The Full Federal Court yesterday handed down a noteworthy decision on casual employment rights which could have far-reaching implications for Australia’s casual workforce. It found that despite an employee being engaged as a casual, the character and nature of his engagement was not a casual one. Employment of indefinite duration, which is stable, regular and predictable led to the conclusion that the employee should be entitled him to paid leave entitlements and payment for public holidays. Further, the employer was not entitled to “set off” the casual loading already paid to the employee against those permanent employee entitlements owing. In short, the Court has dealt with the issue of casual employees leave entitlements.

Background

Mr R was employed by WorkPac, a labour hire company, as a casual employee under six consecutive casual contracts over a period of three and a half years. He was also covered by the WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012 (“Enterprise Agreement”).

Mr R worked under rosters, often operating on a 7 days on/7 days off basis, alternating between day and night-time work. He was also engaged on a “drive in-drive out” basis (driving to the mine site and staying in the accommodation provided by the host employer and then driving back home after the completion of each shift swing). His shift arrangements were planned well in advance (often 12 months ahead of schedule) and there were limited days and periods during which he did not work.

Relying on the earlier Full Court judgment of WorkPac Pty Ltd v Skene [2018] FCAFC (“Skene”), Mr R claimed he was not a casual employee and should be entitled to paid leave entitlements (including annual leave, personal/carer’s leave and compassionate leave) and public holiday pay under the Fair Work Act 2009 (Cth) (the “Act”) and the Enterprise Agreement. WorkPac claimed that Mr R was engaged as a casual employee under a written contract and should be declared as such both at common law, under the Act and as a “Casual Field Team Member” (“Casual FTM”) under the Enterprise Agreement.

In the alternative, WorkPac argued that if Mr R is found to be a permanent employee, because he was already paid a casual loading in lieu of paid leave entitlements, it is entitled to “set-off” any amounts owed with respect to those entitlements, or is entitled to restitution with respect to those amounts.

Casual employees do not have a firm advance commitment

The Court had to look closely at casual employment rights.

The Skene judgment, which was adopted by the Full Court in this case, determined that a casual employee has no firm advance commitment from her or his employer to continuing and indefinite work according to an agreed pattern of work (“firm advance commitment”). A firm advance commitment is unlikely to exist where there are “irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability” [at 71].

Justice Bromberg noted that a short notice of termination period may also indicate the absence of a firm advance commitment and point to a contract for irregular work.

Regular employment consists of “predictable periods of working time and provides substantial certainty that the work will be both available to be performed and will be performed during designated periods” [at para 65].

As established by Skene, while the written contract of employment is relevant, it is not determinative of the characterisation of an employment relationship. The course of dealing which has taken place under the contract and the conduct of the parties will also be relevant in assessing the characterisation of the overall relationship and determining the true nature of an employment arrangement.

In relation to Mr R’s engagement, Justice Bromberg found:

• the allocation of work which he performed was pre-programmed and pre-allocated in accordance with a roster long in advance, which was strongly indicative of regular, certain, continuing, constant and predictable work and a firm advance commitment;

• the shifts allocated to Mr R were not optional to perform based on the terms of the contracts or intention of the parties;

• the provision of labour hire by WorkPac to the host company dictated the need for employees to perform regular predictable work in accordance with a fixed pattern of work which was well-known to WorkPac; and

• the parties’ intentions indicated an ongoing indefinite employment subject to rights of termination.

On the basis of the above factors, the Full Court found that Mr R was not a casual employee.

Post-contractual conduct

The post-contractual conduct of the parties was not determinative because the firm advance commitment was already apparent from the terms of the contracts and the relevant factual matrix of each contract. However, even if it were to be taken into account, Justice Bromberg considered that it also supported the conclusion of a firm advance commitment. Further, the characterisation of Mr R’s employment supported an objectively justified expectation of continuing work, which indicates he was given a firm advance commitment and was not therefore a casual employee. The other Justices confirmed that post-contractual conduct could change the nature of the engagement over time based on the conduct of the parties.

No “set-off” permitted

WorkPac contended that if Mr R was determined to be a permanent employee, it did not owe him payment for the leave entitlements claimed because these were discharged by the payments he already received, in particular the casual loading component which was paid “in lieu” of his leave entitlements.

This claim was rejected by the Full Court. Even if Mr R agreed to accept a payment in lieu of or in substitution of his entitlements to leave, it found that WorkPac had a statutory obligation to provide him with that paid leave and an obligation to allow him to take that leave, which it cannot contract out of or substitute by the payment of money. Similarly, WorkPac’s contention with respect to restitution for the amounts it had already paid to Mr R was also rejected.

Takeaways

Taken together with the Skene judgment, this case could have far-reaching implications on the issue of casual employment rights for a significant number of Australia’s casual workforce that work on a predictable and regular basis. Businesses should therefore take the time to audit and assess how their casual workforce is engaged, the true characterisation and nature of those engagements in substance and their potential legal exposure to similar such claims.

People + Culture Strategies