wake of the recent Federal Court decision in WorkPac Pty Ltd v Skene [2018] FCAFC 131 (Skene). The Skene case concerned a ‘fly in, fly out’ mining truck driver who had been engaged as a casual employee by WorkPac since 2010. The worker was engaged consistently in accordance with a 12-month roster.

In finding that the employee was not truly a ‘casual’, the Full Federal Court adopted the common law test for a ‘casual employee’, which required an objective consideration of the conduct of, and relationship between, the parties to an employment relationship. The employee was deemed not to be a ‘casual employee’ because:

  • there was a firm commitment to providing him continuing and indefinite work (subject to the parties’ rights of termination); and
  • there was an agreed pattern and arrangement of

WorkPac argued that Mr Skene was not entitled to annual leave under the NES as he was paid a ‘casual loading’ and paying Mr Skene annual leave would mean that he was ‘double dipping’. The Court did not accept WorkPac’s argument as:

  • it was not clear if he was actually paid ‘casual loading’ (his agreement stated that he would be paid $55.00 per hour); and
  • even if he was, the fact Mr Skene was paid ‘casual loading’ when he need not have been, was not a legitimate basis for withholding his leave

The Court accepted that WorkPac had mistaken Mr Skene’s employment status and ‘unknowingly’ contravened the NES. However, the Court held that ‘ignorance of the law’ does not amount to an excuse for contravening the NES and remitted the matter to the Federal Circuit Court for determination of any pecuniary penalties.

Employers’ response to the decision

Employers have argued that the Skene decision means that there is a risk that casual employees who have been engaged regularly can effectively ‘double dip’ by making a claim for leave entitlements despite having received a casual loading in lieu of those very entitlements.

Given that the Skene decision affects an estimated 1.6 to 2.2 million casuals across Australia, this double dipping risk can create a bill for employers of up to $8 billion.

To address this risk, some employer groups are seeking that modern awards be amended to include a new category of ‘perma- flexi’ employees who would receive paid annual and personal leave, redundancy pay and notice of termination, while attracting only a 10 percent flexible loading payment instead of the 25 percent loading payable to casuals.

Unions’ response to the decision

The unions have reacted strongly to the Skene decision and have slammed the proposal to create a new ‘perma-flexi’ category of workers. The CFMMEU has also written to more than 50 employers in the coal mining sector informing them that they could be complicit in any continuing breaches of the Fair Work Act 2009 if they are using labour hire employees engaged as casuals.

The CFMMEU has warned employers that while it is investigating legal remedies for affected employees, it is prepared to meet with employers to discuss their employment practices and how to address the Skene decision.

Watch this space

While WorkPac decided not to pursue a High Court appeal of the Skene decision, it has instead filed a fresh Federal Court application seeking declarations that another former employee was a casual employee and not entitled to be paid leave entitlements.

This has been met with an attempt to stay those proceedings in favour of a ‘class action’ addressing the issue.

While WorkPac’s new Federal Court application can be seen as an attempt to get a ‘second bite of the cherry’, a declaration in its favour would provide a welcome relief from employers around the country.

Stay tuned for more developments in 2019.

Need advice on the implications of this decision?

Contact the Employment, Remuneration & Benefits team.

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