Let’s keep it casual: “Casual” employee entitled to annual leave after 15 years of service

For roles that do not require fixed hours or only require staff “as needed”, hiring casual employees is a favoured option of many employers.

The benefit of hiring casual employees is that it provides both the employee and employer with flexibility. Casual employees are engaged to perform work on an ad-hoc basis and do not generally have fixed or regular hours, there is also no guarantee of ongoing employment and the employment relationship technically ends at the conclusion of each engagement.

As a result, casual employees are not entitled to many of the benefits that permanent employees normally have, such as paid annual leave and personal/carer’s leave. To compensate for this, casual employees receive a casual loading on top of their hourly rate of pay.

Issues arise however when casual employees are engaged on a long-term basis, have regular and systematic hours and a reasonable expectation of ongoing employment. Many such scenarios develop because the nature of the employment relationship might change over time. In these circumstances, casual employees may be found to be permanent employees and therefore eligible to make claims for entitlements such as annual leave and unfair dismissal.

A recent case before the Federal Circuit Court of Australia (FCCA) has shown the importance of regularly reviewing casual engagements and ensuring that contracts and pay records reflect the correct type of employment.

In Apostolides v Mantina Earthmovers & Constructions Pty Ltd [2018] FCCA 279, the FCCA found that a crushing plant operator was entitled to payment for annual leave accrued but untaken during his 15 years of service, as well as payment in lieu of notice following the termination of his employment in August 2015 – despite the employer’s arguments that he was a casual employee.

In addition to the claims for underpayment in the proceedings, the employee also claimed that his employer had engaged in adverse action and discrimination in relation to the termination of his employment (which had come about as a result of his sustaining injury).

Whilst the FCCA rejected the claims alleging adverse action and discrimination, it did find that the employee was a permanent employee and therefore entitled to payment for accrued by unused annual leave and an amount in lieu of notice upon termination of employment.

The employee had argued that throughout his employment, he was expected to and did work at least 38 hours each week plus reasonable overtime, in a role that was integral to the operation of the company. 

The employer argued that the employee was paid an amount over and above the applicable award or agreement rate, which was equivalent to a casual loading. However, it was unable to provide any, or any satisfactory evidence that the over-award amount was a casual loading. There was no written contract governing the employment relationship and the employee’s payslips made no reference to the employee being a casual employee or that he was paid a casual loading.

The FCCA noted that the employee had never been paid for work on public holidays and that it was “implausible” that he would not seek to take annual leave in the 15 years he was employed, which indicated that he had implicitly accepted a casual employment status. However, whilst both parties appeared to have operated under the assumption that the employee was a casual employee, this was not determinative of the actual employment relationship. The FCCA accepted the employee’s evidence that he had worked full-time hours and reasonable overtime and had never been told that he was not required for work at any time prior to his dismissal.

Having regard to the provisions in the applicable industrial instruments as well as the actual nature of the employee’s engagement, which was long-term, regular and systematic, it was determined that the employee was at all times a permanent employee and therefore entitled to payments upon the termination of his employment.

The employee’s claim for the imposition of civil penalties was rejected on the basis that both parties had been ignorant of the legal relationship and there was no exploitation or deliberate breach of the employment terms by the employer.

Lessons for employers

Employers must ensure that their engagement of casual employees is in accordance with any applicable awards or agreements, and that this is accurately reflected in any employment contracts and pay records. It is equally as important to regularly review casual employment relationships, particularly long-term casuals, to ensure that they are properly characterised throughout the entire employment relationship.

Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

02 9256 7500 | sydney@workplacelaw.com.au

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog.

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