Are you entitled to annual leave?

Court determines employee is entitled to annual leave and notice payment after so called ‘casual’ employment is found to be permanent

Employers who engage employees as casuals, need to ensure that these arrangements are properly documented, particularly if the employment is regular, systematic and long-term. Otherwise, the employer may face the prospect of having to pay annual leave and other entitlements normally associated with permanent employment. This was found to be the case recently when the employment of a long-term “casual employee” came to an end.

In the recent case of Apostolides vs Mantina Earthmovers and Constructions Pty Ltd, the Federal Circuit Court of Australia (‘FCCA’) found there was insufficient evidence that an employee with 15 years of continuous service was employed as a casual employee, despite the employer claiming otherwise. The employer claimed that the employee was engaged as a casual employee and was paid an above-award rate of pay which was inclusive of the casual loading paid to casual employees in lieu of entitlements normally enjoyed by permanent employees such as paid annual leave, personal leave, notice of termination, redundancy etc., However, the employee argued that he was engaged on a regular and systematic basis throughout his time of employment, and he regularly worked 38 hours per week plus overtime in a role that was an important part of the company’s operations.

Having considered the evidence, the FCCA found that there was no contract of employment documenting the casual nature of the employment and nor was there sufficient evidence that the employee’s rate of pay was inclusive of casual leave loading. The FCCA also found that the employee’s engagement was long-term, regular and systematic, consistent with that of a permanent employee. Consequently, the FCCA determined that the employee was entitled to payment for accrued but unused annual leave for the 15-year period of employment plus a payment in lieu of notice of termination.

The employee in this case was employed prior to the introduction of the Fair Work Act when legislation did not clearly provide for the employment of casuals on a long-term, regular and systematic basis. This allowed eligible ‘casual employees’ to claim (often successfully) permanent employee entitlements, such as in this case. However, the Fair Work Act does recognise that casual employees may be engaged on a long-term, regular and systematic basis and therefore employers should not be deterred from doing so. Provided that:

1. the casual engagement complies with any terms relating to casual employment expressed within an applicable industrial instrument i.e. modern award, enterprise agreement or the National Employment Standards;
2. the casual employment arrangement is clearly expressed and documented, including whether the rate of pay includes an amount for casual loading payable under a modern award, enterprise agreement or the National Employment Standards. We recommend that employers use an employment contract for this purpose.

Please note: This article is currently under review following a recent decision by the Full Federal Court. Please contact our office if you require further information about this topic.

Should you require any assistance with employment contracts or other employment matters, please contact our employment law team.