There has been yet another ruling on casual employees being deemed by the court to be permanent employees, and to add to the sense of déjà vu, this second case also involves the labour hire company Workpac.  This Rossato case builds on the previous Skene case in deeming the Workpac employee, who was hired out to various mines in a labour hire arrangement, to in fact be a permanent employee of Workpac.  The determining factor in this case has been the firm commitment in the contracts to future engagements and the practice of exclusively directing labour and time.  The similarities do not stop there, much like in the Skene case this case has drawn sensationalist headlines, and as a result, caused panic among employers.  So, headline grabbing aside, what does it mean for employers in the fuel industry?  Are all casuals now permanent staff?

The short answer is…no.

The longer answer is that this and other recent cases have continued to highlight the importance of understanding the requirements around compliant engagement and management of staff, particularly casual staff.  ACAPMA has repeatedly communicated to members on the subject of engaging casuals including in the context of the current focus, as well as the practices that businesses should be undertaking now, to ensure they are getting their engagements right.

Case Review

The reason for the high level of current discourse on casual employment is a series of cases (some still ongoing) that have resulted in the deeming of an employee to be a permanent employee.  As part of the deeming the employee became entitled to retrospective annual leave, sick leave and other entitlements, which were not offset by the previous payment of the casual leave loading.  The employee in question received the casual leave loading AND a judgement for the payment of unpaid leave and entitlements that they would have received if they had been a permanent employee. 

The key to the employee being deemed to be permanent is that, despite the contract identifying the employee as a casual, the contract also included a firm commitment to ongoing employment, in the form of end dates and the business behaved in line with these end dates – effectively rendering the first reference to the status of the employee as a casual as void, because they treated the employee as a permanent – expecting his whole labour to be directed where they directed it at all times through the specified length of the contract.

The key to the employee being awarded the payment for entitlements to leave in addition to being allowed to keep all of the casual leave loading that he had been paid in the course of his employment is a bit more complicated.  Had there been a legislative provision that clearly stated that the casual loading is designed to offset the lack of paid leave then the Workpac would have had a much easier time in convincing the court that the casual loading should be used to offset the unpaid leave entitlements if the employee was found to be a permanent employee – however there is no such legislative provision.  Similarly, if the contract had clearly stipulated this then it would have been easier for Workpac to argue the connection between casual loading and the entitlements.

It is worth noting that this case, and its predecessors, are on the radar of the Government, and options to ensure that there is more clarity, particularly in the area of offsetting the casual loading against any unpaid entitlements in the future, should the employee be deemed to be permanent, is underway.

What does it mean for businesses now?

This case has caused a flurry of activity and comment, as the Skene case did, and lead some commentators to state that there was no such thing as a casual employee any more.  While such statements are certainly exciting, they miss out on several very important elements of the case itself, and further they fail to understand some of the very particular realities of operating in the downstream fuel industry.

ACAPMA has explored this in detail online; https://acapmag.com.au/2018/09/industrial-ruling-on-regular-casuals-causes-uncertainty/, and herehere, and here , here and in Townhall sessions on engaging casuals.

While the facts of the case, and the particular failings of compliance that occurred, including clear mention of casual status on engagement documents alongside a clear commitment to future engagement in the form of a fixed term contract (it is this clear future commitment that was the deciding factor in this case), it is worthwhile to examine the questions that it has raised, questions such as;

  • Are long term casuals allowed to be engaged?
  • What is a regular casual?
  • What are the business responsibilities in compliantly engaging casuals?

Are long term casuals allowed to be engaged?

Despite all of the sensational media comments, the short and easy answer to this question is; yes.  Like most short answers however, there is a caveat, that is, long term casuals are allowed to be engaged, but the business has to ensure it has taken steps to ensure appropriate and compliant engagement.  We will explore this more shortly.

The reason for such an easy answer is simple, long terms casuals are allowed to be engaged, because the modern awards provide clearly and explicitly for the ongoing engagement of long term casuals.

In the downstream petroleum industry we are familiar with the term Casual Conversion Clause.  Within both the award that applies to petroleum transport (Road Transport and Distribution Award 2010) and the award that applies to petroleum retail (Vehicle Manufacturing, Repair, Service and Retail Award 2010), a clause exists outlining a requirement for the business to, once a casual employee has been engaged on a regular ongoing basis for a particular period, remind the employee that they have the right to elect to convert to permanent.

Importantly, in the effort to answer if long term casuals are allowed to be engaged, it is noted that these Casual Conversion Clauses provide for a process whereby the employee can (either through act or omission) elect to remain a casual.

This means that there is a provision, within the award, that recognises that after a qualifying period of regular engagement a casual has the option to elect to convert to permanent, however, by allowing for the employee to elect to remain casual this is clear evidence that it is in fact possible and allowable to engage casuals over a long term period.

What is a regular casual?

ACAPMA is often asked, when applying these Casual Conversion Clauses, what is a regular casual.  This is because the two particular Casual Conversion Clauses in petroleum transport and retail apply to “a casual employee, other than an irregular casual”.  

Irregular Casual is defined as someone who works on  “an occasional, non-systematic or irregular basis”.  Giving rise to the question What is a regular casual?.

ACAPMA is often asked if a regular casual is an employee who has been continually engaged, or is it an employee who works a similar number hours each week, or is it an employee who works the same hours and days each week.

This is a question that did not have a universal answer, and arguably still does not, however on 1/10/2018 a Casual Conversion Clause was inserted into 85 modern awards (that did not previously have such a clause, including the Clerks-Private Sector Award 2010) and it includes a definition of regular casual;

(b) A regular casual employee is a casual employee who has in the preceding period of 12 months worked a pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to perform as a full-time employee or part-time employee under the provisions of this award.

This definition adds clarity around when an employee becomes regular, and when it would be appropriate to apply the Casual Conversion Clause.  The reference to ongoing basis, covers the continual engagement of casuals.  The reference to a pattern of hours allows for changes to hours week to week to still be considered regular.

The take home for businesses is; that if they have had an employee on their rosters as a casual for a year or more, they should be considering them a regular casual, regardless of alterations to the hours or days worked.

What are the businesses responsibilities in compliantly engaging casuals?

As outlined it is possible to engage casuals, and for a long term, however it must be done compliantly.

Like all engagements of staff there are a few requirements under the law and more under the particular award;

  1. Communicate to the employee their employment status (permanent/permanent part time/casual) on engagement
  2. Communicate to the employee the employment instrument (award/Enterprise Agreement) on engagement
  3. Communicate to the employee what the leave entitlements are and what the pay rate includes – for casuals this would include communicating that “as a casual employee you are not entitled to paid annual leave, however you have been provided with a casual loading that is constructed to offset the loss of this entitlement” – it is worth noting that had Workpac had such a clause in their contract it would have been easier for them to argue that any casual loading previously paid should have been used to offset any leave entitlements if the employee is deemed to have been permanent)
  4. Pay required rates associated with status (permanent rate for permanent staff/casual rate for casual staff).  While not a requirement, it is considered ideal for the payslip to also communicate status as well as to display status in the rates – eg 12 x Base Rate + Casual Loading or  12 x M-F Casual Rate (includes casual loading)   
  5. Follow the Casual Conversion Process outlined in the relevant award

As with all employment documents and records evidence of same should be kept and be accessible.

BONUS QUESTION: What does following the Casual Conversion Process look like?

As outlined above the Casual Conversion Process differs from award to award.

Under the historic Casual Conversion Clauses – in the Road Transport and Distribution Award 2010 and the Vehicle Manufacturing, Repair, Service and Retail Award 2010;

  • Where the business has a regular casual who has been engaged for the minimum period the business must, within 4 weeks of the employee meeting the minimum period, give the employee notice in writing of the operation of the Casual Conversion clause and essentially remind the employee that they have the right to elect to convert to permanent status.
  • If the employee does not respond in writing with a request to convert to permanent, then the employee is taken to have elected to stay a casual
  • If the employee responds in writing with a request that they would like to convert to permanent, then the business must formally respond and must not unreasonably refuse the request.  Any refusal must be on genuine business grounds.

It is important to note that if the employee decides later to request to convert the business must still formally respond and must not unreasonably refuse the request.

It is also important to note that even if the business has not sent the written communication the employee retains the right to request to convert.

Failure to undertake the Casual Conversion Process is a breach under the law and can result in penalties for the business.

Under the new Casual Conversion Clauses – in the Clerks – Private Sector Award 2010;

  • Within 12 months of employment, the business must provide all casual employees, regular and irregular, with a written copy of the provisions of the clause
  • If the employee does not respond in writing with a request to convert to permanent, then the employee is taken to have elected to stay a casual
  • If the employee responds in writing with a request that they would like to convert to permanent, then the business must formally respond.  The business may refuse the request, but only after consultation with the employee and the refusal must not be unreasonable, and the reasons must be communicated in writing within 21 days of the request being made.  If the employee rejects the reasons for refusal then a dispute at the Fair Work Commission can be raised .

It is important to note that if the employee decides later to request to convert the business must still formally respond and must not unreasonably refuse the request.

It is also important to note that even if the business has not sent the written communication the employee retains the right to request to convert.

Failure to undertake the Casual Conversion Process is a breach under the law and can result in penalties for the business.

Next Steps

It is clear that, given the provisions in the awards, that the notion that there is no such thing as a casual anymore, is nonsense. 

There is provision within the award for casuals to be engaged, for the casuals to be reminded of the option to convert to permanent after a qualifying period…option…the Casual Conversion Clauses, explicitly and implicitly state that the regular casuals that the clauses apply to, cannot be forced to convert to permanent, they can continue to be engaged as casuals, but the business has a responsibility to ensure that this is a reflection of a genuine choice by the employee based on their own personal situation.

In order to do that clear communication in good engagement documents is a must. 

As noted above in addition to paying the correct casual rates it is advisable to also ensure the pay slips make reference to the status of the employee as a casual.  But by far the most impactful action the business can take, and indeed must take, is to follow the Casual Conversion Process that is outlined by the award. 

Correct engagement, correct pay and correct conversion process leads to correct and compliant engagement of casuals.

Better late than never!  If a business has patchy engagement documents, or has a concern that they may not have consistently applied the exiting casual conversion process then it is recommended that they issue all staff with confirmation of employment packs, including the casual conversion letters as appropriate.

ACAPMA reminds members that template documents and guidelines for engaging retail staff and the casual conversion process have been produced and circulated by ACAPMA for many years, and have been recently redistributed to all members.  Members can also access advice and support for this and other employment matters via employment@acapma.com.au

Elisha Radwanowski BCom(HRM&IR)
ACAPMA