Background
WorkPac Pty Ltd, a labor hire company in the coal mining industry, employs casual workers deployed to clients as needed. Under the Coal Mining Industry (Long Service Leave) scheme—a portable long service leave arrangement established by federal legislation—employers must pay levies calculated based on employees’ “eligible wages.” These levies fund a pool from which employers are reimbursed when workers take long service leave, regardless of their service with a particular employer.
WorkPac disputed with the Coal Mining Industry (Long Service Leave Funding) Corporation over the proper calculation of levies for its casual employees. The dispute centered on two statutory construction issues: first, how to identify the “base rate of pay” for casual employees paid on a “flat rate” that incorporates various loadings and allowances; and second, whether the base rate should be multiplied by “ordinary hours of work” (capped at 35 hours per week) or by actual rostered hours worked by the employee.
The case proceeded by way of separate questions directed to ten sample casual employees, whose resolution would determine the proper methodology applicable to the broader cohort of WorkPac’s casual workforce during the relevant period (4 July 2012 to 31 December 2023).
The Court’s Holding
Justice Younan held that for casual employees paid on a “flat rate” basis under the relevant enterprise agreements, the “base rate of pay” for levy calculation purposes is the flat rate specified in the Notice of Offer of Casual Employment, less any casual loading explicitly identified as a separate component in that notice. For employees subject to certain notices, this meant subtracting the 25 per cent casual loading specified in the agreement schedules.
On the hours issue, the court determined that the base rate should be multiplied by the hours actually worked by the employee insofar as they corresponded with the employee’s rostered hours, not by a standardized definition of “ordinary hours of work.” The court rejected WorkPac’s submission that “ordinary hours of work” should be capped at 35 hours per week, finding instead that the relevant hours were those the employee was rostered to work and actually performed.
The court emphasized that the scheme’s design ensures a direct connection between what employers pay in levies and what they can claim for reimbursement, but acknowledged that complete correspondence between input and output was not the legislative intent. The definition of “eligible wages” in the Collection Act did not support reading in an additional 35-hour cap beyond what the legislation explicitly stated.
Key Takeaways
- For casual employees paid flat rates that incorporate loadings, the base rate is the stated flat rate less any separately identifiable casual loading, not the underlying minimum hourly rate.
- The relevant hours for multiplying the base rate are actual rostered hours worked, not a standardized “ordinary hours” figure capped at 35 hours per week.
- The scheme’s legislative intent protects against inflated claims by limiting reimbursement to “eligible wages” as defined in the Collection Act, not by imposing extrinsic hour caps.
Why It Matters
This decision affects how all employers in the coal mining industry calculate statutory long service leave levies for casual workers. It clarifies that flat-rate pay structures must be disaggregated to identify the underlying base rate by removing explicitly specified casual loadings. The ruling confirms that the number of hours for levy calculation is determined by what the employee actually worked within their roster, preventing artificial inflations through undefined “ordinary hours” interpretations.
The decision also reinforces the principle that the portable long service leave scheme operates on a pooled, cross-employer model where individual contribution and reimbursement amounts need not precisely match, provided the scheme’s funding integrity is maintained through proper calculation of eligible wages.