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Recent developments in the Federal Court of Australia and Federal legislation will be of interest to businesses that employ casual workers.

The Full Court of the Australian Federal Court handed down its judgment in Workpac v Skene[1] on 16 August 2018.   Mr Skene, with the assistance of his Union, issued proceedings to recover unpaid annual leave entitlements under the National Employment Standards (NES) in the Fair Work Act 2009 (Cth) following the termination of his employment in April 2012.

WorkPac, an employment agency, placed Mr Skene to work at a mine owned by Rio Tinto in Queensland.  He was classified as a ‘casual employee’ in his contract of employment and his total hourly rate of pay was stated to be inclusive of ‘casual loading’.    Nevertheless, the Federal Court found that Mr Skene was a permanent employee.  Key to the decision was that Mr Skene had a predictable work pattern and that he had been provided with an advanced commitment of 12 months’ work.  Consequently, Mr Skene was entitled to be paid NES annual leave entitlements on termination of his contract.

The Full Court observed that it may have been possible for WorkPac to offset the casual loading payments made against the liability to Mr Skene if the casual loading payments had been specifically identified as a financial sum or percentage of pay in Mr Skene’s payslips or other contractual documents.  On the facts, however, no specific identification had been made and Mr Skene was entitled to compensation despite being paid casual loading during his employment.

The decision has clear implications for employers who employ casual workers.  Both WorkPac and the Federal Government expressed concern about the financial implications for businesses.  WorkPac has since commenced proceedings in the Federal Court in a ‘test case’ WorkPac v Rossato[2] to reconsider the decision in Skene.  The Minister, Kelly O’Dwyer, also applied to intervene in that case due to the “concern across Australia’s 3 million small businesses and given the impact it could have on job creation and existing jobs”.

The Federal Government reacted by enacting the Fair Work Amendment (Casual Loading Offset) Regulations 2018 (the Regulations)  on 18 December 2018.  The Regulations provide that where an employer classifies a worker as casual and pays a clearly identifiable amount of money in compensation for the employee not qualifying for an NES entitlement (a casual loading), and it is found that the person was in fact a permanent employee (as in Skene) and a claim for NES entitlements is made by the worker, the employer can seek to have the amounts paid as casual loading taken in to account, when calculating  compensation to which  the worker may be entitled.  The Regulations, in essence, codify in legislation the comments made by the Full Court in Skene.

It is of key importance to businesses that employ staff on a casual basis that casual loading payments in lieu of NES entitlements are clearly identified as a separate sum on payslips, contracts and any other correspondence issued to the casual worker.

Businesses should also be acutely aware, especially as modern working relationships become more fluid, that the true status of a worker will be determined by many more factors than merely the terminology used by the company and worker to define the relationship. If your business regularly employs staff on a casual basis then a specialist review of the contracts and ancillary documents should be sought.

Thomas Miller Law is a specialist law firm with a wealth of experience advising businesses in the transport and marine sector in relation to commercial and employment law issues.

February 2019

[1] [2018] FCAFC 131

[2] [2018] FCA 2100

Author: Paul Lyons, Lawyer
T: +61 (0) 4 2340 2550

Paul is qualified in both England and New South Wales with the majority of his practice being focussed on road traffic, employers liability, insurance and demurrage litigation. Paul has over 13 years experience in private practice in England, including working as an Owner Principal of a specialist law firm; prior to moving to Australia where he worked as a Practice Manager in transport litigation  until he joined Thomas Miller Law in October 2018.  Paul has extensive experience in handling complex and high value litigation.

TM Law Sydney – Marine, Transport and International Trade Team

Alexis Cahalan, Principal Lawyer
T: +61 (0)468 944066

Alexis has been a shipping and transport lawyer since 1987, and is qualified in both Australia and England. After several years with Australia’s two leading maritime and transport law firms, reaching partnership level, Alexis has worked as in-house counsel for international offshore resources and engineering companies and most recently has been a legal and claims specialist for the TT Club, handling litigation and claims for some of Thomas Miller’s biggest insurance clients, as well as providing emergency advice and response for ship owners as a legal correspondent to the UK P&I Club.

Danella Wilmshurst, Principal Lawyer
T: +61 (0)438 012733

Danella has been advising the shipping and insurance industry on maritime and transport law for over twenty years, having been a partner at two of Australia’s leading maritime and transport firms. An expert on wet and dry shipping, freight forwarding and logistics, transport contracts and transactional work, Danella is a Director of the Maritime Law Association of Australia and New Zealand and a Member of the Australian Federation of International Forwarders. She has taken several complex cases through litigation or arbitration, ranging from charter party disputes to oil pollution, and has an international reputation for her expertise and sound guidance to the industry.

Janine Liang, Marine & Transport Lawyer
T: + 61(0)2 8262 5854

Janine is qualified in Singapore and New South Wales. After graduating with a First Class Honours from the National University of Singapore, she began practice in the shipping department of one of Singapore’s largest law firms. Janine worked in one of Sydney’s leading transport and insurance law firms before joining Thomas Miller Law in 2018. She has handled a variety of litigation and arbitration matters, including charter party, insurance, and cargo disputes. On the non-contentious side, Janine has experience advising on documentation such as procurement, trade finance, and employment contracts. Janine is a fluent speaker of Mandarin.

Hamish Cotton, Aviation & Marine Lawyer
T: +61(0)2 8262 5800

Hamish joined TM Law’s Sydney office in 2017 with over twenty years of experience in insurance claims, initially employed in private practice as a solicitor in Australia then England before moving to in-house management roles. Working for and on behalf of international insurers based in the City of London including Lloyds, dealing with Aviation, Marine , Financial, Casualty, Professional Indemnity, Construction & General Insurance matters. Hamish is admitted as a solicitor in Queensland, New South Wales and England and Wales. A qualified commercial pilot, he is also a member of the Aviation Law Association of Australia and New Zealand.