Asking ‘What are we?’: Looking at WorkPac v Skene

Posted on September 15, 2018 Under All 1 Comment

By Janine Wan

So, they’re giving you mixed signals – they said they weren’t looking for anything serious, but their actions seem to be saying otherwise. It seems like it might be time to have that ‘what are we’ talk and figure out where this relationship is going.

Think I’m talking about your love life? Think again. I’m talking about your employment relationship, and if you’ve got a casual job, you might want to pay attention – the landmark decision of WorkPac Pty Ltd v Skene is shaking things up.

What happened?

Paul Skene was a casual truck driver at a mine in central Queensland for a period of just under two years between 2010 and 2012. He was employed by a labour hire company, WorkPac Pty Ltd. His employment by WorkPac was terminated on 17 April 2012, and he received no payment as compensation for unclaimed annual leave upon termination.

Contracted as a casual employee, Skene was paid a flat rate by the hour – the contract specifying that he would receive casual loading in lieu of leave entitlements. However, his roster was set in January for the rest of the year – a rotation of a full seven days one week with 12.5 hour shifts each day, and then a week-long period of no shifts. During his employment, he took seven days of unpaid leave and received no paid leave.

Skene argued that, since his employment was continuous, he was entitled to the six weeks of annual leave and annual leave loading that permanent employees were entitled to, under clause 19.1.1 of the WorkPac enterprise agreement. In addition to the compensation for unclaimed annual leave, Skene also sought for pecuniary penalties to be applied to WorkPac for these breaches.

His assertion was this: although he was classified as ‘casual’ under his contract, he was actually not a casual employee under the Fair Work Act, (‘FWA’) and was entitled to annual leave under the National Employment Standards (NES). Of course, WorkPac disagreed, claiming he was employed on a series of separate casual engagements.

Let’s go to court!

At first instance, the Federal Circuit Court found that Skene was a casual employee for the purposes of the WorkPac Agreement, as he was contracted and paid as such. However, despite the label that WorkPac put on the work, the common law test for employment type examines the actual substance of the employment relationship. As such, Skene could still be found to be an employee ‘other than casual employees’ under the FWA, and entitled to annual leave. Indeed, Skene’s relationship with WorkPac, upon examination, seemed more like a permanent one: his work schedule was predictable, consistent, and continuous.

And so, the Court found that Skene should receive compensation for unclaimed annual leave entitlements under the NES. However, because of WorkPac’s ignorance of the relevant law and since Skene was considered a casual employee under the WorkPac Agreement, the Court declined to impose penalties.

Let’s go to court (again)!

WorkPac appealed the decision, and so did Skene – objecting to the lack of penalties imposed on WorkPac. On appeal, the Full Court upheld the decision that Skene was not a casual employee – but with caveats and some further analysis.

Firstly, it clarified the relationship between the NES, employment agreements (such as the WorkPac Agreement), and modern awards (entitlements such as pay, hours of work, etc). The court held that the NES comes out on top and applies to all employees. This means that no matter what the other documents may say, it is the actual characterisation of the employment relationship that matters. And so, the Full Court disagreed with the primary judge, and found that, even under the WorkPac agreement, Skene should not have been labelled as a casual employee.

Secondly, the Court examined the method for determining what a casual employee is. In accordance with previous case law, we are told to look for the ‘essence of casualness’, which includes ‘informality, uncertainty and irregularity of the engagement’ – all of these factors were missing in the arrangement that Skene had with WorkPac.

Thirdly, the Court dispelled the issue of ‘double dipping’ – the idea that Skene benefitted twice from this finding by receiving both casual loading rates and paid annual leave. Here, they found that it was unclear if Skene had even been paid casual loading, since he was paid a flat fee. Additionally, they referred back the primacy of the NES and reaffirmed that arrangements regarding benefits are to be determined by the actual characterisation of the employment relationship. This means that, even where lack of access to annual leave was offset by casual loading, the FWA is clear that it cannot do so completely. And so, even though WorkPac may have intended to pay Skene casual loading, the uncertainty of what portion of his remuneration this made up, as well as the fact that compensation in itself is not enough to completely remove access to such benefits, meant that this amount did not remove Skene’s entitlement to annual leave.

Finally, the Full Court remitted the issue of penalties to be imposed on WorkPac to the primary judge, as ‘although an unknowing contravention will diminish the objective seriousness of a contravention, ignorance of the law is not ordinarily excusatory’.

Okay, but how does this affect me?

If you are currently a casual employee, you might want to ponder this: despite labels, does your employment relationship have that ‘essence of casualness’ in its substance?

Following this decision, employers may consider changing your work arrangements or may even offer full-time employment if they think you might be like our pal Skene here. We will also likely see contracts being revised to clearly identify the payment of casual loading as a separate amount from hourly wages, since this was addressed specifically as an oversight in the WorkPac Agreement.

This case has definitely caused a stir. Many have called for Parliament to change the FWA due to the uncertainty that this presents for employers. And although the union movement sees this as a positive step, the Australian Council of Trade Unions is amongst those asking for clarity.

Indeed, the lack of a clear definition may mean that the currently prevalence of casual employment may no longer be so attractive to employers. As these issues become more complex and involved, casual labour hire on a systemic level may be considered impractical or uneconomical – especially since hiring long-term casuals can actually be more expensive for employers than a permanent employee. With this legal development in mind, employers may have to reconsider their strategy for addressing rising demand for more staff.

And for those looking for casual employment? Job-hunting might have just gotten a little more complicated.