A recent Federal Court case has sent shock waves among employers by allowing a casual employee to claim permanent employee entitlements even though he was paid a higher casual rate.
Truck driver Paul Skene was employed by WorkPac under a hiring agreement at a Rio Tinto coal mine in Central Queensland from 20 July 2010 to 17 April 2012.
Mr Skene signed a casual contract and was:
- assigned a permanent single room at the mine
- provided with a 12-month roster in advance in 2011 and 2012
- provided with flights and accommodation at no cost
- required to work according to his roster: 12½-hour shifts with seven days on, seven days off
- required to complete weekly timesheets
- paid weekly.
Mr Skene didn't take any paid annual leave during his employment with WorkPac, but he did take a week's unpaid leave as arranged with Rio Tinto.
On 23 April 2012, Mr Skene's contract was terminated. He then claimed he was entitled to be paid out annual leave and permanent entitlements because, he said, he was a permanent full-time employee.
WorkPac refused to pay on the basis that Mr Skene was a casual employee. Mr Skene then lodged a claim against the company.
A decision affecting a casual coal mining truck driver could have big implications for employers across the country.
Federal Court says Skene was a permanent employee
The Federal Court found that Mr Skene was a permanent employee because his employment was regular and predictable in terms of shift arrangements and hours of work; it was continuous and not subject to significant fluctuation; and there was an expectation that he would be available on an ongoing basis to work his roster.
The court found he was entitled to permanent employee entitlements under the National Employment Standards (NES) and the applicable enterprise agreement.
The court is yet to determine compensation for Mr Skene and penalties for WorkPac.
What about annual leave?
This decision found that employees described as casual employees engaged "in continuous employment rather than those in irregular, intermittent, occasional or discontinuous employment" are not "casual employees" within the meaning of Section 86 of the Fair Work Act and may be entitled to annual leave under the NES.
The Federal Court found that Mr Skene was entitled to the additional benefits even though WorkPac argued that he had already been paid the casual loading.
The court found that it was not clear that Mr Skene was paid a casual loading at all, because it wasn't specified in the employment contract. Therefore, in the court's mind, there was no double-dipping.
Lessons for employers
This case highlights the difficulties employers can have if they employ an individual as a "permanent casual" or in "continuous employment". Naming an employee's classification as 'casual' in an employment contract is not enough. The court will look at the substance of the employee's role over its contractual form.
If you wish to engage an individual as a casual employee, you should:
- ensure there is no firm commitment to continue to engage the individual in the future
- ensure you have proper contracts in place with your employees that genuinely reflect the nature of the work
- not classify an employee as "casual" in an effort to avoid obligations to pay entitlements. This is likely to lead to harsh penalties and back-pay claims.
What you should do next
Moores suggests that all employers carefully review their employment contracts and entitlements for casuals in light of this case to ensure that they are acting consistently with their obligations.
If you are unsure, seek legal advice for guidance.
Moores can help
For more information, or to speak to a member of Moores' workplace relations team, contact practice leaders, Skye Rose or Catherine Brooks, on (03) 9843 2100.