A court ruling on a casual worker’s ability to claim permanent employee entitlements has sparked warnings for all employers to be alert to their staff rostering or face the prospect of backpaying entitlements.
Several recent industrial relations cases have brought a range of standard operating rules into the spotlight, as differing interpretations of non-specific laws create headaches for employers.
One such case involved the definition of “days” when calculating sick leave provisions, with standard practice being 7.5 hours per day, regardless of how many hours are actually worked as part of a normal day.
Now a separate Federal Court verdict has thrown up question marks over the definition of a casual employee.
Workplace relations advisory firm HR Assured issued a written warning that a recent verdict “creates an enormous challenge” for employers Australia-wide.
“The recent decision of the Full Court of the Federal Court in the matter of WorkPac v Skene creates an enormous challenge for Australian businesses, and has led to fears of significant liabilities for the back payment of wages arising from the engagement of casual employees,” the firm said.
“In this matter, the Full Court of the Federal Court held that a labour hire casual who worked regular and predictable hours was a permanent employee at law, and was therefore entitled to paid annual leave, and other permanent employment rights, despite WorkPac paying him as a casual.”
According to the statement, “While a valid Casual Contract of Employment would go to identifying the intentions of the employee and employer at the commencement of the employment relationship, the Full Court importantly held that the provision of an agreed and continuous pattern of work can demonstrate a contrary intention to that contained within the employment contract, and in certain circumstances give rise to a permanent employment relationship.”
In handing down its verdict, Mr Skene was awarded $21,000 in compensation and an additional $6,700 for accrued annual leave, HR Assured said.
“This decision has resulted in understandable concern from employers engaging casual employees who fear it may result in a significant volume of claims from employees challenging the status of their engagement and seeking the back payment of permanent employment entitlements such as annual leave, redundancy and notice of termination,” it said.
“With employees having six years in which to raise a claim, the decision provides both current and former employees with an opportunity to pursue a claim of this type.
“It is important to note that the decision does not require employers to begin backpaying current casual employees, nor does it mean that all casuals are now entitled to annual or personal leave.
“For casual employees who work a consistent number of hours each week, with little or no variation in the days worked or start and finish times, the risk is significant. At the other end of the scale, casuals who work irregular hours, with changes in the number of hours and times when those hours are worked, there is very little risk of deemed permanent employment.”
HR Assured suggested that a “large proportion” of casual workers in Australia operate somewhere in the middle of this spectrum, creating a great deal of uncertainty in the marketplace, which could lead to a wave of new judgements to determine where the law actually sits.
“With a recent announcement that casual employees in the mining industry commencing a class action against a mining company, and one of Australia’s leading labour hire companies, concerning the misclassification of workers engaged as casuals, this issue is likely to escalate,” it said.
“Given the serious ramifications arising from this decision, many leading business and employer groups have called upon the government to legislate to remove any ambiguity which may exist with the engagement of casual employees and avoid employees effectively ‘double-dipping’.”
However, if more workers were successful in claiming they had been wrongly classified, the casual loading already paid would need to be factored in.
This could potentially reduce any amount of backpay or even negate a claim – and possibly even warrant a refund to employers in instances where a short period of employment meant the loading was more valuable than the accrual of permanent employee entitlements like annual leave.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.