RP Emery and Associates - Legal Publishers Since 1990
Category A-Z
HomeAbout UsBlogBusiness ContractsPeople and Relationship ContractsReal Estate ContractsCheck OutMembers

Casual Employee Classification – Demystifying the Decision in Workpac v Skene

Court Ruling Workpac v SkeneThe recent ruling by the Federal Court of Australia in Workpac v Skene has resulted in the potential classification of casual employees as permanent employees. This decision is significant for small businesses, many who employ staff on a casual basis, as staff may now be entitled to additional benefits. In this article, we discuss the impact of the decision and potential impacts on your business.

Permanent vs Casual Employees

Permanent employees have minimum work entitlements, such as guaranteed work hours, an ability to accrue annual leave and sick leave.[1]

Casual employees generally do not have an advance commitment of work, have no guaranteed hours and do not accrue sick or annual leave entitlements.[2] Casual employees are generally paid a higher rate (commonly 25%) as compensation for reduced employee benefits.

Background - Workpac v Skene

Mr. Skene was employed on a continuous basis from July 2010 – April 2012 by labour-hire company Workpac as a dump truck operator at a Rio Tinto mine in Queensland. Mr. Skene was a fly-in fly-out worker employed on a casual basis and received no leave entitlements, yet no casual loading was applied to his pay. He worked a regular roster of 12.5 hours per day, 7 days on 7 days off that was set a year in advance. In April 2012, Mr. Skene was terminated due to misconduct and lodged a claim for leave entitlements.  

Federal Court Ruling

The Federal Court ruled in favour of Mr. Skene, classifying him as a permanent employee who was entitled to additional employment benefits such as annual leave or back-pay for sick leave. The court determined that casual employment is classified by the absence of a commitment to ongoing employment, which was not consistent with Mr. Skene’s regular, predictable and consistent employment terms. Thus, Mr. Skene was not considered to be a casual employee in accordance with the Fair Work Act 2009 (Cth).[3]

What this means for you

The decision in Workpac v Skene means that many employees who are contracted on a casual basis could be classified as permanent employees with full entitlements. [4] Employees have 6 years to raise claims from the date their employment ends.

The new approach means employers are required to assess the substance or ‘practical reality’ of the employee-employer relationship and whether employees are engaged in ‘continuing and indefinite work’. This assessment should include consideration of:

  • circumstances of employment;
  • contractual terms;
  • whether the work is frequent and predictable or irregular and uncertain; and
  • any payments (such as casual loading).[5]

As a worker may initially be employed on a casual basis, later becoming a permanent employee, it is critical that the individual and employer agree to the nature of employment. The terms of casual contracts should be clear, and a casual loading should be applied to the employee’s pay slip. Business owners should also ask themselves if casual staff have a reasonable expectation of ongoing employment, have irregular working patterns or are assigned unpredictable rostered hours.

It may also be necessary to review the employment terms of a casual employee, as the classification may change over time. This may result in a reconsideration of your business needs and whether casual employees are best suited to your business or if hiring permanent part-time employees will offer greater certainty.

[1]   Fair Work Act 2009 (Cth) s 86.

[2]   Hamzy v Tricon International Restaurants trading as KFC (2001) 115 FCR 78.

[3]   Fair Work Act 2009 (Cth) s 86.

[4]   Workpac Pty Ltd v Skene [2018] FCAFC 131.

[5]   Workpac Pty Ltd v Skene [2018] FCAFC 131.

Other Resources

What is Permanent Part Time employment?

What types of employees do you have? Are you meeting your obligations?

Employment Articles

Casual Emplyment Agreement Template available for Immediate Download



Sign up to the Bottom Line