A recent decision of the Full Bench of the Federal Court has found that a labour hire employee thought to be engaged as a casual employee was actually an employee entitled to annual leave payments. Background Mr Skene was employed by WorkPac Pty Ltd (WorkPac) as a dump-truck operator working at coal mining operations in Central Queensland. He was employed from 17 April 2010 to 17 July 2010 in a ‘drive in, drive out’ position, and then again from 20 July 2010 to 17 April 2012 in a ‘fly in, fly out’ position working 12 hour shifts on seven days on, seven days off roster arrangement at Rio Tinto’s Clermont mine. Mr Skene’s employment contract with WorkPac indicated that his pay rate was a flat rate of $50 per hour and that the terms of the WorkPac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007 (Agreement) applied to his employment. During his second engagement, Mr Skene worked in accordance with a roster, which at times was provided 12 months in advance. Upon termination of his employment in April 2012, Mr Skene was not paid any money in lieu of untaken annual leave. Mr Skene challenged this in the Federal Circuit Court, arguing that he was in fact a permanent employee and therefore entitled to payment of unused annual leave in accordance with the Agreement and the National Employment Standards (NES) provided for under the Fair Work Act 2009 (Cth) (FW Act). The NES provides annual leave for all employees ‘other than a casual employee’. Decision at first instance In the first instance, the Federal Circuit Court held that Mr Skene was ‘not a casual employee’ for the purposes of the NES, and therefore was entitled to payment of unused annual leave on termination of his employment. Considering previous authorities, the Court held that the employment at the Clermont mine was not truly casual employment because: it was regular and predictable, with working arrangements set up to 12 months in advance the employment was continuous on this arrangement, except for one period of approved unpaid leave the ‘fly in, fly out’ nature of the work was inconsistent with the notion that Mr Skene could elect not to work on a particular day, or refuse a shift, and there was an expectation that Mr Skene would be available on an ongoing basis to perform his duties in accordance with the roster, and the evidence suggested that the work undertaken by Mr Skene was not subject to significant fluctuation from one day, week, month or year to the next. WorkPac was ordered to pay Mr Skene compensation and interest for untaken annual leave, calculated on the full loaded rate of pay. However, the Court found Mr Skene was a casual employee for the purposes of the Agreement and further that it was not appropriate to impose pecuniary penalties for breaches of the FW Act. Decision on appeal WorkPac appealed the decision to the Full Bench of the Federal Court. WorkPac argued Mr Skene was a casual employee for the purposes of the NES and therefore excluded from the entitlements it provides for. The Full Bench dismissed the appeal, finding that Mr Skene was not truly a casual employee. The Full Bench disagreed with some aspects of the judgment in the first instance, finding that Mr Skene was also a casual employee in accordance with the Agreement, and that WorkPac should have pecuniary penalties imposed on it for breaches of the FW Act. The matter was remitted to the Federal Circuit Court to determine the amount. In determining the issue of whether Mr Skene was a casual employee, the Full Court assessed a range of factors which it considered went to the proper characterisation of the employment for the purposes of the NES and did not find any error with primary judge’s assessment of these factors. The Full Bench held that what typifies casual employment was the ‘absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work’, which encompassed markers of casual employment where work patterns were irregular, uncertain, intermittent or unpredictable. Further, the Full Bench noted that the payment of a casual loading is not a determining factor as to whether an employee is casual, although it is one consideration. What position did the Full Bench take on ‘double dipping’? There is some concern being aired in the media that this decision entitles casual employees, in some circumstances, to both casual loading and entitlements associated with permanent employment. However, the Full Bench has not provided a determination on this point, finding that it is not clear whether Mr Skene was paid a casual loading at all, given his contract did not allocate any part of the rate of pay to a casual loading or as monies in lieu of paid annual leave. Therefore the Court was not required to decide on this issue. The Full Bench did, however, state that even if Mr Skene was paid a casual loading when he need not have been, this would not negate a finding that he was a permanent employee. Further, Mr Skene was found to be a permanent employee for the purposes of the NES and the Agreement. Therefore the Full Bench was not required to determine if he had certain entitlements as a casual under one instrument and entitlements as a permanent employee under another. Were such a situation to occur, it gives rise to the risk of an employee being found to have both entitlements. This is not the decision in this case. However, given the significant attention this case has received, it may be that claims are made regarding entitlement to both casual loading and entitlements associated with permanent employment under two different instruments. How such claims will be determined is currently unclear and will only become evident through further case law or amendment of the FW Act. Lessons for employers This case confirms previous approaches by courts and tribunals to look beyond the words of an agreement or contract to determine the true legal nature of the employment relationship. Importantly, this can include a situation where the employment commences as casual employment, but develops the characteristics of full-time or part-time employment during the course of employment, even if the parties still believe that the employment is casual. Employers should carefully review the actual nature of the working arrangements of their casual employees to ensure ‘casual’ is in fact the proper characterisation of their employment. Employers should also take care to ensure that contracts with employees characterised as casual are worded in such a way to enhance the likelihood that they will also be found to be so before a court.
