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Casual employees and the NES

Since 2010, when the Fair Work Act came into operation, there has been a legal controversy about what is meant in the context of the National Employment Standards  by the expression “casual employee”.

S.86 of the Act provides that Division 6 of the Act, which is about annual leave entitlements under the NES “applies to employees, other than casual employees”. However the Act does not define what is meant by the expression “casual employees”.

Thus “The effect of s.86 is to exclude casual employees from the entitlement to annual leave and the ancillary benefits provided by the National Employment Standards in Div 6 of Pt 2–2 of the FW Act.” (WorkPac Pty Ltd v Skene (2018) FCAFC 131 delivered 16 August 2018 per Tracey, Bromberg and Rangiah JJ at para 6). “

The traditional meaning of that expression developed by case law and the common law was expressed by their Honours in the above case as having been put this way by Lucev FM (as he then was) in  Williams v MacMahon Mining Services Pty Ltd [2009] FMCA 511

“At [35], Lucev FM observed that the description by the contracting parties of the employment relationship as “casual” was not of itself determinative.  Relying upon what Steytler P observed in Personnel Contracting Pty Ltd (t/as TricordPersonnel) v Construction, Forestry, Mining and Energy Union of Workers (2004) 141 IR 31 at [41], his Honour determined that the characterisation of the relationship needed to proceed “by reference to the totality of that relationship, including the system operated and work practices imposed by the appellant, and an analysis of the terms of the contract entered into by the employee with the employer”.

In the recent WorkPac case it has now been definitively held by a senior Full Court that the expression “casual employees” for the purposes of the NES is to be afforded its traditional common law meaning, that is to say it is to be determined by an analysis of the real and practical nature of the relationship and not by reference to what it might be described as by an enterprise agreement.

In the following case an employee had been described in his day to day employment as a “casual” and the issue for determination was whether he was entitled to be paid out accrued holiday pay when his employment was terminated, something to which he would not have been entitled under the NES if the description of him as a casual was to rule over the reality of his day to day work which was full time and consistent.

Here is the relevant pat of the critical judgment.

“Casual employees and the NES

  1. Discussion
  2. The main issue on this part of the case is really this: did Parliament intend that the words “casual employees” in s.86 be used in their ordinary sense, their legal sense (as the primary judge did) or the specialised non-legal sense which WorkPac contended was common to federal industrial instruments?
  3. Although by identifying that question we have suggested three potential answers, it is necessary to recognise that there may well be overlap and care needs to be taken to avoid an overly compartmentalised approach.  As Priestly JA said in Gamer’s Motor Centre at 483-484:

In considering the appropriate meaning of the words in their setting it is my view that if there is one ordinary and natural meaning of the words then that meaning must be given to them, but if as is the case here the words have a range of meanings, then the construction to be given to the words used must take into account the legal as well as the “ordinary” uses to which they have been put. No matter how hard a draftsman tries to keep the language of a statute clear and simple, the statute is a legal document. The Sale of Goods Act 1923 (the Act) is a legal instrument using words with legal significance in an overall context where all concerned with its passage through Parliament knew the past history of the words used in it and knew also that the meaning to be put upon the words in cases of such doubt as would lead to litigation would be decided by lawyers. Thus when this Court comes to consider the meaning of the words in s.28 of the Act it seems to me necessary to make the kind of survey made by McHugh JA in his reasons [ie a close analysis of the cases interpreting the words in question]. The object of the approach is not to find the legal as opposed to the “ordinary” meaning, but to find from the range of legal and ordinary meanings, which in any event will seldom be in watertight compartments, the meanings best suited to the statutory document as a whole.

  1. No party contended that the expression “casual employee” is used in s.86 in its ordinary or popular sense. The expression does, however, have a popular or ordinary meaning which is reflected in the legal sense of the expression but not in the specialised sense for which WorkPac contended. The Macquarie Dictionary (5th Ed) defines the word “casual” in connection to a worker as meaning “employed only irregularly”.  The Shorter Oxford English Dictionary (6th Ed) refers to special collocations of the word “casual” and lists “casual labourer” as meaning “without permanent employment, working when the chance comes”.
  2. For reasons which we later give, we are not persuaded on the material to which WorkPac took the Court, that there is a uniformly understood specialised meaning of the expression “casual employee” referrable to the use of that term in federal industrial awards.  Further, even if we had been so satisfied, or even if we had been satisfied that a common as opposed to a uniform understanding existed, we would have rejected the meaning contended for by WorkPac on the facts of this case.
  3. There are a host of difficulties with WorkPac’s contention, based as it is, on the approach taken in Telum. The first, and in our view a fatal difficulty, is that the specialised meaning for which WorkPac contended can, at best, only provide part of the meaning for the expression “casual employee” as used in s.86. This is because the meaning contended for by WorkPac only addresses employees covered by an award or enterprise agreement, and is silent as to “award/agreement free employees”. Employees not covered by awards/agreements who are also casual employees are also excluded by s 86, but the meaning contended for by WorkPac says nothing of what the expression “casual employee” means for those employees. WorkPac obliquely suggested that the expression in its legal sense would be applicable for such employees. The contention, only faintly put by WorkPac and not established on the evidence, that there may not be many such employees, seems intuitively wrong and is beside the point. Given the extensive reference made in Div 6 (and elsewhere in the National Employment Standards) to award/agreement free employees, it must be presumed that Div 6 was drafted on the basis that such employees exist and that their entitlements to annual leave, including the specification of those who are excluded because they are casual employees, has been addressed.
  4. The acceptance of WorkPac’s contention requires the conclusion that a single expression used once in a legislative provision was intended to have a dual or compound meaning. Namely, in relation to award/enterprise agreement covered employees, the expression “casual employee” is used in s 86 in the specialised sense for which WorkPac contended, and, that for award/enterprise agreement free employees the expression is used in its legal sense (although as we later discuss, WorkPac sought to deny that the expression had a legal meaning). WorkPac’s submissions did not identify, and our own research has not discovered, any authority supportive of a single statutory expression being attributed a dual or compound meaning in analogous circumstances. There is no extant interpretative maxim or principle which supports the adoption of such an interpretation absent a statutory definition or an express or clearly discoverable intent in the text of the statute.
  5. Such a result could have been achieved by the inclusion of a definition for the single expression in question. But it seems untenable that where no such definition was provided or no other textual explanation included, the framers ofs 86 proceeded in the expectation that it would be understood that the expression “casual employee” was intended to have one meaning when applied to award/agreement covered employees and a completely different meaning for award/agreement free employees. Such an approach to drafting ought not be presumed.
  6. The unconventional approach to drafting which WorkPac’s contention assumes was applied to s.86 is to be contrasted with the manner in which an entitlement to an extra week of annual leave for a “shiftworker” has been addressed in the same division. Like the expression “casual employee”, the term “shiftworker” is undefined. For employees for whom a modern award or enterprise agreement applies, the FW Act has expressly left it to the award or enterprise agreement to “define[s] or describe[s] the employee as a shiftworker for the purposes of the National Employment Standards” (s.87(1)(b)(i) and (ii)). However, in this case, the draftsperson has been conscious that the capacity given to the applicable award or enterprise agreement to define a “shiftworker” entails the need to expressly provide a definition of “shiftworker” for an award/agreement free employee. Such a definition is provided by s.87(3).
  7. The manner in which s.87 has given content to the definition of “shiftworker” also draws attention to the observation that, where in Div 6 a criteria of eligibility to an entitlement has been given over to an applicable award or enterprise agreement to define or describe, that has been done expressly and in clear and unambiguous language.
  8. So much may be expected.  It ought to be presumed that where Parliament is prepared to cede control over a significant definition used in the National Employment Standards to the FWC or to industrial parties making enterprise agreements, it would do so expressly.  That is particularly so given the consequences which that course is likely to entail.  Delegating to the FWC and to the makers of enterprise agreements the power to define who is a casual employee for the purposes of the National Employment Standards would likely result in a substantial differentiation in the accessibility of those Standards to some employees as opposed to others, despite the fact that the true nature of the employments of all is the same.  Alternatively, it may result in the access of the same employees varying over time, as new enterprise agreements are made, despite the fact that the true nature of those employments has not altered.
  9. Given the primacy of the terms and conditions provided for by the National Employment Standards, and in particular the inability of awards or enterprise agreements to displace those Standards, it would be counter-intuitive to think that Parliament has, by  ceding  control of an important expression like “casual employee”, intended to reverse the order of priority ordinarily applicable as between the National Employment Standards on the one hand and awards and enterprise agreements on the other.  Parliament may well do that, and in the case of “shiftworkers” and their access to an additional week of annual leave, it has done that; but, importantly, Parliament has done so expressly.  Absent clear language, it would be wrong to impute to Parliament an intent to provide industrial parties making enterprise agreements with the capacity to control which employees will and which will not have access to the National Employment Standards.
  10. The specific context of accessibility to paid annual leave is particularly instructive. As earlier discussed, the principal entitlement provided for by Div 6 which, by s.86, applies “to other than casual employees”, is the taking of annual leave. The purpose of that entitlement is to provide an employee access to rest and recreation. That purpose is apparent in s.93, amongst other provisions. S.93 permits a modern award or enterprise agreement to include a term providing for the “cashing out” of paid annual leave by an employee. However, such a term must require that paid annual leave not be “cashed out” so as to result in the employee’s remaining accrued entitlement to paid annual leave being less than four weeks. The purpose of the restriction imposed on “cashing out” annual leave is confirmed by [378] of the Explanatory Memorandum to the Fair Work Bill 2008 (Cth).  Relevantly, the restrictions imposed are said to be “[i]n recognition of the importance of employees taking leave for the purposes of rest and recreation”.  Similar restrictions on cashing out paid annual leave are provided for in relation to award/agreement free employees in s.94.  What Parliament intended was that the entitlement provided by the National Employment Standards to paid annual leave be utilised as leave in order to provide employees with obligations to provide ongoing work access to rest and recreation.
  11. If WorkPac’s contention is correct, that statutory purpose could be readily defeated simply because an employee is designated to be a casual employee by an award or enterprise agreement irrespective of the true nature of the employment (remembering, that as few as two employees and their employer may make an enterprise agreement (s.172(6) of the FW Act). On WorkPac’s construction, an employee designated to be a casual but working a full-time pattern of work (eg 9.00am to 5.00pm, Monday-Friday) in on-going employment never gains an entitlement to take paid leave, irrespective of how many months or years that pattern of work continues. It cannot be said that, because such an employee would receive a casual loading to compensate for the inability to take paid leave the statutory purpose is addressed. As the cashing out restrictions imposed by s.93 and s.94 show, monies paid in lieu of leave may not defeat Parliament’s intent that access to leave be given so as to provide rest and recreation.
  12. There are other reasons why, in the absence of clear language, it would be erroneous to impute to Parliament an intent consistent with WorkPac’s construction.  Parliament must be taken to be aware that courts will interpret a statute in accordance with conventional principles of statutory interpretation.  One such principle is that where words have acquired a legal meaning it will be taken that the legislature intended to use the words with that meaning unless a contrary intention clearly appears.  A second relevant principle with particular applicability in a specialist field like industrial relations legislation, is that where Parliament repeats without alteration words which have been judicially construed, it is presumed that the words bear the meaning already attributed to them.  Thirdly, the same words appearing in different parts of the statute would ordinarily be construed as words intended to have the same meaning.  Each of those cannons of construction have been earlier discussed, and they are each relevant here.
  13. As further discussed below, the expression “casual employee” is an expression that has acquired a legal meaning. It is an expression which appears in s.384 of the FW Act in a provision which regulates which employees may access unfair dismissal protections provided by the FW Act. The expression has a long history of use for the same purpose in federal industrial legislation as Reed demonstrates in relation to the Industrial Relations Act 1988 (Cth) and the regulations made thereunder and as Hamzy demonstrates in relation to the WR Act. In that context, the expression has been the subject of extensive judicial consideration. As the discussion above of Williams, MacMahon and Ledger records, the expression “casual employee” was extensively used in relation to the legislative predecessors of the National Employment Standards including in the predecessor provision to s 86 itself where it was there used for an identical purpose. Williams, which considered the expression in s.86 as it appears in the WR Act and applied its legal meaning, was handed down shortly prior to the enactment of the FW Act.
  14. It is difficult to accept that in that historical context, and in the knowledge that the application of well-known principles of statutory construction would (absent clear contrary indication), lead to the expression “casual employee” being construed in its legal sense and consistently with prior authority, Parliament would not have provided a clear indication of a contrary intent if such an intent was held.  That has not been done; not directly and not by way of extrinsic material such as the Explanatory Memorandum.  We consider that absence to be significant, and in combination with the fact that WorkPac’s construction requires the expression “casual employee” to have two distinct meanings (one a specialised industrial meaning and the other a legal technical meaning), we have found the construction contended for by WorkPac unattractive.
  15. There are, however, additional hurdles to the acceptance of WorkPac’s construction. To this point the discussion has assumed that a uniformly understood specialised meaning of the expression “casual employee” referable to the use of that term in federal industrial awards existed when the FW Act was enacted. The existence of that understanding as a common understanding is the foundation of WorkPac’s construction as well as the reasoning in Telum.
  16. The existence of such an understanding would, as we have said, ordinarily need to be established by evidence.  No attempt to do that has been made here.  Instead, WorkPac relied on views expressed in decisions of the FWC suggestive of the “common industrial meaning” contended for.  Given the FWC’s position as a specialist industrial Tribunal, we will assume for the purpose of this discussion, that it is permissible to regard the view of the FWC expressed by its decisions as capable of establishing a uniformly understood specialised meaning of a term used extensively in the field of industrial relations.
  17. Even so, WorkPac’s contention faces at least two difficulties.  First, the FWC does not speak with one voice on the matter.  There are views expressed in other decisions of the FWC which serve to deny the proposition that the history of engagement by the FWC and its predecessors with the expression “casual employee” has created a “common industrial meaning” which was known to Parliament and adopted by it.  The decision in Cetin, earlier discussed, is a case in point. There, a Full Bench of the AIRC (presided over by Ross P the current President of the FWC) gave the expression “casual employee” its legal meaning. As earlier stated, that course was the subject of criticism by a differently constituted Full Bench in the Casual Conversion Case.  In a recent decision of another Full Bench (again presided over by Ross P), Re 4 Yearly Review of Modern Awards – Penalty Rates (2017) 265 IR 1, this was said of an expression found in s 134(1)(da)(ii) of the FW Act (at [201]):

“Irregular or unpredictable hours” is apt to describe casual employment.

  1. Second, the factual basis for the view expressed in Telum and endorsed in the Casual Conversion Case is itself questionable. In Telum, the Full Bench said that by the time of the award modernisation process “many, if not most” (at [25]) awards and all modern awards (at [38]) contained or contain a “definition” of casual employee the core of which is that a casual is a person labelled or designated as such (at [38]).
  2. There are two reasons to question that assertion. The content of modern awards is not to the point; modern awards post-date the enactment of the FW Act and their content is not informative of any understanding Parliament may have had when the FW Act was enacted.
  3. Further, the analysis assumes that clauses historically found in federal awards and now in many modern awards which provide that “a casual employee is one engaged and paid as such” (or words similar), is a “definition” clause which, irrespective of the objectively discernible nature of the employment, designates the employee to be in casual employment.  As White J said in Devine Marine at [141], the word “engaged” in a clause of this type:

[I]s capable of more than one meaning. On one view, it can refer to the way in which the parties themselves identified their arrangement at its commencement. On another view, it can be a reference to the objective characterisation of the engagement, as a matter of fact and law, having regard to all the circumstances.

  1. White J noted (at [141]–[144]) that support for the former construction can be seen from the decision in Telum at [38] but that support for the latter construction can be seen from other decisions.  Submissions on the competing constructions were not received in Devine Marine and White J did not express a concluded view of general application; however, by reference to the particular provisions of the award in question White J preferred the former construction.
  2. The Full Bench in Telum did express a view of general application but the correctness of that view is contestable.  As White J’s judgment in Devine Marine demonstrates, much may depend on context including the terms of related provisions in the particular award in question.
  3. Further, the discussion in Telum at [38]–[42] suggests that the clauses in awards which the Full Bench had in mind and which it regarded as designating a casual employee to be a person labelled as such, included clauses of the kind set out at [41] of Telum.  The clause there exemplified, is in similar terms to cl 5.5.6 of the WorkPac Agreement considered by the primary judge.  For reasons later given at [193]-[227], cl 5.5.6 is not a clause which designates an employee to be a casual employee.
  4. In our view, the conclusion in Telum that most federal awards defined casuals in the manner there stated is the product of a broad generalisation based on an interpretive exercise which is contestable.  On the basis of the reasoning in Telum, we would not accept, as a fact, WorkPac’s proposition that most federal awards defined a casual employee to be a person designated as such by the award and therefore the expression “casual employee” acquired a commonly understood industrial meaning that a casual employee is an employee designated as such by the applicable industrial instrument.
  5. We note also that, despite WorkPac’s submission that such a meaning has been commonly understood for some 70 years, the only relevant specialist dictionary we are am aware of, The CCH Macquarie Dictionary of Employment and Industrial Relations (1992, CCH Australia Limited), makes no mention of the meaning contended for.  There, “casual employee” is given this definition (emphasis in original):

casual employee  an employee who is employed for work of intermittent nature which does not carry with it the guarantee of a full week’s work each week, nor, often, an on-going employment relationship.  Casual employees are often not entitled to specific award provisions applying to other employees (e.g. leave provisions and the standard redundancy provisions applying to employees under federal awards as a result of the termination of employment test case).  A casual loading is usually added to the employee’s wage to compensate for such disadvantages.  Also casual worker. See also casual work.

  1. Further, a Full Bench of the Industrial Relations Commission of New South Wales (WrightP, Walton  VP, Harrison DP, Haylen J and Tabbaa C) said in Re Secure Employment Test Case (2006) 150 IR 1 at [231]:

The concept of a “casual” which has emerged through historical employment practice and industrial jurisprudence and which has now long been defined and regulated in awards in this State is essentially one in which: the employee has a short term engagement; shifts are irregular and unpredictable; the employee is not obliged to accept an offer to work a particular shift; the employee’s employment technically commences at the beginning of a particular shift and ceases at the end of that shift; the employee is paid a loading as compensation for, amongst other things, annual leave and other benefits “accrued” during each shift worked; and the employee has no expectation of being rostered for another shift.

  1. We do not accept that WorkPac has established a uniformly understood specialised meaning of the expression “casual employee” which existed in the field of industrial relations at the time that the FW Act was enacted. We should add that a consistency of understanding for the “common industrial meaning” contended for was not even maintained in the course of the hearing. While WorkPac’s written submissions stated that a “casual employee” was an employee defined or described as a casual employee under the applicable federal industrial instrument, WorkPac’s oral submissions, at various times, identified two additional features. First, that the employee is paid a casual loading pursuant to the applicable industrial instrument, and second, that the employee is employed on an hourly or daily basis.
  2. To this point, we have directly addressed and rejected the third and fourth propositions from Telum and implicitly disagreed with the first proposition dealing with the principles of statutory construction.  For reasons that will already be apparent, the failure in Telum to take into account all of the applicable principles of statutory construction helps to explain why the reasoning in Telum is flawed.
  3. The second proposition from Telum is that the “ill-defined” general law notion of casual employment on which reasonable minds may differ, would not have been adopted by Parliament. It may well be true that reasonable minds may differ as to the meaning of “casual employee”. However, the same may be said about the meaning of the term “employee”, a key term in the FW Act which is also not defined, the content of which is left to the general law. We see nothing surprising in the suggestion that the same approach was taken to the expression “casual employee”.
  4. The seventh proposition that Parliament intended that awards, enterprise agreements and the National Employment Standards interact consistently and harmoniously cannot be denied. That intent is expressly effectuated by s.55 of the FW Act which addresses the interaction between the National Employment Standards and a modern award or an enterprise agreement. S.56 and s.61 are also part of the hierarchy established by the FW Act in which priority is given to the National Employment Standards over enterprise agreements and awards. S.57 deals with the interaction between awards and enterprise agreements. It is via those provisions, in which priority is accorded as between the National Employment Standards, awards and agreements that consistency and harmony is achieved. The construction of the expression “casual employee” in s 86, which we prefer, respects those priorities and the intended harmony for the reasons already given. The construction preferred in Telum and contended for by WorkPac does not.
  5. The fifth proposition that, there would be “double dipping”, is related to the proposition just addressed. If the priority order or the hierarchy just mentioned is respected, as Parliament must have intended, there would be no “double dipping”. There is nothing in the FW Act that requires employees who are not casual employees and thus entitled to annual leave under s.87 to be paid a casual loading. If so much is recognised and respected by awards and enterprise agreements, as the hierarchy established by the FW Act must envisage, no “double dipping” is possible.
  6. In this case, Mr Skene was paid an all in flat rate (initially $50.00 and later $55.00 per hour) under his contract of employment.  It is not clear that he was paid a casual loading at all.  Like the contract under consideration in MacMahon (see at [67]), Mr Skene’s contract did not allocate any part of the rate of pay to a casual loading or as monies in lieu of paid annual leave. For that and other reasons a claim of set-off failed in MacMahon.  The primary judge did not find that a loading was paid to Mr Skene.  Assuming, however, that Mr Skene was paid a casual loading which was at least in part in lieu of paid annual leave, it may be said he will be paid twice for the same entitlement if he is now compensated for not being paid annual leave as the primary judge found he should be. However, that Mr Skene was paid a casual loading when he need not have been is not a legitimate basis for construing s 86 of the FW Act in the manner for which WorkPac contends.
  7. Returning to the propositions in Telum, the sixth proposition from Telum, (and WorkPac’s submissions) pointed to the definition in s 12 of the FW Act of “long term casual employee” and in particular to the content of paragraph (b) thereof. That definition states:

long term casual employee: a national system employee of a national system employer is a long term casual employee at a particular time if, at that time:

(a)       the employee is a casual employee; and

(b)          the employee has been employed by the employer on a regular and systematic basis for a sequence of periods of employment during a period of at least 12 months.

  1. The Full Bench in Telum at [51] said this:

This very definition suggests that [the] legislature did not intend the expression “casual employee” to call up the general law approach. If the criterion in (b) is satisfied then the employee would likely not be a “casual employee” under the general law approach but the definition presupposes that an employee who satisfies the criterion in (b) can still be a “casual employee” within the meaning of (a).

  1. That reasoning is at odds with the reasoning in Williams at [57]-[68] where the legislative predecessor to the s 12definition of “long term employee” was considered. Further, the reasoning impliedly assumes that the word “regular” in para (b) of the definition of “long term casual” is referring to the pattern of work of the employee and the frequency and consistency of work performed, rather than the pattern of engagement of the employee to perform work. The word “employed” in para (b) like the word “engaged”, is capable of referring to the act of hiring an employee to perform work or the actual performance of work. In Yaraka Holdings Pty Limited v Ante Giljevic (2006) 149 IR 339, the ACT Court of Appeal was called upon to construe s 11 of the Workers Compensation Act 1951 (ACT). That provision deemed a person engaged under a contract for services (ie an independent contractor) to be an employee for the purposes of that Act. An individual “engaged … on a casual basis under a contract of service” is taken to be a worker but, relevantly, only where the engagement “has been on a regular and systematic basis”. As Crispin P and Gray J noted at [64] the concept of “employment on a regular and systematic basis” was drawn from provisions found in regulations under the WR Act, in particular reg 30B. The same can be said of the s 12 definition in the FW Act of “long-term casual employee”. At [65], Crispin P and Gray J observed that what needed to be “regular and systematic” was the “engagement” of the person rather than the hours worked pursuant to such engagement. Whilst the frequency of work was to be considered, their Honours considered that the provision “contains nothing to suggest that the work performed pursuant to the engagement must be regular and systematic as well as frequent”. At [68], their Honours said this:

The term “regular” should be construed liberally. It may be accepted, as the Magistrate did, that it is intended to imply some form of repetitive pattern rather than being used as a synonym for “frequent” or “often”. However, equally, it is not used in the section as a synonym for words such as “uniform” or “constant”.

  1. In his judgment, Madgwick J came to the same view.  At [89], his Honour said:

a ‘regular… basis’ may be constituted by frequent though unpredictable engagements and that a ‘systematic basis’ need not involve either predictability of engagements or any assurance of work at all”.

  1. The correctness of the assumption made in Telum that para (b) of the definition of “long-term casual employee” requires constancy of work rather than regularity of hiring is contestable.  We see some force in the proposition that the construction adopted in Yaraka Holdings has application to the definition of “long-term casual employee”, but there are textual differences between the two provisions and the Court has not had the benefit of submissions from the parties on the issue. It is not necessary to express a final view because we would reject the reasoning in Telum even if the assumption was correct. The lack of any significant tension between the use of the expression “casual employee” in its legal sense and the s 12 definition of “long-term casual”, even if the assumption made in Telum is correct, is illustrated by example at [174]-[175] below.  Consistently with the reasoning in Williams at [61] to the effect that para (b) is retrospectively focussed on how the employee “has been engaged”, the fact that the pattern of work performed by the employee turned out to be constant, does not deny the characterisation of the employment as casual employment.
  2. The reasoning in Telum also wrongly assumes that the general law meaning of “casual employee” is inconsistent with or does not countenance the possibility that a casual employee may have worked on a regular and systematic basis for a sequence of periods of employment.  As we will further discuss below, the statement in Hamzy at [38] that “[t]he essence of casualness is the absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work”, provides the rationale of casual employment.  Immediately following the sentence just quoted, the Full Court said this:

But that is not inconsistent with the possibility of the employee’s work pattern turning out to be regular and systematic.

  1. In any event, if there is inconsistency between the general law understanding of the expression and the use of the expression in the FW Act, the proper conclusion, in our view, is that Parliament intended to use “casual employee” in its legal sense as adjusted by any indications to be drawn from the FW Act.
  2. For all those reasons we reject the construction of the expression “casual employee” for which WorkPac contends. In our view, the expression in s 86 is used in its legal sense of which we will say more shortly. That being so, WorkPac’s primary challenge to the finding that Mr Skene was “other than a casual employee” under s 86 of the FW Act should be rejected.
  3. Even if we are wrong and the expression “casual employee” is used in the specialist sense contended for by WorkPac, because we later conclude that the WorkPac Agreement did not designate Mr Skene to be a casual employee, the application of WorkPac’s construction would lead to the dismissal of its appeal.
  4. WorkPac did contend that the expression “casual employee” did not have a fixed legal meaning.  In so far as by that submission, WorkPac was contending that the expression had not acquired a legal meaning, we disagree.
  5. In Doyle v Sydney Steel Company Limited (1936) 56 CLR 545, Starke J at 551 said that the expression “casual worker” was “not one of precision”. McTierrnan J made a similar remark at 565 stating that each case is to be determined on its facts. Dixon J at 555 said that casual employment is “ill-defined” but that it was open “to treat most forms of intermittent or irregular work as casual”. In Shugg v Commissioner for Road Transport & Tramways (NSW) (1937) 57 CLR 485 at 496, Dixon J said that the expression “casual” is a word of “indefinite meaning” but apt to be associated with “elements of chance or of discontinuity”. His Honour further observed that casual employment was considered to be “occasional or intermittent” employment.
  6. It may be accepted that the term “casual employee” has no precise meaning and that whether any particular employee is a casual employee depends upon an objective characterisation of the nature of the particular employment as a matter of fact and law having regard to all of the circumstances.  That the expression lacks precise definition and that the shade of its colour is dependent upon context does not deny that the term has acquired a legal meaning, especially where the general law has laid down indicia by which the factual circumstances are to be assessed in the process of characterisation.  In that regard the expression “casual employee” is no different to the term “employee”.  Both have acquired a legal meaning referrable to the particular indicia found by the authorities to be relevant to the characterisation process.  For the term “employee” the relevant indicia are applied through what is commonly described as a “totality test”: Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at [24] (Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ). White J in South Jin recognised that the expression “casual employee” had a “meaning in the general law” at [65]. As did Barker J in MacMahon at [34].
  7. In the alternative to its primary contention that “casual employee” has a specialised meaning, WorkPac contended that the facts support the conclusion that Mr Skene nevertheless fell within the expression as used in s 86. On this submission, WorkPac’s contention was based on the general law approach to characterisation but with adjustment said to be justified by the statutory context.
  8. First, Workpac’s contention sought to distance the characterisation process from the indicia identified in Doyle, Reed, Hamzy and Melrose Farm on the basis that statements there made about the relevant indicia were confined by the legislative context in which the expression “casual worker” or “casual employee” was there being considered. In the case of Doyle, the legislative subject considered was workers compensation. In Reed and Hamzy, the subject was unfair or unlawful dismissal.  In Melrose Farm, the issue was whether an employee had been underpaid under a particular industrial award. Why the indicia identified in those cases were particular to the statutory or regulatory context in which those cases were determined was not really explained.
  9. The contention is unpersuasive.  We take into account that Moore J in Reed was interpreting a specific phrase (“engaged on a casual basis for a short period”) and doing so in light of a meaning given to that expression in a treaty (the International Labour Organisation’s Convention Concerning Termination of Employment at the Initiative of the Employer).  Nevertheless, the indicia of informality, uncertainty and irregularity of employment identified in Reedwere not suggested by Moore J to be inapplicable to the Australian understanding of the concept of casual employment and are reflected in other authorities which have considered casualness of employment in a purely Australian context, including the early observation of Dixon J in Doyle set out above and those of Barker J in MacMahon at [33]‑[34]. The observations of Moore J in Reed were also applied by Crispin P and Gray J (with whom Madgwick J agreed) in Yaraka Holdings (at [66]).
  10. Furthermore, WorkPac made no attempt to distinguish MacMahon on the basis of the legislative subject of the provision considered. As already recorded, the subject was a statutory entitlement to annual leave. Nor was any attempt made to distinguish Ledger on the basis of statutory context, which is understandable given that Ledger dealt with the very legislative context that is here being considered. Nor did WorkPac make any attempt to distinguish, by reference to statutory subject (casual loading), the general law approach taken in South Jin to construing the expression “casual employee”.
  11. In our view, the indicia identified in those cases are relevant and not excluded by reason of the statutory context in which the expression “casual employee” is found in s.86. We accept, of course, that a statute may indicate that the legal (or indeed the ordinary meaning) of a term is to be adjusted. However, if the subject matter addressed by s.86 (and Div 6) favours any adjustment, the indications given by that subject matter support the contention that employees in continuous employment are not within the scope of the expression “casual employee”. That is because, as we have already explained, the purpose of Div 6 includes providing to employees a guaranteed break from work, an entitlement which it is likely was directed at employees in continuous employment rather than those in irregular, intermittent, occasional or discontinuous employment.
  12. Shugg is a case in point. The issue there was access to an entitlement to annual leave conferred upon employees of the Commissioner of Road Transport and Tramways by s.123 of the Transport Act 1930 (NSW). Section 123 provided annual leave “to officers”. The plaintiff had been employed as a “casual” but had been continuously employed for over three and a half years. The issue was whether the plaintiff was an “officer” for the purposes of s.123 despite having been engaged as a “casual”. By majority the High Court held that he was. That the provision of annual leave was directed at employees in continuous employment and that therefore the word “officer” should be construed to include such employees (whether engaged as “casuals” or “permanent” employees) is apparent from the reasoning of Latham CJ at 491, Dixon J at 496-497 (where his Honour drew a distinction between “general, indefinite or continuous employment” to which s 123 applied and “an employment for a particular occasion or occasions, or to fulfil some special or defined purpose of brief duration” to which s.123 was inapplicable), and Evatt J at 498.
  13. We do not accept that the statutory context in this case indicates the adjustment contended for by WorkPac. Despite the absence of a finding that Mr Skene was paid a casual loading, the primary way in which that adjustment was put by WorkPac was that the only relevant indicator of casual employment for the purposes of s.86 is that the employee is paid a casual loading.
  14. The statutory context and the way in which WorkPac relied upon it has already been discussed in relation to WorkPac’s primary contention. It is similarly answered by the reasoning already given. WorkPac’s appeal to context is fundamentally based on the idea that Parliament intended that an employee should be entitled to either a minimum period of leave or monies in lieu thereof. Therefore, so the argument goes, a person who receives monies in lieu has been excluded from the entitlement to take leave. However, the exchange upon which that proposition is founded is antithetical to Parliament’s purpose in relation to the taking of the leave conferred by s.87. S.93 s.94 provide that a minimum period (four weeks) of access to annual leave may not be exchanged for monies.
  15. A rationale for the exclusion of casual employees consistent with Parliament’s purpose is to be found in what the Full Court in Hamzy said was “the essence of casualness” being (from the perspective of the employee) the absence of a firm advance obligation to provide on‑going work and therefore a capacity for the employee to have access to rest and recreation. In other words, employees who have no ongoing obligation to provide their services have the capacity to take a break from work and need not be guaranteed annual leave. Accordingly, no such guarantee is given to casual employees by Div 6.
  16. In rejecting WorkPac’s contention, we do not intend to suggest that the payment of a casual loading may not be a relevant indicator in the characterisation process.  Our conclusion however reinforces the importance of the “essence of casualness” referred to in Hamzy.  We respectfully agree with Wilcox, Marshall and Katz JJ in Hamzy at [38] that the “absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work” is the essence of casualness.  That insightful description needs to be further explored so as to expose its rationale.
  17. What needs to be recognised is that the expression “casual employee” describes a type of employment that, at least in part, takes its meaning from other recognised types of employment. Beyond the reference made to casual employees, there is extensive reference made in the FW Act to two other types of employees – full-time and part-time employees (including, in Pt 2–2 at ss 62(1), 63(1), 64(1) and 114(4) in respect of full-time employees, and ss 65(1B) and 114(4) in respect of part-time employees). This reflects the reality that the vast majority of employees in Australia conveniently fall into one of three categories – full‑time, part-time or casual. Another type of employee also extensively referred to in the FW Act is a “shiftworker”, but a shiftworker will usually also be a full-time, part-time or casual employee.
  18. A “type” of anything is usually distinguished by a characteristic or perhaps several characteristics not present in other categories of a like nature.  The characteristic that distinguishes full-time and part-time employment is that those employments are on-going (sometimes called “permanent”) employments.  On-going employment does not mean life‑long employment (McClelland v Northern Ireland General Health Services Board [1957] 1 WLR 594 at 601 (Lord Goddard); Haley v Public Transport Corporation of Victoria (1998) 119 IR 242 at [82] (Ashley J) but on-going employment is employment for an indefinite term subject to rights of termination (McClelland at 601 (Lord Goddard)). It is characterised by a commitment by the employer, subject to rights of termination, to provide the employee with continuous and indefinite employment according to an agreed pattern of ordinary time (as distinct from overtime) work. A corresponding commitment to provide service is given by the employee. What distinguishes a full-time employee from a part-time employee is the pattern of work agreed to. A full-time employee’s pattern of work will be the ordinary full-time hours applicable at the particular workplace (eg eight hours each week-day). A part-time employee’s pattern of work will be a fixed number of ordinary hours, the number of hours being less that the full-time ordinary hours applicable at the workplace, worked at a regular time on regular days (eg 9.00 am to 1.00 pm every Monday, Tuesday and Thursday).
  19. In contrast, a casual employee has no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work.  Nor does a casual employee provide a reciprocal commitment to the employer.  That characteristic, drawn from Hamzy, is what White J referred to in more general terms in South Jin at [71]as “any commitment by the employer or the worker to ongoing employment”. In our view, what is referred to in Hamzyas the “essence of casualness”, captures well what typifies casual employment and distinguishes it from either full-time or part-time employment.
  20. The indicia of casual employment referred to in the authorities – irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability – are the usual manifestations of an absence of a firm advance commitment of the kind just discussed.  An irregular pattern of work may not always be apparent but will not necessarily mean that the underlying cause of the usual features of casual employment, what Hamzy identified as the “essence of casualness”, will be absent.
  21. This is best illustrated by example.  A relief teacher is employed by a secondary school to relieve a teacher ill with the flu.  She is employed for 10 consecutive school days.  On the ninth day she is asked to relieve a teacher taking two months long‑service leave.  That takes her employment through to the end of the school term.  A few days into the new term, the relief teacher relieves for another teacher who has unexpectedly been dismissed and works for a month until a replacement for the dismissed teacher is found. And so the pattern continues for 12 months.  Whilst irregularity was not a feature of the employment, at no time during the 12 month period was the teacher other than in casual employment because at no time was there a firm advance mutual commitment to on-going employment on an agreed pattern of ordinary hours of work.  It just happened that the teacher’s work turned out to be regular.
  22. A second example may be illustrated by reference to a researcher employed by a university as and when funding grants for particular scientific research become available to fund the employment of an additional researcher.  Funding grants are short-term and whether or not the university will succeed in obtaining funds is unpredictable.  In a particular year the university is successful in winning several grants across a number of research projects.  That results in the researcher moving from one project to the next but being regularly employed for over 12 months.  Unpredictability as to the availability of further work for the researcher meant that at no point in the 12 month period was an advance mutual commitment to on‑going employment on an agreed pattern of work a characteristic of the employment.  Despite the regularity of the employment, the researcher remained a casual employee over that period.
  23. Each of those employees would likely meet the definition of “long-term casual employee” in s 12 on the completion of a 12 month pattern of employment of the kind which the examples illustrate. At the end of such a period, each will be a casual employee having been employed by their employer “on a regular and systematic basis for a sequence of periods of employment during a period of at least 12 months”. If the employee had a reasonable expectation of that pattern of employment continuing, the FW Act provides the employee with access to flexible working arrangements (s.65(2)(b)) and parental leave (s.67(2)).
  24. The discussion has sought to emphasise that, in their ordinary conceptions, casual employment and full-time and part-time employments are mutually exclusive categories of employment.  An employee cannot be both a casual employee and full-time or part-time employee at the same time in the same employment.  The features that distinguish one from the other are important to bear in mind in the characterisation process.
  25. It is also necessary to bear in mind that employment arrangements may change during the course of an employment.  What is agreed to at the commencement of an employment is relevant to the characterisation process, but an employment which commences as casual employment may become full-time or part-time because its characteristics have come to reflect those of an on‑going part-time or full-time employment.
  26. As Buchanan J said in Ledger at [62]:

It must be accepted that, over time, repetition of a particular working arrangement may become so predictable and expected that, at some point, it may be possible to say that what began as discrete and separate periods of employment has become, upon the tacit understanding of the parties, a regular ongoing engagement (for an example of historical interest, see Cameron v Durning [1959] AR (NSW) 142).

  1. The conduct of the parties to the employment relationship and the real substance, practical reality and true nature of that relationship will need to be assessed.  This is now the settled approach to the question of whether a person is an employee: see Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37 at [142] (North and Bromberg JJ) citing R v Foster; Ex parte The Commonwealth Life (Amalgamated) Assurances Limited (1952) 85 CLR 138, at 151 and 155(Dixon, Fullagar and Kitto JJ); Vabu at [24], [47], [57], [58] (Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ); ACT Visiting Medical Officers Association v Australian Industrial Relations Commission (2006) 232 ALR 69 at [25] and [31] (Wilcox, Conti and Stone JJ); Damevski v Giudice (2003) 133 FCR 438 at [77]–[78] (Marshall J, with whom Wilcox J agreed) and [144], [172] (Merkel J); Dalgety Farmers Ltd t/as Grazcos v Bruce (1995) 12 NSWCCR 36 at 46–48 (Kirby ACJ, with whom Clarke and Cole JJA agreed); Autoclenz Ltd v Belcher [2011] 4 All ER 745 at [22], [25]–[26], [29]–[32] (Lord Clarke SCJ, with whom Lord Hope DP, Lord Walker, Lord Collins and Lord Wilson SCJJ agreed). See also ACE Insurance Ltd v Trifunovski (2011) 200 FCR 532 at [29] (Perram J); and on appeal ACE Insurance Ltd v Trifunovski (2013) 209 FCR 146 at [93]and [102] (Buchanan J, with whom Lander and Robertson JJ agreed). In such an assessment “the nature of the relationship may be legitimately examined by reference to the actual way in which the work was carried out”: Ace Insurance at [91].  The same approach is appropriate to adopt in determining the nature of the employment relationship. It is the approach adopted in MacMahon (at [38]) and apparent from the reasoning in Reed (at 424), Hamzy(at [38]), Melrose Farm (at [101]-[105]), Bernardino ([18]-[23]), Ledger (at [62] and [65]) and South Jin (at [138]-[152]) discussed above and also CPSU, Community & Public Sector Union v State of Victoria (2000) 95 IR 54 at [10] (Marshall J). In Reed, Moore J at 424 said this:

The characterisation of Reed’s employment by either Reed and/or representatives of the Company generally or in a document, and the provisions of the Award, are simply matters to be taken into account in determining the true character of the employment.

  1. Whether the requisite firm advance commitment to continuing and indefinite work (subject to rights of termination) is absent or present must be objectively assessed including by reference to the surrounding circumstances created by both the contractual terms and the regulatory regime (including the FW Act, awards and enterprise agreements) applicable to the employment.
  2. The payment by the employer and the acceptance by the employee of a casual loading, like the description of the type of employment given by the parties in their contractual documentation, speaks to the intent of the parties to create and continue a casual employment.  But the objective assessment will need to consider whether that intent has been put into practice and if achieved, has been maintained.  The objectively demonstrated existence of a firm advance commitment to continuing and indefinite work (subject to rights of termination) according to an agreed pattern of work will ordinarily demonstrate a contrary intent and the existence of on-going full-time or part-time employment rather than casual employment.  The key indicators of an absence of the requisite firm advance commitment will be irregularity, uncertainty, unpredictability, intermittency and discontinuity in the pattern of work of the employee in question.  Those features will commonly reflect the fact that, whilst employed, the availability of work for the employee is short-term and not-ongoing and that the employer’s need for further work to be performed by the employee in the future is not reasonably predictable.
  3. In this case, the primary judge found (at [85]) that the essence of casual employment as described in Hamzy (and applied in MacMahon) was missing in relation to Mr Skene’s employment. His Honour did so having found (at [81]) that Mr Skene’s pattern of work was “regular and predictable”, “continuous” and “not subject to significant fluctuation” in circumstances where “there was plainly an expectation that Mr Skene would be available, on an ongoing basis, to perform the duties required of him in accordance with his roster” (set 12 months in advance).
  4. WorkPac’s contention that the primary judge erred because what he regarded to be the essence of casual employment cannot be the essence of casual employment under the FW Act must be rejected. Nor, was there any error in the primary judge’s reliance upon the regularity, predictability, certainty and continuity of the pattern of Mr Skene’s work.
  5. Whilst the contention does not seem to have been raised before the primary judge, that the primary judge did not treat the payment of a casual loading to Mr Skene as a determinative factor of casual employment, is not demonstrative of error.
  6. WorkPac also contended that a relevant factor was that both it and Mr Skene had considered that Mr Skene was in casual employment.  We agree that that was a relevant factor.  At [82], the primary judge took that factor into account.
  7. Furthermore, WorkPac contended that the fact that the WorkPac Agreement defined or described Mr Skene as a casual employee was “highly relevant if not determinative”. We agree that if the Agreement had defined or described Mr Skene as a casual employee, for the purposes of s.86 of the FW Act, that fact would have been a relevant factor to be taken into account just as a designation in a contract would be a relevant factor. However, as we later determine, the Agreement did not define or describe Mr Skene to be a casual employee. There is no error in the primary judge having had no regard to that factor.
  8. Further, WorkPac contended that Mr Skene was engaged by the hour and that that was a relevant factor.  While that may be a relevant factor in some circumstances, it is “not a necessary characteristic of casual employment that the employee work under a series of separate and distinct contracts of employment each entered into for a fixed period” (Melrose Farm at [106]). Further, as McTiernan J said in Doyle at 565, “[e]ngagement at an hourly rate is not a criterion of casual employment as distinct from regular employment”.
  9. In any event, WorkPac’s contention faces two hurdles neither of which are overcome.  First, the contention that Mr Skene was engaged by the hour was made on the basis that Mr Skene was a “casual FTM” under the Agreement.  We have determined that he was not and also determined (at [224]) that cl 5.6.1 does not, on its proper construction, envisage hourly employment; that is, cl 5.6.1 does not envisage that an employee is separately contracted for each hour of work.  Second, the primary judge made a factual finding, not challenged by the ground of appeal, that Mr Skene was not engaged “by the hour” (at [54]).
  10. The second contention relies on the erroneous proposition that Mr Skene was designated to be a casual employee under the Agreement.  However, the primary judge (at [82]) took into account that Mr Skene was paid by the hour and that (at [54]) even if Mr Skene had been engaged by the hour, that would not necessarily mean that he was a casual employee even for the purposes of the Agreement.
  11. Lastly, WorkPac contended that a relevant factor was that Mr Skene’s employment could be terminated on an hours’ notice.  The submission being that termination on an hour’s notice is indicative of casual employment.  Again, while we accept that termination on very short notice may be a relevant factor (MacMahon at [42]), it is not a factor necessary indicative of casual employment. Subject to any regulatory restriction, contracting parties are free to provide for termination on short notice for any kind of employment. In any event, the primary judge (at [82]) took into account that Mr Skene’s employment was terminable on an hours’ notice. There was no error in the primary judge not regarding that factor as determinative or giving it any more significance than he did.
  12. For all those reasons, WorkPac’s alternative challenge to the judgment of the primary judge that Mr Skene was entitled to annual leave under the FW Act must be rejected. As WorkPac has failed on both its primary and alternative challenges, its appeal must be dismissed.”

WorkPac Pty Ltd v Skene [2018] FCAFC 131 delivered16 August 2018 per Tracey, Bromberg and Rangiah JJ

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