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Australia – Landmark Federal Court ruling grants casual workers annual leave entitlements

20 August 2018

The Federal Court of Australia last week ruled in favour of a Queensland truck driver employed at a Rio Tinto mine by labour-hire firm Westpac.

The Court found that the truck driver was not a casual worker under employment law due to his regular and continuous pattern of work and that he was to be entitled to be paid accrued annual leave on termination of his employment.

The landmark ruling could have wide-reaching effects for casual employment in Australia and could mean that many current employees who are considered casual could be permanent employees.

According to smartcompany.au, the employee, Paul Skene, had been terminated by the company after working there for nearly four years in a casual position. Upon the end of his employment, the Skene felt his work with the company was akin to regular employment, due to his work being 12.5-hour shifts in “a seven days on, seven days off continuous roster arrangement”.

Skene then took the labour-hire company to court, claiming he was owed approximately AUD 21,000 (USD 15,336) in annual leave, along with approximately AUD 7,000 (USD 5,112) in interest.

Despite the company adamantly claiming that Skene was a casual employee under the Fair Work Act, the full bench of the Federal Court found otherwise and ruled in favour of the truck driver.

Under the Fair Work Act, a casual employee is not entitled to annual leave which permanent employees receive, however, the Act does not provide a definition of a casual employee.

The case, which was brought by the Construction, Forestry, Mining, Maritime and Energy Union (CFMMEU), opens the door for others who’ve been employed as so-called casuals to make claims for unpaid leave entitlements.

The Australia Council of Trade Unions responded to the decision with ACTU President Michele O’Neil commenting, “This is a major blow for employers who want to use casualisation to avoid their responsibility to their employees. This decision makes clear that employers seeking to avoid paying people’s entitlements can’t simply rely on classifying workers as casuals.”

“We need to change the rules around casual employment so that employers aren’t able to deny people their rights for years on end,” O’Neil said. “This case ran in the courts for four years before today’s decision was made. These cases are long and expensive. Working people need fast efficient access to justice and the rules should be changed to make this happen." 

CFMMEU mining division nat­ional president Tony Maher said the decision meant casual workers were entitled to be paid leave if they worked in ongoing, regular arrangements.

“The labour hire industry has thrown substantial resources at overturning this decision because it employs many thousands of workers as casuals in the coal mining industry under similar circumstances to Mr Skene,” Maher said.

Meanwhile, Skene told The Australian “a great result for labour-hire workers, who should be getting the same entitlements as full-time employees”.

Recruitment & Consulting Services Association of Australia & NZ chief executive Charles Cameron said the decision was a "kick in the guts" for business confidence.

“It paves the way for casual employees to ­‘double-dip’ on their entitlements, enabling them to accept a casual loading in lieu of permanent employee benefits but then still legitimately claim a right to the very leave they accepted the loading in place of,” Cameron said. “This essentially creates a new ‘super employee’ category that has not existed previously, nor do we believe it was ever the intent of the then Australian Labour Party government lawmakers to create.”

Australian Industry Group chief executive Innes Willox also commented, “The interpretation of the Fair Work Act that the Federal Court has adopted is inconsistent with industry practice and will potentially lead to a great deal of uncertainty for businesses.”

Willox called on federal parliament to protect businesses and jobs by changing the legislation to clarify that an employee engaged as a casual and paid as a casual was a casual for the purposes of the act.

In its decision, the Court held that the determination of whether an employee is a casual must be conducted by assessing “the real substance, practical reality and true nature of the relationship” as opposed to adopting the description the parties have given to the relationship.

The Full Court endorsed the notion that, for an engagement to be considered casual: there should be no certainty about the period over which the employment is offered; and there should be an informality, uncertainty and irregularity about the engagement.

The Australian Financial Review added that the decision comes as Hunter Valley (New South Wales) mining companies have been subject to class actions by Australia-based employment specialist law firm Adero Law over claims hundreds of workers hired as casuals should have been permanent staff.

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