By Charles Power

A number of recent decisions of the courts and Fair Work Commission (FWC) might require you to review your use of casual employees.

At present there is real doubt as to whether prior casual service is to be counted in calculating a permanent employee’s entitlement to paid leave or redundancy pay entitlements under the National Employment Standards (NES) in the Fair Work Act 2009 (Cth) (FW Act).

The decision a majority FWC Full Bench in AMWU v Donau (2016) suggests you do.

But the later decision of the FWC Full Bench in Unilever v AMWU (2018) suggests you don’t.

Neither decision is authoritative on this question, because each was a decision on the meaning of a particular redundancy clause in an enterprise agreement.

However these conflicting decisions create significant uncertainty.

The imminent commencement of casual conversion clauses in many modern awards compounds this uncertainty.

On 1 October 2018 many awards will include casual conversion clauses.

From this date, if an award-based casual employee has at least 12 months of regular casual employment with you, he or she can request conversion to permanent employment.

So if your casuals convert to permanent employment, do you need to make provision for their service-based entitlements based on their entire service including their casual service?

Based on the current law, I cannot give you an answer.

Enter the Full Federal Court decision in Workpac v Skene (2018).

This decision suggests that a ‘casual’ might not be a casual for certain Fair Work Act (FW Act) purposes if the nature of the employment lacks the ‘essence of casualness’.

According to the Court, if a casual employment relationship under the FW Act must be characterised by the absence of any firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work, and no reciprocal commitment from the employee to the employer.

If this essential feature is non-existent, the employment relationship is likely to be permanent for FW Act purposes – which means the employee will be entitled to NES paid personal leave or annual leave.

The casual conversion clause only applies if the employee has the requisite period of casual service. If they were in fact permanent employees because they lacked the essence of casualness, the clause doesn’t apply. That, of course will provide you with small comfort.

Indeed, there is increasing concern amongst industry about this issue, given that it is estimated that between 61% and 85% of Australia’s 2.6 million casual workers are engaged in ‘regular’ work with an employer.

A recent Senate Inquiry report referred to data that showed 60% of all casuals have been employed in their current jobs for more than a year and 17% for more than five years.

Both the Coalition Government and the Labor Opposition have made commitments to address the issue.

Labor has foreshadowed it will introduce a definition of casual employment into the FW Act. It is likely it will base this definition around the Workpac decision. However, I would expect this definition would only clarify the position for new starters and not resolve the doubt about existing relationships.

In the meantime, you should review your casual engagement contracts and ensure they include words along the lines of:

‘This offer of casual employment does not involve any representation or expectation of continuing work or regular and systematic engagement as a casual. Moreover, you are not obliged to accept any work offered to you.’