The recent case of WorkPac Pty Ltd v Rossato  FCAFC 84 (“Rossato”), handed down on 20 May 2020, has re-examined and confirmed the definition of a casual employee.
Specifically, Rossato confirmed the definition of casual employment as in WorkPac Pty Ltd v Skene (2018) 264 FCR 536 (“Skene”): A casual employee is an employee who “has no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work".
The Rossato decision is significant because the Full Federal Court held that an employee, who was employed ostensibly on a casual basis and as a result received a casual loading, was entitled to the benefits usually afforded to permanent employees under the National Employment Standards (“NES”) in the Fair Work Act 2009 (Cth) (“FW Act”). These entitlements were annual leave, personal/carer’s leave, compassionate leave and public holidays. This was due to the regular and indefinite work he received under a roster, which was set months in advance.
This could have a catastrophic financial effect on businesses employing casual staff on rostered shifts, particularly at a time where many businesses have experienced significant downturn already.
Background facts considered in the Rossato case
Mr Rossato was employed from 28 July 2014 to 9 April 2018 by labour hire company WorkPac Pty Ltd (“WorkPac”) to work at two coal mines. He was employed under six consecutive employment contracts. The contracts were not all identical, but each purported to employ Mr Rossato as a casual employee. Mr Rossato was paid a casual loading of 25%, stated to be in lieu of his entitlements to annual leave, personal leave, notice of termination and redundancy pay. Mr Rossato worked a 7 day on/7 day off roster which was set approximately 7 months in advance. He rarely missed a shift.
Mr Rossato retired in April 2018 and in October 2018 claimed entitlement to paid annual leave, paid personal/carer’s leave, paid compassionate leave and public holiday pay entitlements under the NES and the relevant Enterprise Agreement.
On the other hand, WorkPac sought:
A finding that Mr Rossato was a casual employee and not entitled to any of the claimed entitlements in the NES;
Alternatively, if Mr Rossato was found to be a permanent employee, because his pay included a 25% casual loading, that loading amount be “set off” or balanced against any amount owed to him in unpaid entitlements;
If Mr Rossato was found to be a permanent employee, that WorkPac was entitled to restitution (recovery) of the 25% loading that had been paid to him.
The Court found that Mr Rossato was not a casual employee because there was a “firm advance commitment” to continuing employment from WorkPac.
For WorkPac to be successful, it needed to demonstrate there was not a firm advance commitment to Mr Rossato to continuing employment.
The usual manifestations of there being no firm advance commitment to ongoing employment are:
irregular work patterns;
discontinuity in the pattern of work.
Other indicators that there is not or may not be a firm advance commitment to ongoing work include:
an employee who stands and waits for work, i.e. is only given the opportunity to work in response to a specific demand that a specific period of time be worked;
an employee who has the capacity to choose whether or not to work a period of time demanded or requested by the employer; and
a short notice period of termination of the contract of employment.
As above, WorkPac did not satisfy the Court there was no firm advance commitment to ongoing employment.
Instead, the following elements of Mr Rossato’s employment supported the finding that there was a firm advance commitment to employment:
The work was carried out in a pattern of regular and predictable hours as required by a roster;
The agreed pattern of work in the roster approximated full time hours;
There was no real ability for Mr Rossato to accept or reject shifts;
The language in the employment contracts suggested that WorkPac was seeking a commitment from Mr Rossato to be available for work and fulfil his contractual obligations to them.
Workpac was unsuccessful in its argument they should be entitled to “set-off” the 25% loading paid to Mr Rossato against any entitlement to leave etc.
Workpac was also unsuccessful in its argument it was entitled to restitution (recovery) of the 25% loading that had been paid to Mr Rossato.
The Court determined that Mr Rossato was entitled to paid annual leave, paid personal/carer’s leave, paid compassionate leave and public holiday pay which had accrued during his period of employment.
LESSONS FOR EMPLOYERS
Courts and tribunals will examine the entirety of the employment relationship when determining whether an employee is casual or permanent, rather than simply a strict interpretation of the contract of employment. The substance of the employment (rather than form) and course of dealing or conduct of the parties will determine the nature of the employment.
Each case will be determined on its own facts. Ultimately, however, employers cannot employ staff to work regular, predictable, ongoing part- or full-time hours under casual employment contracts without affording them the benefits that permanent staff receive under the NES.
Further, employees can essentially “double dip” if their employment contract states casual, but they are working regular, predictable, certain hours for an indefinite period of time.
Employers should undertake a review of all casual employment arrangements to ensure their casual staff are in fact casual or whether some other form of engagement is more appropriate.
In undertaking such a review, employers should be on the lookout for:
Whether the shifts casual employees receive are unpredictable and uncertain (and not in accordance with a pre-determined roster);
Whether there is a clear pattern of work or fixed and repeated roster;
Whether there is any indication that the work is continuing and indefinite.
Such reviews should occur on a regular basis.
HIGH COURT APPEAL
The decision is widely recognised as being controversial and potentially incredibly costly to businesses throughout Australia. Unsurprisingly, WorkPac has now sought special leave to appeal the decision to the High Court of Australia. The Federal Government has also indicated that it will intervene in the appeal.
Workplace Legal will keep its clients advised of any further updates, but in the meantime the Rossato case is the authority and employers should be wary of their casual employment engagements and undertake a review of all such arrangements.
For assistance regarding the above matters, please do not hesitate to contact Workplace Legal on (03) 9972 4950.