A High Court win for WorkPac – no leave entitlements for regular and systematic casual employee
One of the most significant decisions in employment law recently, was the decision of the Full Federal Court which found that a coal mining employee, Mr Rossato, was entitled to paid leave entitlements, despite being engaged as a casual employee. However, in a significant decision for Australian employers, this week the High Court of Australia upheld this employer’s (a labour hire company called Workpac) appeal against that Full Federal Court decision.
Whilst the High Court decision is a win for employers, it is important that employers understand the background to the decision and the factors the High Court considered in reaching the conclusion that Mr Rossato was a casual employee and not entitled to permanent employee type entitlements.
In 2018, Mr Rossato claimed that he was not a casual employee and was entitled to paid annual leave, public holidays and paid personal and compassionate leave entitlements. Mr Rossato’s claim was made after his retirement, and in reliance on the decision of WorkPac Pty Ltd v Skene (2018) 264 FCR 536 (‘Skene decision’), which was handed down around the same time as Mr Rossato’s retirement. In the Skene decision, the Federal Court held that Mr Skene, an alleged casual employee of WorkPac’s, working under similar circumstances to Rossato, was not a casual employee.
WorkPac denied Mr Rossato’s claim for entitlements and sought a declaration from the Federal Court that Mr Rossato was a casual employee and not entitled to permanent employee type entitlements. In the alternative, WorkPac sought declarative relief that if Mr Rossato was found to be permanent, that WorkPac was entitled to “set off” the casual loading paid to Mr Rossato during his employment against the permanent entitlements claimed.
In May 2020, the Full Federal Court determined that Mr Rossato was not a casual employee for the purpose of the Fair Work Act 2009 (Cth) and the applicable enterprise agreement. In making such a determination, the Federal Court declared that Mr Rossato was entitled to permanent leave entitlements and that WorkPac could not “set off” the casual loading against those permanent leave entitlements. Upon application to the High Court, WorkPac was granted special leave to appeal the Full Federal Court decision.
Access our previous Alert here for a more comprehensive overview of the Rossato and Skene Federal Court decisions.
Factors considered by the High Court
On 4 August 2021, the High Court handed down its long-awaited decision. Below are some of the key findings of that decision:
The High Court determined that the Full Federal Court “fell into error” in the Skene decision as it “strayed from the orthodox path” to assess the characteristics of casual employment. The High Court accepted WorkPac’s submission that the Federal Court, in approaching the characterisation test, did not look to cases where the “parties had committed the terms of the employment relationship to a written contract and thereafter adhered to those terms”.
Contract of employment
The High Court held that the contractual arrangements between Mr Rossato and WorkPac did “not include a mutual commitment to an ongoing working relationship between them after the completion of each assignment”. Furthermore, that express terms of the contracts were “distinctly inconsistent with any such commitment”. The High Court also noted that Mr Rossato’s remuneration was agreed between the parties on the basis of no mutual commitment to an ongoing working relationship.
No firm advance commitment
The High Court accepted that there was no firm advance commitment evident in the express or implied terms of Mr Rossato’s contracts of employment (assignments). It found that a casual employee’s reasonable expectation of continuing employment on a “regular and systematic basis” does not demonstrate firm advance commitment.
Regular and systematic employment
The High Court agreed with WorkPac’s submission that the Fair Work Act “explicitly recognises that casual employment can be “long term” and can involve “a reasonable expectation of continuing employment … on a regular and systematic basis”.
Fixed (advance) roster
The High Court concluded that the performance of Mr Rossato’s work obligations that “exhibited features of regularity and consistency did not establish a commitment between the parties to an ongoing working relationship after each assignment was completed”. The High Court was critical of the Federal Court’s “inordinate emphasis” on the roster system that Mr Rossato was obliged to work, stating that the “working hours […] fixed by rosters is of limited significance”.
Fair Work Act and Enterprise Agreement
The High Court determined that Mr Rossato was a casual employee for the purpose of the Fair Work Act 2009 (Cth) (‘FW Act’) and a “Casual Field Team Member” for the purpose of the relevant enterprise agreement.
Take-aways from the decision
The High Court decision highlights the importance of:
- having well drafted contracts of employment for casual employees that clearly set out the casual nature of the arrangement (just calling someone a casual employee in the contract is not enough – there should be emphasis on their being no firm advance commitment to ongoing employment);
- ensuring that a casual employee’s remuneration is based on having no mutual agreement to ongoing work (this means having clear contractual terms about the payment of the casual loading and what that casual loading is paid for); and
- adhering to the terms of relevant modern awards and enterprise agreements concerning the terms and conditions for casual employment, particularly in respect of casual conversion obligations and rights; and
- adhering to the new statutory provisions now contained in the FW Act concerning casual employment.
Clearly, the key takeaway from this decision is that properly drafted employment contracts for casual employees are essential. Employers should take time to review their casual engagements and contracts in light of this decision and seek advice if they have concerns about those engagements, or where they believe that their contracts need to be reviewed. If you require advice concerning the engagement of casual employees or assistance in drafting or updating casual contracts of employment, please contact one of Aitken Legal’s specialist employment lawyers.
Disclaimer: The information contained this article is general and intended as a guide only. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this update, Aitken Legal does not accept liability for any errors it may contain. Liability limited by a scheme approved under professional standards legislation.