By Charles Power

A lot of our clients are taking the opportunity to review significant legal developments over the recent period and ensure they are doing what they need to address the implications for their business.

‘Casuals’ may be entitled to paid leave

The two Federal Court rulings (Workpac v Skene & Workpac v Rossato) found that a so-called “casual” was entitled to the Fair Work Act (FW Act) paid leave where:

• the employer gave the employee a firm advance commitment to continuing and indefinite work, according to an agreed pattern of work, and
• the employee reciprocated by committing to be available on a continuing and indefinite basis, to perform work according to that agreed pattern.

The ruling doesn’t mean all regular casuals will be entitled to paid leave – the risk only arises where there is a mutual expectation that continuing and indefinite casual work will be offered and this will be worked.

If this mutual expectation exists, options to mitigate the risk include:

• changing rostering casuals to preclude the “firm advance commitment”;
• enabling casuals to convert to permanent employment, and complying with any model casual conversion clauses in applicable modern awards; and
• expressly providing in the employment contract that casual loading is paid to compensate for the absence of FW Act paid leave entitlements (so if leave payments are claimed the loading can be offset against that sum under Fair Work Regulation 2.03A).

Annualised salaries

In early 2020 the Fair Work Commission introduced a model provision into the majority of modern awards imposing new requirements for annualised wage arrangements.

These mean that if an award-covered employee is to be paid a fixed monthly or annual salary to satisfy award entitlements, including base rates, overtime, penalties, loadings and allowances, the employer must:

• make a written agreement with the employee in a prescribed form, stipulating certain assumptions regarding the hours that will be worked;
• keep records of the starting and finishing times of work, and any unpaid breaks taken, which must be signed by the employee, or acknowledged as correct in writing by the employee each pay period or roster cycle, and
• undertake regular reconciliations.

Annualised salary arrangements for award-covered employees have become more onerous.  There is uncertainty as to whether the Award annualised salary provisions need to be satisfied in order to have a simple provision in a contract that stipulates the salary paid is for all monetary entitlements howsoever arising for the hours the employee is worked.

The model award clause requirements were intended to reflect best practice in mitigating risk of underpayment claims associated with use of annualised salaries.

Owner drivers may be deemed employees

A recent Federal Court ruling (Jamsek v ZG Operations Australia Pty Ltd (2020)) challenges the assumption that drivers who use their own truck to provide services are outside the FW Act and Superannuation Guarantee legislation. In this case, the drivers could not use their trucks for other jobs. Any profit and goodwill associated with the use of the company-branded trucks went to the company rather than the drivers. The Court ruled the owner drivers were employees and entitled to significant unpaid leave and superannuation entitlements.

Historical factors probably led to a negative outcome for company – drivers were originally employed but required to purchase the company’s trucks and become contractors to continue working.

Employers should review owner driver relationships and agreements to ensure drivers are free to work non-exclusively and can use their vehicle for other business contracts.