The High Court provides clarity on the entitlements of a casual employee

In 2016, the Federal Circuit Court made a landmark decision which provided a casual employee of the labour hire firm Workpac, with paid leave entitlements. Until this decision it was always an accepted principal that the casual loading paid to casuals was in lieu of any entitlement to paid leave entitlements.

Workpac, in 2018 sought a declaration from the Federal Court, that another one of its employees, who was employed under similar circumstances to the employee in the 2016 Federal Circuit Court decision was engaged as a casual and therefore they did not owe him paid leave entitlements.  The Federal Court however declined to make the declaration sought hence affirming the 2016 decision.

The effect of both the 2016 and 2018 decisions was to put in question if or when a casual employee may be entitled to paid leave in addition to the payment of the casual loading. These decisions spooked many employers, who had significant casual workforces and there has been speculation since then about if employers may face a significant claim for back payment of leave entitlements from employees who they had genuinely engaged and paid as casual employees.  The estimates of the potential back payments nationally was in the Billions.

The most recent amendments to the Fair Work Act, 2009 inserted a definition of a casual employee and this went a long way to clarifying this issue for the present and the future. However, there remained an outstanding issue about if there may be claims for back payment from casual employees engaged prior to the recent statutory changes.  Although the Act sought to make provision to minimise any such risk, those amendments relating to retrospectivity were themselves open to legal challenge.

However, the landmark decision released by the High Court today has finally brought the speculation to an end. The Full Court of the High Court found that a casual employee is one who has "no firm advance commitment" from their employer on the duration of their employment or the days or hours they are to work, and provides no reciprocal commitment.

A full court said the mere expectation of continuing employment on a regular and systematic basis is not sufficient for the purposes of the Fair Work Act, 2009.

This decision in conjunction with the recent amendments to the Fair Work Act, 2009, should hopefully end any speculation on the entitlements of casual employees for the past, the present and the future.

Employers must however ensure that when they engage casual employees that they do so in accordance with the definition of casual employment in the Fair Work Act, 2009 to ensure that casual entitlements are secured.  The Fair Work Act, 2009 and Modern Awards also provide for casual conversion to permanent employment in specific circumstances and employers must ensure that they comply with these obligations in relation to their casual employees.

If you have any questions about your current casual employee’s or how to ensure you comply with the statutory definition in employing new casuals, we are able to assist you. Please contact your usual Mazars advisor or our HR Consulting division on mazarshr@mazars.com.au, 07 3218 3919 or via the form below:

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Author: Cheryl-Anne Laird 

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Published: 04/08/2021 

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