Are you an ill-defined casual employee?

Deciding whether an employee is truly casual is no easy task.  Knowing who is casual, and for what purposes, seems to be a moveable feast.  Simply calling workers casual and paying them a “loading” but then employing them long term on a regular basis, leaves employers open to claims down the track.  And that is because at common law, these employees might not be casual at all.

As the Full Bench of the Fair Work Commission recently said, “… the notion of casual employment remains ill-defined under common law”.

In this bulletin, we look at a decision of the Full Bench of the Fair Work Commission (Telum Civil (Qld) Pty Ltd v Construction Forestry Mining and Energy Union [2013] FWCFB 2434), a decision that throws light on some parts of the problem.

We now have some clarity for those engaged and paid as casuals when it comes to receiving entitlements under the Fair Work Act that are derived from awards or enterprise agreements.

The dispute

A number of Telum employees worked full time and regularly, for over a year, on a one off construction project.  They had, according to the company records, been engaged as casuals in accordance with the enterprise agreement and they were being paid the 25% casual loading as required by the enterprise agreement.  Even though casual, when the project came to an end, the workers claimed redundancy payments.

Under the National Employment Standards (section 123(1)(c) of the Fair Work Act) the workers were entitled to redundancy pay unless they were in fact casuals.  The CFMEU claimed the employees were not casuals because they had worked full time, doing regular hours and for a long time - all facts inconsistent with the common law status as a casual employee.

At first instance the Commission agreed with the CFMEU, finding the workers were not casuals at common law and were therefore not excluded from receiving the NES redundancy payments.

The decision of the Full Bench

On appeal, the Full Bench found the Commissioner had erred when she made the assumption that the meaning of casual in section 123(1)(c) of the Fair Work Act was necessarily a reference to the notion of casual employment under common law.  Modern awards and most enterprise agreements have a specific definition of casual employment. 

The wordings may vary, but the core criteria are that the casual employee is “engaged and paid as such”.  Neither modern awards nor enterprise agreements adopt the common law approach of also looking at the pattern and duration of work.

The Full Bench held that where an employee is covered by a modern award or an enterprise agreement that contains a definition of “casual employee”, then that definition will apply, and not the more general common law definition.  This approach was said to be consistent with the objectives of the Fair Work Act to ensure that modern awards and enterprise agreements work with the National Employment Standards to provide a fair and relevant safety net of terms and conditions. 

The Full Bench said the National Employment Standards, modern awards and enterprise agreements should “interact consistently and harmoniously”.

To adopt the approach taken by the Commissioner in the first instance would have allowed for double dipping by employees, who were receiving a loading for irregularity but who worked regular and systematic hours.

Implications for practice

The decision concerns particular provisions of an enterprise agreement and the Fair Work Act, and does not determine the meaning of casuals for all purposes.  If a person is casual under the enterprise agreement or award, they may still be able to bring an unfair dismissal claim; this is because the Fair Work Act specifically protects casuals who are employed on a regular and systematic basis for 12 months.  Nevertheless, the decision does provide guidance on how the word casual may be interpreted when applying the provisions of the Fair Work Act.

If an employer wishes to make use of the Telum decision, then it is important to be clear with your employees about the nature of their engagement.  If the enterprise agreement or modern award defines casuals and the employees are engaged and paid as casuals, then they will not receive the award and enterprise agreement entitlements of permanent employees.

But remember, if you begin to treat your casuals as if they are ongoing permanent employees, then they may cease being casuals and will start picking up all the benefits of ongoing employment.