Could your casual employees be entitled to annual leave?

This is a question that is now being asked by employers as a result of the recent decision of WorkPac Pty Ltd v Skene [2018] FCAFC 131 on 16 August 2018 by the Full Court of the Federal Court of Australia.

In this case, Skene, a FIFO employee, was on a roster set 12 months in advance, working regular fixed shifts and paid a flat hourly rate, with no casual loading separately identified. When he was terminated, Skene argued he was not a casual employee, rather a permanent employee, and entitled to annual leave, which should have been paid out on the termination of his employment.

The Court agreed, and found that Skene was not a casual employee, and entitled to annual leave. The Court found that the essence of casual employment was that there were irregular patterns of work, uncertainty as to the period over which the employment is offered, intermittency of work, flexibility and unpredictability. Whilst it was accepted that Skene's employment contract stated he was engaged as a casual, he was found not to be a casual employee for the purposes of annual leave entitlements under the National Employment Standards in the Fair Work Act 2009 (Cth) (FW Act).

The Court considered the consequence of such a decision, in that a casual employee could be 'double dipping' by being paid a casual loading as well as annual leave, and the concept of an employer offsetting the casual loading against the annual leave entitlement. However in this case, it was found that Skene not be paid a designated amount or percentage of his wages expressly attributed to the casual loading, instead it was expressed in general terms.

The Minister for Industrial Relations is said to be seeking urgent legal advice on the implications of the Skene decision and the 'double dipping' issue.

What risks does this present to your business?

If your business is engaging casual employees on a regular basis with set rosters, for long periods of time, there is a real risk that they could be regarded as permanent employees and not true casual employees for the purposes of the FW Act, exposing your business to additional costs such as annual leave entitlements, even when you think you have already compensated employees by way of paying a casual loading.

Your business and key decision makers/personnel could also be exposed to prosecution and penalties for failing to comply with the FW Act.

What steps should your business take?

IR Legal Solutions recommend your business take immediate steps to:

  • Review all casual engagements in your business as a priority - are they really true casual engagements or something more permanent?;

  • Check your employment contracts - do they clearly specify the true nature of the engagement, that hours will be in accordance with the needs and demands of the business and is then happening in practice;

  • Clearly specify and separate out the amount of any casual loading paid - in your employment contracts and payslips; and

  • Consider the use of offset clauses in your employment contracts.

Need advice on this or changes to your employment contracts and practices? Contact us at IR Legal Solutions, we are actively working with clients to minimise the risks of the Skene decision as much as possible.