A workplace loophole has been identified, and casual workers throughout Australia are likely to be in a much better position moving forward, after a landmark decision was handed down by the Federal Court earlier this year.  A subsequent decision handed down by the full bench of the Federal Court has since confirmed that that the earlier decision remains judicially relevant when it comes to determining the status of a casual employment relationship.

The initial decision identified the workplace loophole and essentially attempted to close the loophole which had disadvantaged permanent workers by allowing employers to deem them as ‘casual workers’ in their employment contracts, and thereby stripping them of the entitlements, rights and security that accompany a permanent employment position.

In the first case, an employee was classified by his employer as a ‘casual worker’, and this definition was reflected in the various employment agreements he entered into with his employer over his 6 year tenure with the company.  However, he successfully argued that he was in fact not a casual worker, amongst other things, by virtue of the shifts/rosters he was allocated, his actual hours of work, the regular, continuing and predictable nature of the work and the absence of the ability for him to elect whether he worked particular shifts or not.

While a countless number of employees were working “regular, certain, continuing, constant and predictable shifts which were set in advance” and thus should have been classified as permanent employees and receiving benefits such as paid annual leave, sick leave, compassionate leave etc, the unilateral and incorrect categorisation by employers of these workers as ‘casual workers’ meant that they were not receiving these benefits.

In the subsequent case which came before the Federal Court with differing circumstances and facts, and although the Full Bench was somewhat critical that the ‘regular and systematic basis’ test was applied to the hours worked pursuant to the engagement rather than the actual engagement of the employee, it still considered that the terms of the contract between the parties, length of engagement, work frequency, rostering systems, and actual hours worked were all relevant considerations when determining the relationship between the parties.

Another consideration was the employee’s ‘reasonable’ expectation for continued employment with the employer.

These decisions and the exposure of this workplace loophole have potentially exposed employers to a potential $8 billion dollars worth of backpay claims by workers who may have been underpaid and highlights the need for employers to ensure that they are classifying and paying their employees correctly.

It appears likely that an appeal will follow, due in part to the perilous position many Australian businesses are in due to the Covid pandemic together with the already weakened state of the economy and the immediate financial implications businesses may face.  The Industrial Relations Minister has commented on the decision and posited that legislative options may need to be considered, and has indicated that the Government may consider joining a High Court appeal should one be launched.

In any event, it appears that this is area which is highly relevant in present times and is one which has had several shake-ups. It follows then that it is an important time to ensure your ducks are all in a row as a business, and that you know where you stand as an employee.

Affinity Lawyers on the Gold Coast has an experienced and professional Employment Law team who are able to assist with all aspects of employment law, including employment contract drafting, contract reviews, employment law advice and more.  Contact our legal team today on 5563 8970 to arrange a consultation.