Court ruling could put SMEs out of pocket with back pay to casuals

- August 20, 2018 2 MIN READ

The federal court of Australia has ruled in favour of a casual truck driver who sued major mining corporation Rio Tinto for holiday pay after his contract concluded.

The court found the truck driver, who worked for the company under a hiring agreement for almost four years, was not a casual worker under employment law because of his regular and continuous work.

The court heard the truck driver had been working 12.5-hour shifts in ‘a seven days on, seven days off continuous roster arrangement’.

The truck driver had been employed at a Rio Tinto mine in Queensland by labour-hire company Workpac. When his contract was terminated, he requested annual leave be paid out given the regularity of his work. When the labour-hire company refused, he took the mining giant to court.

The case has now been heard before a full bench of the Australian Federal Court, with the court ruling in favour of the truck driver. The ruling is likely to have a significant impact on small to medium business owners who provide a majority of the nation’s casual employment opportunities and employ casual workers on a regular basis.

It could see an end to the ‘permanent casual’.

ACTU President Michele O’Neil said the ruling made clear that employers wanting to avoid their responsibility to pay entitlements by classifying an employee as casual, would be caught out.

“This is a major blow for employers who want to use casualisation to avoid their responsibility to their employees,” she said.

“This decision makes clear that employers seeking to avoid paying people’s entitlements can’t simply rely on classifying workers as casuals.”

CFMEU national president Tony Maher told the Sydney Morning Herald the decision challenged a flawed business model used by labour-hire firms.

“It means the end of the so-called ‘permanent casual’, which was always a rort,” he said.

“The labour hire industry will cry foul over this decision – the answer for them is to employ people under proper workplace arrangements that reflect the real nature of their work.”

The landmark ruling is being described as a pivotal test case for casual employment in Australia.

If the ruling remains unchallenged, it is likely to open the door to 1000s of cases of employees filing for back pay.

Currently, under the Fair Work Act’s national employment standards, a casual employee is not entitled to annual leave. However, the Act neglects to provide a definition of a casual employee.

The decision is the second ruling that could have a major impact on Australia’s SME’s with the Fair Work Commission recently ruling that shift workers should have their leave entitlements calculated by the total number of hours worked in a regular shift. The ruling means that those working a 12-hour shift could be entitled to 120 hours leave a year as opposed to the standard 76 hours of paid leave, leaving businesses open to millions in back pay.

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