The full bench of the Federal Court has confirmed something important: labels aren’t everything. In fact, the label ‘casual’ may just as well be a dress code.
What the court has confirmed more important is the entire nature of the employment relationship – it is what it is, not what it’s called.
The blurred line between casual and permanent employment has been under the microscope for a little while now in employment law, and I think at times we have all been confused by the charade – for example – many casuals are in fact employed on a stable, regular, and predicable basis even though this flies in the face of what casual employment is supposed to be all about.
The Fair Work Commission attempted to clear things up with the Casual Conversion Clause being added to many modern awards last year. This created an entitlement for casuals who work regular hours with twelve months service to request a conversion to permanent status and employers could refuse but only on reasonable grounds.
But what about casual loading? Hmm. Well the thing about casual loading is those casuals were able to obtain an additional hourly rate (15-25% more depending on the award or agreement) in lieu of entitlements to annual, personal/carers and compassionate leave and public holidays. They were being paid extra to forego the permanent entitlements, right?
For a while a successful defence to any mischaracterisation of employment could have been the casual employee was paid a loading which compensates for the annual leave and entitlements otherwise payable. But two recent cases say that is not enough, and hold that regardless of any loading paid, it is up to the employer to properly characterise the employment or else bear the costs.
The previous 2018 Federal Court decision of WorkPac Pty Ltd v Skene (Skene) essentially held: a rose by any other would smell as sweet, and a permanent employee by any other name can claim back-payment for unpaid permanent employee entitlements. The trick is to look at the nature of the employment relationship, if it is regular, continuous, predicable and certain, then it is probably permanent.
Now here’s the sequel, on 20 May 2020 the full bench of the Federal Court handed down its decision in Workpac v Rossato. Yes. Workpac were back again to get the decision it had really wanted in Skene. Although in fairness, many employers alike were left just as scared and confused after the first decision. To which the full bench now essentially held: didn’t you hear us the first time … now pay up. And here’s why:
- Labels aren’t everything: the court reaffirmed that labelling an employee as a casual, and indeed paying that employee casual loading was not enough to have that employee characterised as casual. The employment relationship must be categorised with regard to the substance and the working arrangements.
- It doesn’t matter if you’ve paid casual loading to an employee: too bad so sad. You can’t get it back because now you have to pay permanent entitlements. Not even as an offset.
Now that the court has confirmed the casual/permanent characterisation is clear as mud, the decision will lead to widespread consequences.
For long term employees: potentially large claims against their employers for back-pay.
For employers: large potential liabilities not previously accounted for – in already crippling economic times.
For many others: a little bit of confusion.
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