Union Labour Hire Scare Campaign - Fact Over Fiction

The lack of clarity around what defines “casual’ employment

Fundamental to the work we do is understanding the definitions of permanent, temporary and casual employment. Given the landmark Federal Court decision in August it is now harder still to be able to define where the parameters are.

On August 15, the Australian Full Federal Court handed down its ruling in the WorkPac v Skene case which, subject to any appeal to the High Court or legislative intervention, is expected to have deep and long-lasting ramifications for the employment sector and those we work with and for.

Paul Skene was an employee at a Rio Tinto coal mine in Central Queensland under a labour hire arrangement with WorkPac who had employed him for two-and-a-half years. Skene had been hired as a casual employee.

Under the Federal Court ruling, Skene was found to be entitled to annual leave upon termination of his employment with the court finding that Skene, having worked in a continuous and regular pattern, was deemed as a matter of law not to be a casual employee.

Skene claimed to have been employed on a permanent full-time basis by WorkPac, while WorkPac stated he was employed as a casual employee under section 86 of the Fair Work Act (2009). Section 86 of the Act specifically states that annual leave “applies to employees, other than casual employees”.

Michael Russell, a class actions Partner with Colin, Biggers & Paisley Lawyers (CBP), told RCSA in light of the Federal Court ruling, labour hire firms engaging casuals under long-term arrangements would be wise to take action to mitigate the fundamental risks they now face, particularly with the recent rise of industrial class actions confronting labour hire firms and host employers.

“The decision, which is at odds with some previous case law and the expansion of the gig economy in Australia, has attracted significant controversy,” a paper on the ruling co-written by Russell and some of his colleagues at CBP noted.

“It represents a new wave of industrial relations litigation which force employers, particularly in the labour hire industry, to vigorously defend the classification of casual employees within traditional employment models.”

Russell, who is acting for and advising a number of labour firms and large employers with respect to class action risks, said that in recent months, multiple class action cases have been launched in Australia seeking to challenge the validity of casual employment and enforce "new" rights against labour firms and employers, including payment of leave entitlements. He said this was fundamentally destabilising previously agreed upon working arrangements.

“Several of these cases are backed by the Australian National Union of Workers and are seeking the payment of entitlements alleged to be payable to workers, many of whom are classified either as casual employees or independent contractors,” he said.

“This includes ODCO contracting arrangements where an agency engages workers as independent contractors.”

Russell explained that WorkPac's position in the Skene case was that Skene’s employment should be deemed as being “casual” in accordance with the terms of the Casual or Fixed Term Employee contract he had signed prior to stating work with WorkPac or Rio Tinto. Skene countered that as he was given rosters well in advance, he had a firm commitment of work, negating his casual status.

“The Court disagreed with WorkPac’s submission that there is a uniformly understood specialised meaning of the expression ‘casual employee’ referable to the use of that term in industrial instruments, such as enterprise agreements,” the paper Russell co-wrote stated.

“On the issue of 'double dipping’, whereby employees might receive a casual loading and payment for annual leave entitlements, the Court found there was no evidence Mr Skene was ever paid a casual loading at all.

“In any event, the rationale of the Court was that if employees are correctly classified as permanent, there would be no ‘double dipping', on the basis that there is nothing in the FW Act that requires employees who are not casual employees (and thus entitled to annual leave) to be paid a casual loading.”

RCSA CEO Charles Cameron said the decision paved the way for employees to be deemed a permanent employee while being paid as a casual employee and allowing them to double dip on their entitlements.

“The ability of the Act to be interpreted in this fashion creates enormous uncertainty for business in Australia and highlights the high difficulty that exists for employers in complying with unclear law,” Cameron said.

Mark Laudrum, a Director with RCSA Insurance said the court ruling meant there was now a possible increased risk for litigation against labour hire companies by their staff and companies needed to take steps to mitigate against this.

“Until there is some clearer idea about what constitutes a casual worker - and this is defined by the courts or government - there are more risks that workers will try to make the best of the situation and work for casual rates while also trying to claim leave entitlements,” Laudrum said.

“Business owners should do what they can to limit the impact of such claims. I would suggest engaging risk consultants to look at your business and identify areas where you can insure and protect yourself against the legal costs associated with potential claims.

If you would like to speak with Mark Laudrum about risk consultation and insurance, he can be contacted on 03 9602 3407 or rcsa@ardrossaninsurance.com.au