The High Court has clarified the casual employment relationship in its decision on 4 August 2021 in WorkPac Pty Ltd v Rossato [2021] HCA 23. This litigation has been ongoing over the last 3 years and concerned the definition of ‘casual employment’ in relation to a claim made by Mr Rossato.
The High Court unanimously upheld the challenge by WorkPac Pty Ltd (WorkPac) and overturned the Full Federal Court’s decision to find that Mr Rossato was a casual employee and was not entitled to be paid any leave entitlements which are reserved for permanent employees.
The road so far
Mr Rossato was engaged by WorkPac (a labour hire company) under a series of 6 casual contracts over a period of 4 years (from 2014 to 2018) to perform work for a mining company. Mr Rossato’s employment was also governed by an Enterprise Agreement. WorkPac treated Mr Rossato as a casual employee and as such he was paid the 25% casual loading and not given annual leave, personal leave, and other leave entitlements which are available to permanent employees under the National Employment Standards and the relevant Enterprise Agreement.
In 2018, after he retired, Mr Rossato then claimed he was not a casual employee and sought payment in respect of entitlements to leave he had taken over the course of his employment, in reliance on an earlier decision in WorkPac v Skene [2018] FCAFC 131. Mr Rossato claimed he was not a casual employee as he had been performing regular, constant and predictable work.
In response, WorkPac sought a declaration from the Full Federal Court that Mr Rossato was a casual employee and was therefore not entitled to payment for the leave he was seeking. The Full Federal Court considered the characterisation of casual employment and took into account that Mr Rossato’s engagements were stable, regular and predictable employment for which he received weekly rosters which were fixed for long periods of time (up to 7 months in advance). This indicated, to the Full Federal Court, that there was a “firm advance commitment” to the employment, being akin to that which is afforded to permanent employees.
In 2020, the Full Federal Court found that Mr Rossato was not a causal employee for the purposes of the Fair Work Act and the Enterprise Agreement. Further, the Full Federal Court did not consider the 25% casual loading which had been paid to Mr Rossato could satisfy the entitlement as it was only a payment ‘in lieu’ of the entitlement, and therefore was not able to set off these amounts paid to Mr Rossato against the entitlements claimed.
WorkPac sought special leave to appeal to the High Court, which was granted on 26 November 2020. WorkPac contended that the Full Federal Court was in error in finding Mr Rossato was not a casual employee, or alternatively that the Full Federal Court wrongly rejected WorkPac’s claims regarding the set off of the 25% casual loading against payment of the leave entitlements.
The High Court’s Decision
The High Court confirmed that the proper test to determine whether an employee is a casual, is whether there is a “firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work”.
The High Court clarified that where the parties have a written contract containing terms regarding the employment relationship, the Court will look at those terms in determining whether there is a ‘firm advance commitment’ to ongoing employment. In essence, the High Court did not consider the “practical effect” of the agreement or look behind the written terms of the casual contracts to non-contractual issues such as conduct of the parties, or the systematic nature of the work being undertaken on the basis of the rosters. This ‘firm advance commitment’ must be based on enforceable terms, and cannot be merely an ‘expectation, understanding or hope’ that there would be ongoing employment.
The High Court analysed Mr Rossato’s 6 casual contracts and did not find any terms expressing a commitment to ongoing employment beyond the completion of each of the ‘assignments’ in each contract. The nature of the 6 casual contracts meant Mr Rossato was engaged on an ‘assignment-by-assignment’ basis and there was no obligation on WorkPac to offer another contract to Mr Rossato at the completion of the current contract, and Mr Rossato could accept or reject any future contracts which he was offered. Based on the contractual obligations in each of the 6 casual contracts, Mr Rossato was carrying out each assignment as a casual employee. The High Court found Mr Rossato was a casual employee and was not entitled to leave entitlements which were available to permanent employees.
Interestingly, the High Court found that, while the rosters which were provided to Mr Rossato were regular and systematic during the period of each contract, and were provided well in advance (up to 7 months), this did not establish a commitment to continuing employment after the completion of the each casual contract.
As a result of the determination by the High Court that Mr Rossato was a casual employee, it was not necessary to consider or make any findings on the set off of the 25% casual loading against the leave entitlements.
Amendments to the Fair Work Act
The recent amendments to the Fair Work Act 2009 (Cth) (the Act) in March earlier this year provided a statutory definition of ‘casual’ employment. This decision by the High Court is consistent with this new definition (even though the High Court made their determination with regard to the previous law regarding casual employees). The effect of the amendments is that the casual relationship is determined at the time a casual offer is made to an employee and is accepted by the employee, and is not based on the subsequent conduct of the parties.
Although the issue of setting off the 25% casual loading against leave entitlements was not considered by the High Court in this case, the amendments to the Act enable the offsetting of permanent employment entitlements (such as annual and other types of leave) against the amount of casual loading which has already been paid to the employee.
Implications of the High Court Decision
The decision provides clarification for employers that they are able to rely on a properly drafted casual employment contract to protect themselves from claims for permanent employment entitlements (such as paid and other leave). This decision, while not strictly made under the newly introduced definition of ‘casual’ in the Act, indicates how courts will likely apply the new statutory definition and highlights the importance of clear contractual arrangements.
It is a timely reminder for employers to examine their casual employee contracts as soon as possible to ensure compliance and avoid the substantial risk of uncertainties.
Employers should also review the other amendments to the Act which affect casual employees and ensure compliance with these new requirements.
Our employment team is able to assist employers in preparing contracts tailored to their situation to ensure they are enforceable as offers of casual employment and to assist with ensuring compliance with the new casual conversion obligations of employers introduced by the Act which are required to be implemented by 27 September 2021.
