‘The Fair Work Act needs to be urgently amended to define a casual employee in a simple and clear manner’
The Federal Court has found that some “casual workers” on regular and predictable shifts with a firm advance commitment to work were not actually casuals.
Consequently, despite what they were labelled in employment contracts, those workers were found to be entitled to be paid annual, sick and carer’s leave.
The Court found that until 2018, black coal mine worker Robert Rossato was employed for three and a half years by the labour hire company WorkPac across different projects as a permanent worker (even though his contract described him as a “casual”).
Rossato worked on Glencore mines across six contracts and was paid what WorkPac described as a 25% casual loading built into his wage.
However, the Court found he still had an entitlement to leave that could not be offset through the wage bump since it did “not have a close correlation” to the leave entitlements.
Rossato worked seven days on, seven days off under at least one of his contracts with 12-hour shifts set in advance. This was not casual work, but work that is “regular, certain, continuing, constant and predictable”, according to the ruling.
Innes Willox, Chief Executive of the national employer association Ai Group, said the case highlights the need for urgent legislative reform to provide certainty to businesses and casual employees.
Moreover, Willox said it’s important to prevent double-dipping claims by casuals who have been paid additional remuneration in lieu of the entitlements of permanent employees.
“Casuals make up around 20% of the Australian workforce, providing vital flexibility to employers and employees,” said Willox.
“The Fair Work Act needs to be urgently amended to define a casual employee in a simple and clear manner to address the uncertainty caused by the Federal Court’s Workpac v Skene decision, and now the Workpac v Rossato decision.
“The current laws, as interpreted in these decisions, operate as a major deterrent to the employment of casuals.”
Willox added that the expression ‘casual employee’ needs to be defined in the Fair Work Act, in line with the common definition included in modern awards – that is, ‘a casual employee is an employee engaged and paid as such’.
An employee engaged as a casual and paid a casual loading (or a loaded rate that accounts for a casual loading) should not be allowed to turn around years later and claim the entitlements of a permanent employee, he said.
“With unemployment and underemployment rapidly increasing during the COVID-19 crisis, employers need to be encouraged to retain and take on casual employees – not deterred from doing so.”
Indeed, the following statistics highlight the implications of the decision for the Australian economy:
• At least 1.6 million of the 2.6 million casuals in Australia work on a regular, ongoing basis;
• The potential cost impacts on employers of the Federal Court’s decisions, for annual leave alone, are between $5.7 billion and $8 billion;
• Over 50 per cent of casuals work for businesses with less than 20 employees and over 80 per cent work for businesses with less than 100 employees.
However, Labor’s industrial relations spokesman Tony Burke argued that the Morrison government should not overturn the decision through legislation.
“If there’s any ‘double dipping’ going on here it is being performed by the employers – they’re taking advantage of the insecurity of casual work while still getting permanent hours out of their workers,” Burke was quoted as saying by Fairfax Media.
Moreover, the CFMMEU national president and mining secretary Tony Maher said the decision was “fantastic”. Maher said it called out employers who labelled their workers casuals but employed them full-time.
Steve Knott, AMMA chief executive, added it is a remarkable position that is “highly damaging to business confidence and will see more internationally-funded class action law firms, many with obscenely large contingency fees, circling Australian businesses like sharks”.
“Most would agree it is rather unfair that an employee could accept a higher rate of pay for being casually engaged, only to later also claim for back-paid permanent entitlements such as annual leave and redundancy, due to their patterns of work.”