The dangers of taking a ‘casual’ approach to employment status

Incorrectly assuming that an employee is a casual, rather than a full time or part time employee can be a very costly mistake, as a recent Federal Circuit Court decision has again highlighted.

Apostolidis v Mantina Earthmovers & Constructions Pty Ltd

The facts

Mr Apostolides was employed for 15 years as a crushing plant operator at a quarry in South Australia. The circumstances of his employment were as follows:

• He had no written employment contract.
• He neither received nor requested paid leave or payment for public holidays not worked.
• He was described as a ‘casual’ in the company’s payroll system and on a company reference provided when he applied for a loan.
• He was paid above the applicable minimum full time award rate, but not 20% more, and there was no reference on his payslips or other documentation to a casual loading.
• He consistently worked 38 hours per week plus substantial overtime. For his last 8 years of employment, an Australian Workplace Agreement (AWA) applied which left the ‘Employment Category’ field blank.

The claim

Following his dismissal, Mr Apostolides claimed that he had been a full time employee throughout his employment and was entitled to unpaid accrued annual leave and payment in lieu of notice2. The employer maintained that he was a casual employee.

The result

The Federal Circuit Court found the witness evidence of both parties to be unreliable and concluded that, objectively, both parties regarded the employment as casual at the time but their views were not determinative, especially as they were ignorant of the terms of the applicable award and AWA.

Judge Young concluded that Mr Apostolides was a permanent employee ‘by force of statute rather than contract’3 based on the following:

1. The pre-modern Award (Quarrying Industry Award) provided under the heading ‘Weekly Hired Employment – Full time and Part Time’: ‘the contract. of every employee will in the absence of a contract in writing to the contrary, be deemed to be a contract of hiring by the week’. Under the heading ‘Casual Employment’ it provided, amongst other things, that a casual employee ‘is one engaged and paid as such’ subject to certain conditions, including that casuals may be employed to cover absence of full time employees on leave or to fill a special short-term need. Based on these definitions, Mr Apostolides was a permanent not a casual employee.
2. The later AWA, which overrode the award but did not define the employment as casual or permanent and was otherwise ambiguous. It defined ‘full time permanent employment’ as an employee who is ‘employed on a permanent basis and [is] required to work an average of 38 hours a week plus reasonable overtime’ and a casual employee as ‘an employee who is engaged as a casual employee and whose hours of work are subject to the employee’s availability to work and the Company’s need for their services.’ Mr Apostolides satisfied the permanent employee definition as he:2.1 worked full time hours on a regular and consistent basis, was a skilled worker who performed an important role2.2 was never told not to come to work or that he was not required because of operational requirements2.3 although he was paid above the full time award rate, there was no evidence he was paid casual loading of a particular amount

Mr Apostolides was therefore entitled to 15 years’ worth of accrued annual leave and payment in lieu of notice (interest remains to be determined). The Court declined to impose a penalty as it was satisfied that there had been no deliberate breach of the National Employment Standards.

Telum Civil (Qld) Pty Limited v CFMEU4

In another important decision on the meaning of casual employment, a Full Bench of the Fair Work Commission (FWC) rejected a claim for redundancy pay by employees who were engaged as casuals, paid a casual loading but had worked regular ‘full time’ hours, were expected to attend work every day and had done so for over 12 months.

The Full Bench noted that the Fair Work Act (FW Act) does not define ‘casual employee’ but clearly contemplates that a casual employee can be engaged on a regular and systematic basis. It found that references to ‘casual employee’ in the FW Act means a casual employee as defined by the relevant industrial instrument. In this case, the relevant enterprise agreement defined a casual as someone who is ‘engaged and paid as such’ and who is entitled to payment of a casual loading. The employees met the definition and were therefore excluded from the entitlement to redundancy pay by s123(1)(c) of the FW Act.

This decision was endorsed by a subsequent Full Bench which stated that modern awards (and enterprise agreements) displace the common law for the purposes of determining whether an employee covered by that instrument is a casual5.

Willams v MacMahon Mining Services Pty Ltd6

In the case of award/agreement free employees however, the common law principles concerning what constitutes a casual will apply, which are essentially that a genuine casual employee works on an as needed basis and does not have a regular pattern of work or expectation of ongoing employment.

The leading case applying these principles concerned a fly in/fly out employee who worked twelve hour shifts on a two week on/one week off roster at a WA mine site for just over one year. His employment contract described him as a casual and contained a flat hourly rate of $40, which was expressed to include a loading in lieu of all leave entitlements.

In finding that Mr Williams was not a casual employee and was therefore entitled to accrued annual leave on termination, the Federal Court held that ‘His engagement was not for the performance of work on an intermittent or irregular basis. The future was provided for. The nature of the work required was stipulated. A roster was in place which made clear the regularity of the employment…’  All of these factors pointed to an employment arrangement which was not casual. The Court also said that the contract entered into by the parties which described the employment as casual did not override the true legal relationship that arises from a full consideration of the circumstances of the employment.

In a further blow to the employer, the Court ruled that it could not offset the casual loading against its annual leave liability, and the annual leave liability was to be calculated on the loaded rate.

Lessons for employers

These decisions are a sober reminder of the need to:

• pay careful attention to how any applicable award or enterprise agreement defines casual and permanent employees and consider how this applies to your business
• ensure that casual employees have a letter of offer / contract which clearly specifies their employment status, casual loading (with an appropriate offset clause), leave entitlements and that there is no guarantee of ongoing employment or any particular hours of work
• be mindful of the risks of a ‘casual’ employee working ‘full time hours’ on a regular and systematic basis, particularly over a lengthy period and where they perform skilled work
• periodically review the status of ‘casual’ employees to ensure they are properly characterised and accurate records and leave accruals are maintained (and ensure this is included in the due diligence process if you are acquiring another business)

It is also important to remember that casual employees can be entitled to long service leave, overtime penalties, parental leave, the right to request flexible working arrangements and protection from unfair dismissal. Ensure that you comply with any award / agreement casual conversion obligations (and keep documentary evidence of this). If a casual employee does become a permanent employee, note that periods of regular and systematic employment as a casual immediately preceding permanent employment may count towards service for redundancy and notice entitlements.7

Other developments regarding casuals

Employers should also be aware of the following developments:

• the FWC recently determined that modern awards should be varied to include casual conversion and minimum engagement clauses where they did not previously contain them (the variations are yet to be made)
• the FWC has published a ‘provisional’ model term which would extend the right to request flexible working arrangements to casuals who have been engaged on a regular and systematic basis for at least 6 months and have a reasonable expectation of continuing employment
• the entitlement to 5 days unpaid domestic violence leave to be introduced in awards will also apply to regular casuals (the Federal Government announced it would extend this to all federal system employees)
• the ACTU’s policy pitch for the next federal election will include an absolute right for casuals to convert to permanent after 6 months (rather than a right to request which the employer may refuse on reasonable grounds after consultation with the employee) and limit the ability to employ casuals to ‘very exceptional circumstances…of a temporary nature’
• if you engage casuals through a labour hire company, you must ensure your provider is/will be compliant with the new labour hire licensing laws in place in Queensland and South Australia and proposed to be introduced in Victoria.

If you would like advice or assistance with any issues concerning casual employees, please contact a member of our Workplace Relations team.

1. [2018] FCCA 279 (7 February 2018)
2. Before the trial the employer paid the employee long service leave.
3. This phrase was adopted by the High Court in Byrne v Australian Airlines (1995) 185 CLR 410, pp421-422.
4. [2013] FWCFB 2434
5. Ill Migliore v Miss Kelly McDonald [2013] FWCFB 5759.
6. [2010] FCA 1321
7. AMWU v Donau Pty Ltd [2016] FWCFB 3075 (15 August 2016)