Are casual employees entitled to paid annual leave?

3 min read ·  

The Australian Federal Court decided, for the second time in two years, that an employee of Workpac was entitled to paid leave even though Workpac had classified the employee as a casual.

The case doesn’t mean that all casual employees in Australia are automatically entitled to the same leave benefits as permanent employees. However, you do need to understand the decision to avoid the same traps as Workpac.

What does the Fair Work Act say?

Under the Fair Work Act, casual employees in Australia aren’t entitled to some benefits of permanent full-time or part-time employment (e.g. annual leave, sick leave, carer’s leave). The problem is that the Act doesn’t define when someone will be a casual employee. In the recent Workpac decision, the Federal Court had to interpret what the Act means by the term “casual employee”.

Hasn’t the Fair Work Commission decided this already?

Under virtually all modern awards, and many enterprise agreements in Australia, a casual employee is anyone “engaged and paid as such,” or some similar phrase. This expression has resulted in many employers reasonably thinking that an employee is a casual, and so not entitled to paid leave, if they are paid a casual loading and clearly engaged as a casual worker. However, the Federal Court had already decided in an earlier case involving Workpac that an employee was not a casual employee under the Act just because they are a casual employee under a modern award or enterprise agreement.

When is someone a casual employee under the Act then?

This is still pretty murky, just like the distinction between independent contractors and employees. 

The Federal Court set out a list of imprecise factors that they use to help guide their decision. The closest a judge came to a definition of casual employee under the Act is “an employee who has no firm advance commitment from her or his employer to continuing and indefinite work according to an agreed pattern of work”. In the Workpac case, the employee was not a casual employee under the Act because:

  • his contracts said he was a casual employee, but also guaranteed (for both his and Workpac’s benefit) that he would turn up to work 38 hours per week. The description of his employment as “casual” in the contract was overtaken by other clauses that pointed to him being a permanent employee; and
  • practically speaking, he had a regular roster pattern in the mining industry that was set well in advance.

What should I be looking for?

Casual employment in Australia usually has most or all of the following characteristics:

  • no employer promise (e.g. in the employment contract) to engage and pay the employee;
  • likewise, no employee promise to perform work if that is offered by the employer;
  • engagements of the casual employee that are irregular, unpredictable, uncertain, discontinuous and intermittent;
  • employment “by the hour” (e.g. paid an hourly rate, with the employment terminable on an hour’s notice).

Employers use Tanda to help identify these key considerations. Its compliance features confirm how far in advance each shift was rostered, how consistent an employee’s earnings have been, and how regular their working patterns are.

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