Disharmony from within: casual confusion reigns

In 1936 the High Court of Australia described casual employment as intermittent or irregular work. It is fair to say that employment, and casual employment, has evolved since then; "Toto, I have a feeling we’re not in Kansas anymore".

Employers breathed a sigh of relief when the Full Bench of the Fair Work Commission acknowledged as much.

In the decision of Telum Civil (Qld) Pty Ltd v Construction, Forestry, Mining and Energy Union [2013] FWCFB 2434, the Full Bench found that a casual engaged and paid as such, who received the benefit of a casual loading to compensate them for entitlements otherwise applying to permanent employment, would be double dipping if they then sought to recover entitlements associated with permanent employment.

Makes sense, right? Sure, at the time the decision drew comment given it did depart from the established common law characterisation of casual, but equally, logically and given the evolved industrial context, the decision made perfect sense.

Indeed, the Federal Court jumped on board in Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365. “The word “engaged” [in the context of engaged and paid as a casual under a modern award] is directed to the agreement made between the parties rather than to the manner and circumstances in which the employee does in fact carry out his or her work”, White J said.

Yet, in Skene v Workpac Pty Ltd [2016] FCCA 3035 (24 November 2016), the Federal Circuit Court of Australia applied the dated "common law definition" to find that an employee, paid and engaged as a casual under the enterprise agreement, was entitled to annual leave under the Fair Work Act. Confusing?

Absolutely, particularly given the Federal Circuit Court found that Mr Skene was a casual employee within the definition under the enterprise agreement.

The facts in short are these. Mr Skene was employed under an enterprise agreement. He was paid a higher hourly rate that included the casual loading. The enterprise agreement expressly provided "[t]he casual loading is in lieu of all paid leave entitlements (with the exception of long service leave)".

Seems pretty clear, right?

Although the Federal Circuit Court made reference to the Telum decision, in our view, it failed to apply the most fundamental aspect of the decision:

We conclude that on the proper construction of the FW Act the reference to “casual employee” in s.123(3)(c) and the rest of the NES - and, indeed, elsewhere in the FW Act - is a reference to an employee who is a casual employee for the purposes of the Federal industrial instrument that applies to the employee, according to the hierarchy laid down in the FW Act ...

To do otherwise makes the system of industrial regulation uncertain and unpredictable for business and employees.

Unfortunately, the decision in Skene ignores that an enterprise agreement is made under the Fair Work Act and given statutory force by the Act. Parliament did not define "casual employee" under the Act. Parliament knew it was allowing a scheme where modern awards and enterprise agreements would do so. The scheme is markedly different from 1936.

In our view, the Federal Circuit Court simply got it wrong, and we will find out in any appeal or challenge to the decision (which is inevitable).

Lessons learnt

As a side note, it’s interesting to observe that the Federal Circuit Court failed to entertain the employer’s cross claim in restitution. This appears to be because the cross claim was filed out of time. But it does signal an avenue for aggrieved employers.

Better still, consider making an offset express in your enterprise agreement or contracts. Tell the employee upfront they are casual and on that basis only you are paying them the loading in lieu of specific paid leave entitlements.

Though not relevant to the legal analysis, the facts in Skene did not help the employer. Mr Skene’s engagement was titled “Notice of Offer of Casual Employment”. However, the terms did not reflect what is typically casual employment. The contract spoke about “a standard work week of 38 hours”, “3 months” assignment and a “falt rate of $50.00 per hour”. Management of the engagement could have been much better.

Authors: Amber Sharp & James Mattson