We routinely deal with employer issues around casual employment. This is not surprising given the fact that there is no definition of a casual employee in the Fair Work Act, as well as the largely misunderstood notion of who, what and when a casual. However, a recent decision of the Federal Court has introduced some additional - and costly - hazards into these murky waters.
The case concerns an employee engaged as a truck driver by a labour hire company.
The employee was engaged as a casual and was paid at a rate that included a casual loading paid in lieu of entitlements afforded to permanent employees – notice of termination, leave, etc.
The employee worked for around 4 years under this arrangement.
The employee claimed he was not a casual and was employed on a full time basis.
Despite a number of factors indicating against this, the Court found that the employee was not engaged as a casual, and he was therefore entitled to be paid for leave accrued over the term of his employment.
The employer’s argument that the employee would be “double-dipping” by receiving the casual loading as well as accruing annual leave was rejected by the Court. The Court said that this reason on its own was not sufficient to determine whether or not the employee was a casual.
The Court said that what will be influential is a determination of whether the “essence of casualness” is present in the relationship, characteristics of which include:
- The absence of a firm, advance commitment as to the duration of the employment or the days (or hours) the employee will work.
- A level of uncertainty, discontinuity or intermittency of work
At a general level, the Court confirmed that the question of whether or not an employee is a casual will come down to the particular facts of each case, and that no one factor may in itself determine the question. However, this is still not very helpful for employers. And the reason this decision is ringing alarm bells is that it not only highlights this very vague definition of what is a casual employee, but it also demonstrates it is possible for an employee to be paid as a casual and to still claim leave entitlements. The Court’s decision contemplates the nature of the employment changing over time, with an employee initially engaged as a casual becoming a permanent part time or full time employee.
If the definition of a casual is undefined and so difficult to grasp, how can an employer ensure that it can properly engage staff on a casual basis? How can they rely on the higher rates paid to casuals and protect themselves from a “double-dipping” claim?
Without Parliament’s intervention to clarify a definition of “casual” for the purposes of the Fair Work Act and the NES, there is little certainty for employers. One common response to this uncertainty is for employers to review their need for, and use of, casual employees. However, we suggest there are other strategies to assist employers to reduce the risks that casual employees will claim they are entitled to accrue annual leave and other entitlements.
Lessons for Employers
- Consider whether any of your casual employees are employed on a regular and systematic basis
- If you employ casual staff and are concerned this decision may affect you, seek advice about how you can manage this (we would be happy to discuss this with you and provide advice on strategies to assist you)
A decision of the Federal Court has allowed an employee who was engaged as a casual, and paid casual loading, to also receive paid annual leave. This case has wide-ranging issues for employers that engage casual staff and requires a re-think by employers about how to minimise the risk of a similar claim by their casual employees.