Does it Really Matter What You Call Your Employees? The Difference Between a Permanent and a Casual Employee.

The Federal Court found the casual employee worked a regular and continuous pattern of work for more than two years, indicating ongoing employment and therefore, the employee was entitled to annual leave.

The employee was employed as a truck driver in a mine in Queensland. Upon termination of his employment the employee claimed that he was a permanent full-time employee and was entitled to annual leave or payment in lieu. Workpac, the employer, argued that the employee was a casual worker and was paid as such.

What is a Casual Employee?

Whilst the Fair Work Act does not provide a definition of a ‘casual employee’, the legal position prior to Skene was that when an employee was engaged as a casual under a modern award or enterprise agreement, provided that the employment relationship was consistent with the modern award or enterprise agreement, the employee could be a ‘casual.’ However, the Full Court dismissed that approach and held that the determination of whether an employee is a casual must be conducted by assessing “…the real substance, practical nature and true nature of the relationship…” as opposed to adopting the ‘label’ that parties have given to the employment relationship.  Following Skene the Court will examine a number of indicia to ascertain the true substance of the employment relationship including:–

1. Regularity of work;
2. Certainty of work;
3. Continuity of service;
4. Intermittency of work;
5. Predictability of work; and
6. An employee’s ongoing expectation of work.

As a result of Skene, a large number of employees currently described by their employers as ‘casuals’ could in fact be permanent employees. We are yet to hear whether Skene will be appealed.

Key Take-Aways for Employers

1. An employee’s legal status will not be simply determined by reference to how the employee’s position is ‘labelled.’
2. Employers must review the substance of their employment relationships, how their casual employees are engaged in practice and ensure that contractual arrangements reflect the true nature of an employee’s employment.
3. Employees may genuinely commence as casual employees, however can morph into a permanent relationship over time, and notwithstanding that parties may continue to describe the relationship as casual.
4. Do not assume that casual employees are not entitled to benefits afforded to other employees, particularly paid annual leave otherwise you may be liable for payment and/or back payment of employee entitlements associated with permanent employment including annual leave, personal leave, notice of termination, and redundancy.

If you require advice surrounding Employment Law, please do not hesitate to contact Simon Abraham or a member of our Litigation & Dispute Resolution team.