Casual v Permanent – What is the employment status of your employees & the consequences for getting it wrong?
The Full Bench of the Fair Work Commission (“FWC” or “Commission”) recently overturned a ruling of the Commission that a ‘casual employee’ had been unfairly dismissed. In the first instance, Commissioner Riordan held due to the fact that the employee had been denied ongoing work by the employer, that act in itself was said to amount to a dismissal.
In John Perry v Nardy House Inc. (NHI)  FWC 73, Commissioner Riordan, in the first instance, ordered that a casual employee be reinstated (not as a casual employee as originally engaged by the employer upon commencement of employment), but on a permanent part-time basis. The Commissioner held that the employer, by rostering the employee on a regular and systematic basis, had engaged the employee in accordance with the terms of a permanent part-time employee, despite the fact that the employer had referenced the employee as a casual in his contract of employment, rostered the employee to work less than 38 hours per week and paid the employee a casual loading.
On appeal, the Full Bench determined that the Commission made an incorrect finding of fact on the employment status of the employee.
The Full Bench held that the employee was in fact lawfully engaged by the employer as a casual employee and was not employed on a full-time or part-time basis as determined by Commission Riordan.
The Full Bench held that an employee’s employment status is a function of the common law employment contract, subject to it being consistent with applicable laws and other relevant instruments.
To determine this matter, the Full Bench examined evidence in the form of:
- Contractual documents; and
- Rosters, which in this case evidenced a variety of start and finish times that were consistent with the definition of a casual employee;
What this decision means for employers is that the Full Bench has re-affirmed that it is the employment relationship established by the facts, and not the relationship ascribed by the employment contract which will determine whether an employee is a true casual.
Employers must ensure they understand that just because an employee is labelled a “casual” and is paid as such, that will not be determinative of a finding that the employee is a true casual employee. In this case, the Full Bench confirmed that the employee’s employment status was to be determined by reference to:
- Contract of employment;
- Applicable award (ie. in this case the Social, Community, Home Care & Disability Services Award 2010 (“SCHADS Award”)); and
- The definition for casual employment as defined in the relevant award (ie. SCHADS Award), which reads as follows:
A casual employee is one who is engaged and paid as such but will not include a part-time or full-time employee.
Of significance in this case was that the definition prescribed by the SCHADS Award imposed limitations on the concept of casual employment. To qualify as a casual under the SCHADS Award, the employee was not only to be engaged and paid as such, but must not meet the definition of full-time or part-time employment.
Message for Employers
This decision is a timely reminder to employers of the importance in making an accurate determination about an employee’s employment status at the point of engagement.
We strongly encourage employers to review the manner in which their casual employees are engaged and give consideration to the following factors:
- Does the employee work in excess of 38 hours per week?
- Does the employee perform work in accordance with a clear and regular rostering pattern and has this pattern occurred over a period of time?
- Does the employee have an expectation of regular and ongoing work?
- Is work regularly offered and accepted so that it cannot be found to be irregular and informal?
- How does any applicable award define the concept of casual employment?
We strongly encourage employers who remain uncertain about their employees’ employment type to seek professional legal advice so that an accurate determination can be made.