WorkPac v Rossato: When is a casual not a casual?
May 25, 2020
In 2018 the WorkPac v Skene[1] case sent shockwaves in the labour market when a casual employee was in hindsight found to have been employed on a permanent basis.
In 2020, a new Court decision in Workpac v Rossato[2] has the real potential to trigger widespread reviews of the nature and utilisation of workers on casual employment arrangements in Australia.
While the Skene case was about an employee engaged under an Award, the new Rossato decision dealt with the nature of casual employment under the Fair Work Act (The Act) which means it has a broader impact for casual employment across all Awards.
Why is this case important?
This case potentially allows certain casual employees, who meet the requirements, to claim leave entitlements under The Act. The case also found that employers were not able to offset any casual loading already paid to the employee against the amount owed. These two parts together potentially creates new liabilities for employers with casual workforces.
Entitlements under the Fair Work Act.
The National Employment Standards (NES) are a set of 10 minimum standards for all employees in the Federal workplace relations system and include annual leave, paid personal leave, carers leave & compassionate leave, redundancy pay and a range of other entitlements. Some of the NES benefits, such as paid leave and redundancy pay are not available to casual employees.
The Act does not define casual employment, which leaves it open for Courts to determine what is meant by casual employment, and what it does not mean.
What was the work arrangement?
Mr Rossato was an experienced mining industry employee who worked as an on-hire casual for Workpac, where his employment terms were set out firstly in a General Conditions document that applied to each period of work and secondly in a notice that would apply for each separate assignment he was asked to work. There were six separate Notices (Notice) throughout Mr Rossato’s employment with WorkPac which set out where he would work, his rate of pay, roster of hours and so on.
The first three Notices each set out a flat hourly rate of pay, and expressly stated the rate included a casual loading in lieu of entitlements under the NES. The balance of the Notices did not expressly state that the rate of pay was in lieu of NES entitlements and contained other differences to the earlier notices.
Was the employment casual or not?
The central question for the Court was whether Mr Rossato was a casual employee or not – and the Court held that the nature of the employment meant that Mr Rossato was not employed on a casual basis.
There are a few key points that the court used when determining the status of Mr Rossato’s employment by looking at the contracts:
- The roster arrangements in the Notices indicated that Mr Rossato was being offered regular and predictable hours of work.
- WorkPac knew the employee would perform regular work with a fixed pattern.
- Timesheets that Mr Rossato were required to complete were pre-filled with the set hours which indicated that WorkPac knew there would be a set pattern of work during the employment.
- As the employment continued it was clear to both parties that the employment relationship would be ongoing, with a predictable pattern of work according to the rosters.
- Some of the Notices contained terms that allowed WorkPac to claim damages if Mr Rossato failed to attend work or rejected a shift he was rostered for, and others put Mr Rossato on notice that may be asked to pay for accommodation & transport costs if he did not attend for a rostered shift. These terms meant that while Mr Rossato could in theory decline to work a shift there were significant penalties and disincentives if he did so.
This outcome will clearly be in conflict with a common understanding that a casual employment is someone who is “engaged and paid as such” as is commonly stated in Award.
What did it mean?
If Mr Rossato was not a casual employee then he had to be a permanent employee, meaning he is entitled to the benefit of the minimum paid leave and redundancy entitlements under the NES.
Workpac then argued that because Mr Rossato had been paid a casual loading in his rate of pay it should be allowed to offset those entitlements against the casual loading already paid. The Court did not agree and did not allow Workpac to do so.
What does this decision mean for you?
This decision in addition to the previous WorkPac case is resulting in considerable concern from employers of casual employees. Employers fear that this may lead to claims being made by employees challenging the status of their employment and entitlements. Employees have 6 years to bring an underpayment claim against their employer, which could allow both current and former employees the potential to bring a claim.
There are currently two class actions against WorkPac that were placed on hold awaiting this decision. It is expected that decisions will follow quickly in those cases and if successful it will lead to potentially more class actions against employers with large casual workforces. This underlines the significance that this case has on casual entitlements and the risks for employers.
Important steps to protect your business would be to review casual contracts and hours to see if any casual employees may be incorrectly classified.
The Attorney General hinted that legislative measures may be taken to address this case especially considering the current economic climate concerning Covid-19. There has not been any indication from WorkPac if they intend to bring a High Court appeal for this case. As these two avenues progress, we will keep you updated.
FCB Group are here to support you in these uncertain times, so please reach out to us on 02 9922 5188 if you have any questions or concerns regarding your casual employees.
[1] WorkPac Pty Ltd v Skene [2018] FCAFC 131
[2] WorkPac Pty Ltd v Rossato [2020] FCAFC 84
