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Wow – casuals being eligible for redundancy entitlements, being able to bring claims of unfair dismissal…where to next?

Historically casual employment has been described as employment which is intermittent or irregular in nature. We know that this is no longer the case, casual employment has evolved but many organisations often engage casuals because of the presumed ease of this arrangement. However, the pervious 12 months saw some interesting decisions with respect to casual employment that you might want to consider.

Redundancy entitlements have commonly been calculated on the basis of an employee’s part-time or full-time service, casual service did not count. The case of AMWU v Donau Pty Ltd [2016], FWCFC 3075, now changes this paradigm. In a contentious decision, splitting the Full bench 2-1, the FWC  made a ruling that casual service which has been regular and systematic prior to an employee transitioning, without a break in time, to a part-time or full-time role and whose role is subsequently made redundant will have their period of casual service counted for the purposes of redundancy pay. The issue in question for the Full bench was the concept of “continuous service”. Section 22 of the Fair Work Act defines a period of service as a period during which the employee is employed by the employer, but does not include:

• Any period of unauthorised absence; or

• Any period of unpaid leave or unpaid authorised absence (except community service leave or stand down).

The Full bench determined therefore, that a period of service by a regular and systematic casual employee is not identified as one of the exclusions from a period of service in the Act and as such, where this is established, it should count as services for the purposes of calculating redundancy pay.

It should be noted, where the role of a genuine casual is being made redundant, S.123 of the Fair Work Act continues to provide that redundancy provisions do not apply. This decision only relates to situation in which a permanent employee’s role is made redundant and they have transitioned from a casual engagement which can be demonstrated to be regular and systematic in nature.

The ramifications of this are yet to be seen. Given we know the right to request flexible working arrangements or take unpaid parental leave is driven by a service pre-requisite and entitlements to annual leave and paid personal /carer’s leave are also calculated with reference to continuous service, could these be challenged too? We will wait to see. For employers who are seeking to transition casuals who have been utilised in less than an adhoc manner to permanent staff, the Donau decision is something to keep in mind.

Most employers are aware that permanent employees, are entitled to access unfair dismissal provisions under the Fair Work Act when their employment is terminated in circumstances that they believe to be harsh, unjust or unreasonable provided they completed the minimum qualifying period of 6 or 12 months, depending on the size of the organisation. Employers beware, The Fair Work Commission in the matter of Cole, determined that in relation to the minimum qualifying period, a period of service as a casual employee does count towards the employee's period of employment if the employment was on a regular and systematic basis; and the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis.

The case of Skene v Workpac Pty Ltd [206] FCCA 3035 highlights a further anomaly with respect to casuals. In this case it was established that an employee can be a casual employee under the terms of an enterprise agreement (and therefore have no entitlement to annual leave under that agreement) yet not be a casual under the Fair Work Act 2009 (FW Act) and therefore entitled to annual leave under the FW Act. In this case, although both the employer and employee believed the employee was a casual and although the employee was paid a casual loading, the Federal Circuit Court ruled that the employee was not in fact a casual. This meant that the employee was entitled to annual leave in addition to his casual loading.

This case sits uneasily with the Fair Work Commission decision in Telum Civil (Qld) Pty Ltd v CFMEU [2013] FWCFB 2434, where a Full bench of the Fair Work Commission held that, where employees are engaged under an industrial instrument, the industrial instrument determines the status of the employee’s engagement. 

In the case of Skene, the employee on commencement of employment signed a “Casual or Fixed Term Employee – Terms and Conditions of Employment” document which set out the casual nature of his employment and that he would be paid a casual loading as such. However, the nature of his engagement saw him working a regular work schedule with regular hours which were all determined in advance. In his determination His Honour Judge Jarrett found that Mr Skene’s employment did not have “the essence” of casual employment but instead had the hallmarks of a permanent employee.

What this case is saying is simply labelling and paying an employee as a casual, in an attempt to deem them a “casual” under a relevant industrial instrument may not be enough. It is evident the courts in to determining whether an employee is truly a casual for the purposes of the Fair Work Act will consider factors including:

• The permanence and regularity of the employee’s roster patterns;
• What an employee is told and what documents they have signed on commencement of their employment, as well as;
• The terms of any relevant EA or Award.

These cases really highlight that organisations need to be certain that their employment arrangements reflect the true nature of an employee’s engagement, or else they may face exposure to a variety of claims they previously sought were exempted by engaging a casual employee.

Is defending an unfair dismissal claim becoming too difficult? A recent research study conducted by Professor Oslington, of the Australian Catholic University and Assistant Professor of Economics, Benoit Freyens, of the University of Canberra, gives weight to this claim. The study conducted by the pair, compared unfair dismissal data under the last three major versions of workplace law. The research highlighted that 17,000 unfair dismissal claims are now being processed each year compared to around 6,000 under Work Choices and 7,000 under the previous Workplace Relations Act. Not only did the research show that unfair dismissal claims are on the rise, but the number of successful claims has also increased.

Specifically the study identified the following:

• Workplace Relations Act (1993 – 2006) 48 per cent of claims were successful, 35 per cent of cases won compensation and 13 per cent of claimants were reinstated in the company
• WorkChoices (2006-2009) Only 33 per cent of cases were successful with 21 per cent of claimants receiving compensation and 12 per cent were reinstated in the workplace
• Fair Work Act (2009 – present) 51 per cent of cases were successful, 42 per cent won compensation with only 8 per cent of claimants returning to their position.

This rise has principally been attributed to two things. Firstly the inclusion of small businesses in the system and secondly, claims being pursued under adverse action, thereby increasing the total number of claims. In considering this research, we need to ask: What does an employer need to do if they only have a 50:50 chance of success? What can be done to mitigate the risk in the first place?

In the majority of cases that come before the tribunals, employers have a valid reason for the dismissal of an employee but time and time again we see employers failing to give reasonable and due consideration to the broader issues. These are issues that can impact on the dismissal being seen by the tribunal as ‘harsh, unjust or unreasonable’. The case of Lambley v DP World Sydney Ltd FWA March 2012 clearly demonstrates this. Mr. Lambley was involved in a physical altercation which took place in the car park of his employer’s premises and he was subsequently dismissed for serious misconduct, resulting in him bringing a claim for unfair dismissal. At the hearing Mr. Lambley claimed he was set up; that in his 30 years of employment with the company he had never had so much as a warning or been involved in any type of altercation. An investigation was conducted by the employer and witnesses gave evidence Mr. Lambley was taunted by the other employee to meet him in the carpark. CCTV was also viewed but appeared to have been tampered with. Whilst the employer agreed the actions of the employee were “out of character”, it stuck to its position of zero tolerance in relation to the behaviour, not wanting to send a message that this type of behaviour was acceptable. FWA however agreed with the employee that the dismissal was “manifestly unjust”. In coming to this decision they gave consideration to broader issues in relation to the case:

• The employees remorse;
• His clean employment record;
• The employee being taunted by the other employee;
• That the behaviour of the employee to react like this was out of character; and
• The fact that the other employee involved no longer worked for the company.

FWA acknowledged that Mr. Lambley had breached policy yet he was reinstated.

As employers we need to be mindful of our broader obligations when making decisions in respect to terminations. Not only to be procedurally fair but to give consideration when there are potentially mitigating circumstances because if they are played out in a tribunal we need to ask, does it have the potential to make the decision appear unfair.

For advice on challenging performance management or potential termination situations, please feel free to contact us or on 02 4963 7373