There has been quite a bit happening with regards to casual employees of late that businesses should take stock and review all casual employment arrangements they currently have in place.

Whilst casual employees are not entitled to annual leave under the National Employment Standards (NES) in the Fair Work Act 2009 (Cth) (FW Act), the recent Full Federal Court decision of WorkPac Pty Ltd v Skene [2018] FCAFC 131 (the Skene decision) has looked closely at when an employee is really a casual for the purposes of the NES and therefore entitled to annual leave.

We recommend that all businesses now take stock and do the same, considering whether their casual employees really are casual employees.

In the Skene decision, the employee, fly in fly out worker, was placed on a roster which was set 12 months in advance. He worked regular, fixed shifts and was paid a flat hourly rate, with no separately identifiable casual loading.

When he was terminated, the employee argued that he was a permanent, not a casual, employee, and therefore entitled to be paid out annual leave on the termination of his employment.

The Court closely reviewed the true nature of the employment relationship in the Skene decision.

They found that the employee had no choices with regards to the days and hours he could work and that his roster was set 12 months in advance, meaning his working arrangements were clear and predictable and he worked regular and certain shifts.

The Court agreed that the employee, despite being paid by the hour, was not engaged as such, and was not a casual employee for the purposes of annual leave entitlements under the NES and therefore he was entitled to such annual leave on the termination of his employment.

Employees may therefore not necessarily be regarded as casual employees for all purposes, and there is now a real risk that, depending on the true nature of the engagement, that a casual employee, despite being paid a casual loading, could be found to be an employee for the purposes of entitlements like annual leave under the NES, imposing additional costs and liabilities on businesses.

The impact of the Skene decision could be that businesses may need to be paying their casual employees entitlements like annual leave, including on termination, particularly if your business has long term casual employees, who are engaged on a regular and systemic basis, for a sequence of periods, during a period of at least 12 months.

This will not necessarily always be the case, and the Court was certainly alive to the issues of ‘double dipping’, in that an employee could be paid a casual loading as well as annual leave and therefore were ‘double dipping’, and the concept of an employer being able to offset the casual loading against any annual leave entitlement was noted.

It will therefore be important for businesses to properly review their use of casual engagements and the best arrangements for casuals going forward, as well as to ensure the terms of the employment contracts used to engage casual employees are sufficient and robust enough, including any casual loading being properly set out in employment contracts and identifiable on payslips.

There have also been changes in regards to the casual conversion provisions in Modern Awards on and from 1 October 2018, whereby a new standard casual conversion clause has been included in most Modern Awards.

The casual conversion clause allows casual employees across most industries now the right to request conversion of their employment to permanent full-time or part-time employment, subject to having worked certain, regular hours over a 6 or 12 month period, depending on the relevant Modern Award that applies.

As a consequence of a casual conversion, an employee will obviously be entitled to receive the entitlements that flow on from being a permanent employee.

Any applications for casual conversion your business receives should be carefully considered, as they may impact on your staffing level requirements and costs associated with employment, and should be carefully managed to ensure compliance with the obligations under the relevant Modern Award, particularly if they are to be refused, as they can only be refused on certain, reasonable grounds.

If you want to put your business in the best position to manage the ongoing risks and implications with regards to casual employees, contact the Employment Law Team at Rouse Lawyers today. Rouse Lawyers is experienced in providing valuable legal advice from the commencement of the employment relationship and assisting your business to navigate the employment laws throughout your employment relationships and to effectively identify and manage the issues and risks in the employment space for your business.