Federal Court Reaffirmed – Casual Employees are entitled to be paid Annual Leave

25th May 2020

Businesses could face up to $8 billion in backpay after the Federal Court reaffirmed an earlier controversial decision, ruling that a casual employee on regular shifts is entitled to be paid annual leave.

This clearly indicates to me how out of touch the courts and judges are with small business in Australia.

It has been my experience that small business people always try to do the right thing. Sometimes they get it wrong, but never deliberately, generally errors occur due to misunderstanding the requirements of the complex labour legislation and numerous and complex Awards.

Often these business, are young couples with a young family starting a business. The flexibility of casual labour enables them to build their business and have flexibility with changing work flows.

From the employees prospective, this decision can only decrease the prospects of casual employees who ultimately become permanent employees. Also, again as industries continue to outsource employment overseas, I can only see this worsening as a result of this decision.

As we recover from Covid-19 we need to grow our economy and a flexible labour force is essential.

Peter Switzer “What were the judges in the Federal Court smoking? Their decision to give permanent employee entitlements to casual workers could ruin small businesses suffering under COVID-19 or kill casual jobs.”

Please Note: The Federal Government is considering whether it should change the law and could back any appeal to the decision to prevent what some people are calling “double-dipping” of entitlements.

 

In a ruling celebrated by the unions, the Full Federal Court reconfirmed on Wednesday that casual employees working regular and systematic hours with “predictable periods of working time” are entitled to personal leave, compassionate leave and public holiday payments.

The court ruled that regardless of what their contract says and regardless of the payment of a casual loading, casuals are likely to be considered permanent employees based on their nature of work.

Conventional wisdom has been that casuals do not accrue annual leave entitlements, because the casual loading sees them effectively paid a higher hourly rate in lieu of such accrued entitlements.
However, on Wednesday, the Federal Court upheld the precedent WorkPac v Skene ruling in 2018, when it decided that a casual mine worker who had regular and predictable shifts was entitled to the same benefits as a permanent member of staff, including accrued annual leave pay.

The labour hire firm, WorkPac, decided not to appeal the ruling in the High Court, instead deciding to challenge the Skene decision’s definition of casuals before a new full bench and with a different employee, Robert Rossato.

However, in a long-awaited judgment, the court on Wednesday made a similar decision, ordering WorkPac to pay Mr Rossato unpaid annual leave, personal leave, compassionate leave and public holiday payments which are owing on the basis that he was a permanent employee.

Mr Rossato was engaged by WorkPac under six separate casual contracts of employment over the course of three years, and casual loading was, according to the firm, incorporated into his flat rate of pay.

The labour hire firm claimed that one of Mr Rossato’s contracts expressly spelt out each proportion of the 25 per cent casual loading that was paid in lieu of leave, notice and redundancy entitlements. In addition, Mr Rossato was covered by an enterprise agreement which provided for the engagement of casual employees and the payment of a 25 per cent casual loading in lieu of leave entitlements.

However, despite arguments from WorkPac that Mr Rossato was a casual because of the lack of “firm advance commitment” as to his days and hours, the full bench ruled unanimously that the party’s description of the engagement as casual in a written contract is not determinative.