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Why you need to review your Employee Contracts

In the final week of August, the Full Federal Court handed down a watershed decision in the case of Workpac Pty Ltd. V Skene 2018] FCAFC 131 which may impact the large number of employers, who engage casual workers.

This case has created some hysteria among so called experts but its important to note the facts

Principles

The provision of casual loading or the description of a worker as ‘casual’ is not decisive as to a workers’ status as being casual. The question of whether an employment arrangement is casual in nature is a question of substance, not form. It must be assessed on a case-by-case against a range of indicia

Facts

Mr. Skene was engaged as a casual employee by Workpac Pty Ltd, a labour-hire company, to work on an assignment as a “fly in, fly out” truck driver at a coal mine operated by Rio Tinto in remote Queensland. Mr. Skene’s letter of offer confirmed his casual employment status with WorkPac, stating that it was an “Offer of Casual Employment” for an assignment of 3 months. A transitional industrial agreement also categorised him as a casual employee.

During his engagement, Mr. Skene worked a 7 days on / 7 days off continuous roster which was regular and predictable and set months in advance. The work was continuous (except for one period of 7 days’ unpaid leave arranged directly with Rio Tinto), his fly in/fly out arrangement and accommodation was fully paid for, he was expected to be available to Rio Tinto on an ongoing basis, his work did not fluctuate and his hours of work were regular and certain, which was reflected in Mr. Skene’s pay slips.

Mr. Skene’s rate of pay was a flat rate per-hour which was not expressed to be inclusive of casual loading and was not set off against any minimum entitlements payable under the NES or the workplace agreement. The assignment continued for just under two years..

Decision

The Full Court found that while Mr. Skene’s employment contract clearly stated that the engagement was “Casual Employment”, Mr. Skene was not a “casual employee” at law for the purposes of Annual Leave entitlements under the National Employment Standards contained in the Fair Work Act.

On an objective assessment, Mr. Skene’s work was ‘regular and predictable’, ‘continuous’, and it was ‘not subject to significant fluctuation.’ There was an expectation that Mr. Skene would be available, on an ongoing basis, to perform the duties required of him in accordance with his roster which was set months in advance. The fact that Mr. Skene himself considered that he was a casual employee, that he was paid by the hour and that his employment could be terminated on one hour’s notice, while indicative of casual employment was not determinative.

Accordingly, Mr. Skene was entitled to Annual Leave or be paid an amount in lieu of that leave entitlement. As WorkPac had failed to meet those entitlements, it was liable for compensation payable to Mr. Skene as well as for pecuniary penalties. The amount of compensation and level of penalty was remitted to the Federal Circuit Court for re-determination.

Why This Case Is Important

This case calls for a rethink on the classification of workers as casual by setting out a range of factors to consider in determining if a worker is indeed casual:

Whether the work is regular and predictable
Whether the employment is continuous
Whether the working hours are subject to significant fluctuation
Whether employment can be swiftly terminated.
Unlike casual employees, permanent part-time employees are entitled to paid Sick Leave, and Annual Leave. Even if a worker only works one day per week, while this may not be a significant amount of leave, it is still a liability that a business has not accounted for. Separate to failing to make provision for this liability, the failure is provide Annual Leave is a serious contravention of the Fair Work Act worthy of an imposition of a financial penalty.

If having weighed these factors there is still uncertainty surrounding a worker’s classification (i.e. casual versus permanent part-time), advice should be sought.

At Stellar Profits we assist employers in having good systems in place to ensure employees are paid correctly. Call us today on 02 9191 7307 to find out more

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Single Touch Payroll – What you need to know

A recent study shows 75% of businesses aren’t ready for Single Touch Payroll. Here’s what you need to do to be ready.

Single Touch Payroll (STP) is mandatory for ‘substantial employers’ (those with 20 or more employees) from 1 July 2018.

Count the employees on your payroll on 1 April 2018:

First of all you need to do a head count of your employees at 1 April. (more…)

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