Annual Leave Entitlements for Casual Employees

The news has been very full lately of a new threat to business that is not related to COVID-19. As welcome as different news may be, this development has caused a lot of undue concern and panic among small businesses across Australia including NBIA Members.

Before we go any further, I would like to restate the current concerns so we can provide the reassurance you need. Last week, a Full Bench of the Federal Court of Australia handed down a decision which confirmed that a casual employee who was employed by Workpac (a labour hire firm) was entitled to accrue and take annual leave, personal/carer’s leave, and public holidays in accordance with the National Employment Standards (NES).
This decision followed an earlier decision, also involving Workpac, that another of their casual employees should have been accruing and paid annual leave when he finished employment with them.
Please note that these decisions only related to casual employment of these two workers PRIOR to December 2018. After that date, the Federal Government amended the Fair Work Regulations 2009 to confirm that employees who are being paid a casual loading are not entitled to receive the paid leave entitlements from the NES. So all casual employment AFTER December 2018 is excluded from this current controversy.
We then have to look at how we got here to understand why we don’t believe that this is an issue that will plague us for long.
Prior to 2006, the only way an employee who was covered by an Award earned an entitlement to Paid Annual Leave, Sick Leave, Bereavement Leave, or paid public holidays, was via their Award. Each Award contained a clause for each of these entitlements. Each clause also stated something along the lines of “Every employee, other than a casual employee, is entitled to paid leave in accordance with the following…”. The vital point is that every Award also defined what a “casual employee” actually was. In some Awards the definition was as simple as “A casual employee is one who is engaged and paid as such”, while some others had definitions which specified the restrictions around their employment, such as “A casual employee is an employee who is employed to work for less than 30 hours per week for no more than six consecutive weeks”.
In 2006 the Howard Government decided that the Award system would be abolished and all entitlements would be drawn from the Act. They already had leave provisions in the Act for employees who were not covered by an Award, so it seemed a simple adjustment. However, the Act did not, and never has, defined what a “casual employee” actually is. The assumption was that the definitions in the Awards (which were never abolished) would continue to apply for the purposes of the leave and other NES provisions. They did not.
The Federal Court were therefore required to work out how to define what a “casual employee” was for the purposes of these entitlements. Because the Act gives no hints, or obligation to review the definitions in the Awards, they had no choice but to use the “plain English” meaning, and for this they have to look at a dictionary. No dictionary would ever define a casual employee in the same way as an Award, so we end up with this current decision.
Our advice is to not panic, to advise staff that this matter is before the courts and until we have a definite decision from the High Court or the Federal Government we are not going to be accruing, or paying for annual leave to any person employed and paid as a casual prior to December 2018.

If you have any questions about Leave Entitlements for Casual Employees or IR/HR please call the NBIA Membership Hotline on 1300 557 022 or email the NBIA Membership Officer.