Over the last approximate 20 years, Australia has seen a very large growth in “non standard” work. While that state of affairs is due to a number of factors, one significant feature has been the increasing rates of “casualisation” of jobs, writes Peter Punch, Partner, Carroll & O’ Dea Lawyers.
But the writer points out that the recent decision of Williams v MacMahon Mining Services Pty Ltd  FCA 1321 (30 November 2010), the Federal Court of Australia (FCA) held that the parties to an employment contract could not define that relationship as “casual” and expect that characterization to prevail, where a court did not regard the relationship to be truly “casual”.
Mr Williams was employed as a miner by MacMahon Mining Services Pty Ltd at the Argyle mining site in Western Australia. In terms of his letter of employment, Mr Williams was appointed as a “casual miner” and required to work on a “fly-in fly-out” basis according to a roster which saw him work “two weeks on and one week off”. Mr Williams was paid an hourly rate which included a loading in lieu of leave entitlements and the letter of employment stated that the relationship could be terminated by one hour’s notice by either party.
Mr Williams’ contract was terminated approximately a year after his appointment. He was given one hour’s notice as per the letter of employment and did not receive any payment for annual leave on termination.
Justice Barker was required to determine whether Mr Williams had been employed on a casual basis. He upheld an earlier ruling by Federal Magistrate Lucev (Williams v MacMahon Mining Services Pty Ltd  FMCA 511 (29 May 2009)) that Mr Williams was, in fact, not a casual employee despite the clear statement in the contractual document as to the parties’ intention. These were the main reasons for his decision:
- The simple well known principle in Australian employment law that just by calling an employment relationship one thing – ie “casual”(even by agreement) does not make it truly what you have called it – a court will determine on the facts what the true nature of the relationship is.
- The High Court decision of Doyle v Sydney Steel Co Ltd (1936) 56 C.L.R.545 held that the concept of “casual employment” was “ill defined” in Australia, but that its essential essence is “intermittency and irregularity”. This was singularly lacking in Mr Williams arrangements which clearly showed that he was engaged on a roster that gave him regularity of shifts and a degree of permanency in practice even if the contract did not provide it.
- The fact that the contract allowed either party to terminate on one hour’s notice to the other was not in accordance with the totality of the relationship. On the facts, the expectation was that the supply of work would continue until the job was finished or the employer lost its head contract.
Mr Williams was thus entitled on termination of the employment relationship to the monetary value of the annual leave that he had accumulated during his period of employment. Moreover, Barker J ruled that the employer could not have a credit against its liability for annual leave payment because of the “loading” it paid to the supposed “casual” to compensate for absence of annual leave entitlement. That latter aspect of the decision gives rise to its own considerations.
No credit for “casual loading”
The company argued that if the FCA rejected its principal argument that Mr Williams was truly a casual, then any entitlement he had to annual leave pay on termination of employment had to be offset by what the company had paid to him as a “casual loading”.
This argument was rejected at first instance before Federal Magistrate Lucev and then on appeal by Barker J.
The writer considered that that argument always had logical difficulties because the loading was a global percentage calculated to compensate the casual for the absence of a range of benefits, not just the absence of annual leave. But more importantly, the principal reason why the argument was rejected by the FCA was because of the impact of Section 173 of the Workplace Relations Act 1996 (Cth) (WR Act), which relevantly provided as follows:
“A term of a workplace agreement or contract has no effect to the extent to which it purports to exclude the Australian Fair Pay and Conditions Standard.”
Barker J believed there was a real inconsistency between the contractual term about paying a loading in lieu of giving annual leave during the employment and the statutory right to be paid for any untaken annual leave in money form on termination of the employment under the then Australian Fair Pay and Conditions Standard. He said:
“Section 173 reflects a parliamentary intention that a person cannot, by one means or the other, contract out of their entitlement to be paid out annual leave and other leave entitlements at the end of a employment period, save for the particular provisions allowing for sacrifice of annual leave.”…
This decision was given in the context of the then prevailing provisions of the WR Act which has now been superseded by the provisions of the “National Employment Standards” found in Part 2-2 of the Fair Work Act 2009 (Cth) (FW Act). The equivalent provision to Section 173 of the former WR Act in the current FW Act is Section 61 (1) which provides:
“This Part sets minimum standards that apply to the employment of employees which cannot be displaced, even if an enterprise agreement includes terms of the kind referred to in sub section 55 (5)”.
While the words of Section 61 (1) are different to those of Section 173 it seems that the intention is the same and Mr Punch would expect that the same approach as applied by Justice Barker to the meaning of s 173 in the Williams’ case will also be applied to Section 61 (1).
[It is noted however that the standard clause in Modern Awards relating to notice of termination does allow the employer to deduct moneys from an employee’s annual leave entitlement on termination if the employee has failed to give the employer the necessary notice of resignation – see, for example, Clause 13.2 of the Clerks -- Private Sector Award 2010. This is a small change from the prevailing law in at least some state jurisdictions, where annual leave entitlement on termination of employment was sacrosanct from employer deduction for money owing to the employer.]
Implications for employers
So, what does this case mean for all those myriad of casual arrangements that exist in private sector employment throughout Australia? Does it mean, for example, that the established concept of “the regular casual” (common in the hospitality, cleaning and other “fluctuating demand” industries) has to be reassessed? Might such a person now be entitled to bring an unfair dismissal claim even if he or she cannot satisfy the preconditions for casuals bringing such claims, as specified in s 384 (2) of the FW Act? Perhaps, but perhaps the Williams’ case is confined to the peculiarities of the mining industry.
The general lessons for employers from this case are clear: just because you have a written agreement with an employee for “casual” employment (and pay him or her a loading for the casual status) is not enough – if the relationship has regularity, certainty and is expected by both sides to be ongoing then it may not be truly casual (which will mean regular employee benefits such as annual and personal leave and redundancy/ notice entitlements will apply – even though a loading for lack of such entitlements has been paid by the employer).