High Court holds Casual Employee not entitled to Leave Entitlements
On 4 August 2021, the High Court reversed a decision of the Full Court of the Federal Court in a landmark decision clarifying the nature of casual employment. In WorkPac Pty Ltd v Rossato & Ors [2021] HCA 23, the High Court unanimously found that a former employer of WorkPac Pty Limited (Workpac), Mr Rossato was in fact a true casual employee and not entitled to permanent employee entitlements at law, constituting a major victory for employers. The decision could potentially prevent backpay claims that otherwise would have resulted had the 2020 Full Federal Court decision been upheld.
Facts
Labour-hire company Workpac employed Mr Robert Rossato to provide production services to its client (the Employment). Between 2014 and 2018, the Employment was comprised of 6 consecutive contracts described as “assignments” and pursuant to the assignments Mr Rossato would perform work as a casual employee for Workpac’ s client on a “fly-in-fly-out” basis. As a casual employee, Mr Rossato was not paid leave or holiday entitlements in accordance with the Fair Work Act 2009 (Cth) (the Act) or Workpac’s enterprise agreements.
Although explicitly described as a “casual employee” in his contract of employment with Workpac (the Contract), Mr Rossato claimed backpay of leave entitlements purporting that he was not a casual employee based on how he was treated during his employment period with Workpac, such that he was, in his view, treated as a permanent employee. Notwithstanding the fact that Mr Rossato had been paid 25% casual loading pursuant to the Contract in lieu of annual leave, personal leave, and other entitlements, Mr Rossato subsequently claimed for these entitlements. This process of ‘double-dipping’ constitutes a long-standing dilemma and has troubled courts extensively in recent years.
Federal Court Decision
The Full Court of the Federal Court held that Mr Rossato was not a casual employee in accordance with the Contract and Workpac’s Enterprise Agreement and found that Mr Rossato was entitled to the backpay claim and for it not to be off-set against the 25% loading he had already received. Workpac then appealed the matter to the High Court.
Legislative changes and High Court decision
In March 2021, the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth) was passed and significantly clarified the definition of ‘casual employee’ under the Act and the elements necessary to characterise casual employment. A person is a ‘casual employee’ under the Act if that person accepts an offer for a job from an employer knowing that there is “no firm advance commitment to ongoing work with an agreed work pattern”.
The High Court held that any “firm advance commitment” will be found in the binding contractual obligations of the parties based on when the parties committed to the terms of their employment relationship. The High Court noted that the contractual arrangement between Mr Rossato and Workpac did not include a “mutual commitment to an ongoing working relationship” following the completion of each assignment. As such, the “express terms of the relationship between Mr Rossato and Workpac were distinctly inconsistent with any such commitment” that was described explicitly as ‘casual’ pursuant to the Contract.
The High Court reasoned that although Mr Rossato’s established shift structure was arranged well in advance by rosters and might foster a sense of ‘regularity’ or ‘consistency’ in the relationship, this was not enough to establish a commitment to on-going employment following the completion of each assignment.
Although the High Court’s decision in Workpac v Rossato was an immensely positive one for employers, it must be noted that the High Court did not ultimately consider the potential for Workpac to ‘off-set’ unpaid entitlements against the casual loading Mr Rossato had already received (as this was not a necessary exercise for the High Court to undertake). This is still a major issue that employers face in claims by employees seeking unpaid entitlements. Therefore, employers may afford themselves the best protection by implementing written contracts of employment that:
- Explicitly characterise an employee as a casual by reference to the definition of a “casual employee” in the FW Act; and
- Specify the employee’s payment arrangements, including the fact that casual loading is payable.
If you require assistance drafting or amending your written contracts of employment for existing or prospective casual employees, please contact Nick Stevens, Luke Maroney, and Daphne Klianis.
