Casual employee and leave ruling: now is not the time for panic
On Wednesday, 20 May the Federal Court upheld the findings in Workpac v Skene regarding casual employees and has left many employers feeling exposed and uncertain. The Workpac ruling is not a new one. The Workpac v Skene decision was handed down in 2018 but in 2020, it was challenged again when Workpac brought a second case to the Federal Court, Workpac v Rossato.
How did we get here – Workpac v Skene
In the original case brought in 2018, a casual employee of a labour hire firm largely providing labour for mines, Workpac, made a claim for annual leave in accordance with the National Employment Standards (NES). The case was one of national significance as it defined the meaning of a ‘casual’ employee as there is no definition under the Fair Work Act. The Federal Court ruled that a casual employee depends on the characteristics of employment, not the label given by the employer.
“A ‘casual employee’ has no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work.”
The Federal Court granted the casual employee’s claim on the basis that he was permanent in substance. That is, the pattern of work was regular and predictable, continuous and not subject to significant fluctuation, there was an expectation that the employee would be available on an ongoing basis to perform the duties required of them in accordance with the roster (which was set 12 months in advance).
The outcome of the Workpac v Rossato case yesterday upheld the finding around such “casual” employees ability to access annual leave and left the door open that such employees could double dip and access both the casual loading and leave entitlements.
What does it mean?
The case raises questions about casual loading as it is firmly believed that we pay casuals a 25% loading as compensation for leave entitlements.
Whilst that is correct, it was designed to be for those casuals who meet the traditional definition of a casual. That is, an employee who does not have set hours and typically works a range of different hours and shifts.
“Employers cannot create something which has every feature of a rooster, but call it a duck and insist that everyone else recognise it as a duck.”
Over the last 30 years we have seen the casualisation of the Australian workforce with an increase in casual employment going from 13% in 1992 to 25% in 2018. If we were to look closer at those casual employees there would be a significant portion that in substance are closer to the characteristics of full-time employment.
As an employer, what do I need to do?
Employers often look at casuals as the easy option: no redundancy, no set hours, no leave. But employers are really paying more where they have long-term casuals that work regular shifts and follow the same shift pattern as permanent employees.
Of course, not every casual employee is a long-term employee or one that works regular shifts or hours each week. For these employees, they are still likely to meet the substance of a casual employee and not be entitled to access the paid leave entitlements.
With the decision handed down on 20 May, everything is up in the air as the legal, HR and business world grapple with the decision and the consequences on Australian businesses already struggling with the fallout from COVID-19. However, further clarity on this is expected from the Government in the coming weeks as they look to address potential double dipping.
Right now, you can be proactively looking at your casual workforce:
- Do you have long-term casual employees?
- Do your casual employees work the same hours each week?
- Do your casual employees work the same set shifts each week?
- Is there reasonable predictability that their work will continue?
If you are answering yes to any of these questions for any of your casual employees, PKF can help. Looking deeper than just contractual law is essential to protecting your business and optimising the outcome. PKF’s specialist team will quantify the number and potential financial impacts whilst providing modelling of the options to get the best result for your business.