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Be careful how you label a worker – Lessons from the Skene case.

The decision of the Federal Court in the case of WorkPac Pty Ltd V Skene is an important decision for those who employ casual workers. With major changes taking place in the dynamic of how workers are engaged, I think it is appropriate to revisit this case.

What was the Skene case about?

Paul Skene was employed in 2010 as a casual dump-truck operator in a Queensland coal mine by WorkPac, who operate a labour-hire business. The workplace agreement under which Mr Skene was employed stipulated that:

· He would work 12-hour shifts on a rotating weekly roster;

· After a 3-month probation period he would be made a permanent employee;

· His rate of pay was fixed at $50 per hour;

· Flights and accommodation costs were built in to the $50 per hour.

Mr Skene’s employment was terminated in 2012. After consulting with his lawyers, he brought a claim against his former employer for unpaid leave entitlements on the grounds that he was incorrectly classified as a casual employee. The court agreed with him and ordered WorkPac to pay compensation.

WorkPac tried to argue that because Mr Skene had been paid the 25% casual loading on top of the basic hourly rate, this was evidence that he was a casual. The court didn’t accept this however and the judges made the following important observations:

1. There is no single test to determine whether an employee is in fact casual; and

2. The label used in the contract to define a worker as a casual is irrelevant.

The court concluded that the term ‘casual employee’ has no precise meaning and the assessment of an employment relationship depends on the conduct of the parties and the real substance, practical reality and true nature of the relationship.

Implications of the decision.

The take home message is that how you label an employment relationship means very little at law and you cannot make someone a casual worker just by a choice of words.

Indicators of a true casual employment relationship are:

· Short-term need for the worker;

· Work pattern is irregular and unpredictable;

· Casual loading paid (usually 25%);

· The work is provided on a short-term basis.

Note - these indicia are not exhaustive.

Cost of getting it wrong.

Even if you pay a worker a casual loading rate and a couple of years later they are successful before the courts that you got the relationship wrong, the courts will generally treat the casual loading as a bonus and you will still be required to pay leave entitlements on top of this inflated hourly rate that you would never have paid in the first place. Don’t’ let this happen to you. Be vigilant and proactive in how you engage and classify your workers.



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