Before the employment relationship begins, employers are urged to consider: Is this worker a casual or are they more appropriately categorised as a permanent full/part time employee? Importantly, employers must remember that just because you call them casual, doesn’t mean they are. Getting it right at the outset will be an employer’s greatest tool in avoiding conflict or litigation down the track.  

In a recent case before the Federal Circuit Court,[1] a worker claimed that he was entitled to 15 years’ worth of accrued annual leave because he was in fact a permanent rather than casual employee. However, the employer claimed that he was a casual because he was paid a loading. While there was no written employment contract in place, the employee was told that his job would be “full-time”, paid at a “flat rate”.

The employment began in 2000 and ended in 2015. Over the course of his employment, the worker “ordinarily worked at least 38 hours a week and usually worked many additional overtime hours”, which was substantiated through his payslips. But, his payslips did not say he was a “casual” nor did they contain any express statement that he was paid a casual loading.  

In determining that the worker was in fact engaged as a permanent full-time employee under the Quarrying Industry Award, the court considered that up until 2007:

• The employee was a skilled worker who was considered an “integral part of the business”. He was never told not to come into work due to the employer’s operational requirements.
• The employee worked consistent and regular hours of at least 38 hours a week plus substantial overtime.
• The employer held the expectation that the worker would be available.
• Despite the employee being paid more than normal, there is no evidence that he was paid a “casual loading” of any percentage.

Following 2007, the conditions of the employment were as defined under the Australian Workplace Agreement (AWA). The court noted that the employment classification had been left blank and therefore the agreement did not expressly define the worker as either a casual or permanent employee. Given the ambiguity, it was determined that the employee satisfied all the elements in the AWA’s definition of a permanent employee and therefore he was entitled to accrued annual leave “at his ordinary rate of pay at the time of termination”.

Lessons for employers

• Employers must become familiarised with the distinct features/key differences between casual and permanent employees.
• The consequences for failing to properly categorise casual workers will likely lead to a claim for unpaid entitlements.
• While the court will consider substance over form, this case highlights the importance of documenting the terms and conditions of the employment relationship in a written contract.
• When a person is genuinely employed as a casual, continue to monitor the arrangement so that it does not turn into a permanent/full time position.
• Rates of pay, including allowances and overtime, must be set in accordance with the applicable Award.