High Court Clarifies Casual Employee Entitlements in Landmark Decision
Yesterday, the High Court handed down its decision in the case of WorkPac v Rossato & Ors [2021] HCA 23 (WorkPac v Rossato). This decision was an appeal from last year’s decision of the FCFCA in Workpac Pty Ltd v Rossato [2020] FCAFC 84 and the precedent set in the 2018 judgment of Skene v WorkPac Pty Ltd (2018) 264 FCR 536 (Skene), where controversially, it concluded that a casual worker was able to claim statutory paid leave entitlements.
These earlier Federal Court decisions led to panic from employers, who believed thousands of employees could potentially ‘double dip’, they could get their 25% casual loading as well as the statutory entitlements reserved for permanent workers.
These decisions were also the catalyst for the Federal Government to amend the Fair Work Act 2009 (Cth) (FW Act) in March of this year to include a statutory definition of a casual worker for the very first time and created a National Employment Standard entitlement for casuals to request conversion to permanent employment.
This article will look at the background of Rossato and then contrast the reasoning from the FCFCA decision and the High Court decision.
Background
Mr Rossato was employed from 2014 - 2018 by Workpac, who are a labour hire company that provides services to clients in the coal industry. During his employment Mr Rossato was employed under six employment contracts as a casual and was categorised as a casual under Workpac’s Coal Industry Enterprise Agreement (Enterprise Agreement). He was also paid as such, with the casual loading added to his pay but he did not have any statutory leave entitlements that a permanent would have.
After ending his employment, Rossato followed the Skene decision and wrote to Workpac claiming that his ongoing employment meant that he was entitled to payments. Workpac rejected his claim and promptly filed an originating application in the FCA.
Workpac sought declarations that pursuant to sections 86, 95 and 106 of the FW Act, Mr Rossato was employed on a casual basis and was therefore not entitled to paid leave. Further, they contended that section 116 of the FW Act prevented Mr Rossato from claiming payment for public holidays. Finally, WorkPac sought declarations that as a ‘Casual Field Member’, Mr Rossato was barred from claiming corresponding entitlements under the Enterprise Agreement. If the Federal Court found against them, they also sought declarations that they were retrospectively entitled to Mr Rossato’s 25% causal loading as restitution.
Federal Court Decision
The Federal Court looked at the substance of Mr Rossato’s work, rather than the form of his employment contracts, to determine whether he was a casual employee for the purposes of the FW Act and the Enterprise Agreement. This required analysis on whether there was a firm advance commitment to employment.
They found that while Rossato was employed and paid as a casual, the way his employment contracts were performed pointed against this characterisation. The factors that contributed to this were:
- His contact included a pattern of full-time hours.
- The work roster was supplied sometimes up to a year in advance, with little evidence he could elect not to work.
- His ‘Drive In – Drive Out’ and accommodation arrangement was inconsistent with intermittent employment.
The Court also rejected WorkPac’s claim for restitution for the causal loading paid to Mr Rossato, contending there was no mistake and no failure of consideration in the employment contract. (You can read the JCL insight written at the time of this decision here).
High Court Appeal
In December 2020, the High Court of Australia granted WorkPac special leave to appeal the Federal Court decision in an attempt to clarify casual employment.
WorkPac submitted that the characterisation of an employee as "casual" depends entirely on the express or implied terms of the employment contract without reference to post-contractual conduct. Workpac clearly communicated to Mr Rossato through his contracts that he was a casual, and Mr Rossato accepted each offer of employment on this basis.
The High Court upheld the test of casual employment advanced by both parties, being employment where the employee has no firm advance commitment. However, the majority rejected the Full Federal Court and the Skene decision’s approach of looking at the conduct of parties, rather than the written contract.
The majority also held that “a court can determine the character of a legal relationship between the parties only by reference to the legal rights and obligations which constitute that relationship” [57].
Therefore, using this reasoning, Mr Rossato was correctly paid as a casual employee under his employment contract and Enterprise Agreement with Workpac, and was therefore not able to access any of the paid statutory entitlements for permanent workers.
Comment
This decision, combined with the passing of the FW Act amendments, gives employers confidence and certainty when it comes to their casual employees. According to a Sydney Morning Herald article, the Federal Government had predicted that if this decision had gone the other way, it could have cost businesses $40 billion dollars in backpay. JCL welcomes this decision.
