A landmark decision of the Federal Court (Full Court) has found that a casual employee was actually a permanent employee and was therefore entitled to annual leave payments.
The employer argued that the employee was casual and not entitled to the related entitlements of a permanent employee. Despite the fact that the employee’s employment contract stated that the employment relationship was casual (and a loading for leave and public holidays was built into his wages), the Full Court found that he was not a casual employee for the purposes of the Fair Work Act. The employee’s work was regular, predictable, and continuous and was not subject to significant fluctuation.
The employer was therefore liable to pay both compensation for its failure to meet the employee’s entitlements to annual leave and penalties in respect of that failure.
Next steps
As a result of this decision, we recommend employers:
- Review all casual employees to ensure that over time the characteristics of their employment have come to reflect those of an ongoing part-time or full-time employment;
- Consider carefully the classification of employees from the outset and ensure employment contracts reflect the appropriate type of employment (i.e. permanent part time or full time or casual);
- Regularly monitor your casual workforce, particularly any long term casuals employed on a “regular and systematic basis”; and
- If necessary, convert long term casuals to permanent employment in order to mitigate the risks of claims for entitlements associated with permanent employment.
If your business requires assistance with properly classifying any long term casual employees, please contact us.