A true ‘casual’ employee does not have a ‘firm advance commitment’ as to the duration of their employment, or the days or hours they will work.

This is the ruling of the Full Court of the Federal Court in WorkPac v Rossato, reinforcing its recent decision in WorkPac v Skene (see our previous blog here). In Rossato, as in Skene, the Court found that WorkPac had incorrectly classified an employee as a ‘casual’.

According to the Court, an employee is likely to have a ‘firm advance commitment’ to ongoing employment if, on an objective assessment of all the facts (not just the written contract) at the time the employment commenced, there is a mutual commitment between employee and employer to continuing and indefinite work according to an agreed pattern of work – even if only on a fixed term basis for a considerable period of time, for example several months. An employee in this situation is entitled to the paid leave entitlements of non-casual employees.

Perhaps even more notably, the Rossato decision indicates that the circumstances in which an employer may offset a casual loading paid to a casual employee against a claim by the employee for paid leave entitlements will be significantly limited.

Background

After the Full Federal Court decision in Skene, Mr Rossato wrote to WorkPac claiming that he was not a casual employee and that he had entitlements under both the National Employment Standards and WorkPac’s enterprise agreement to paid annual leave, personal/carer’s leave, compassionate leave and public holidays.

WorkPac proactively commenced proceedings in the Federal Court seeking declarations that:

  • Mr Rossato was a casual employee; or alternatively
  • WorkPac was entitled to apply the 25% casual loading that it had paid Mr Rossato by way of satisfaction of those entitlements (that is, to ‘set off’ those payments against those entitlements) under the common law principles for set off and Reg 2.03A of the Fair Work Regulations 2009 (the Set Off Argument); or alternatively
  • WorkPac was entitled to restitution of the extra money paid to Mr Rossato as a result of his classification as a casual (the Restitution Argument).

Because of its significance, the dispute was immediately allocated to a Full Federal Court.

Findings on casual employment

In finding that Mr Rossato was not a casual employee, the Court applied the test in Skene of whether there was a ‘firm advance commitment’ as to the duration of the employee’s employment. Some (among many) of the relevant factors in finding that there was a firm advance commitment by WorkPac were that Mr Rossato:

  • Agreed with WorkPac to indefinite/ongoing employment;
  • Worked shift work as part of a crew, with advance notice of his rosters (which were fixed according to a set roster pattern which did not provide Mr Rossato with an opportunity to select which shifts he was prepared to work);
  • Worked on a ‘drive in-drive out’ basis under which he drove himself to the mine at the commencement of each swing and was accommodated there by Glencore until the completion of the swing; and
  • (Apart from RDOs), had limited time off work. Essentially, his time off was due to inclement weather, illness of his partner and public holiday closures.

The Set Off Argument

WorkPac’s Set Off Argument failed both on common law principles and under regulation 2.03A, with the Full Court finding:

  • There was no ‘close correlation’ between the casual loading payments made and the claimed entitlements that would permit a common law set off. This was because the claimed entitlements were composite entitlements – that is, both to take the leave and to be paid for it. The limited ability to ‘cash out’ such entitlements was significant in the Court reaching this finding;
  • Similarly, the casual loading had not been designated as being in satisfaction of the claimed entitlements, which would be necessary to enable a common law set off;
  • Reg 2.03A (which was put in place following Skene) had no application in this case because 2.03A(1)(d) is not satisfied. 2.03A(1)(d) requires that a ‘person makes a claim to be paid an amount in lieu of one or more of the relevant NES entitlements’. This was because Mr Rossato’s claims were not claims for payments ‘in lieu’ but rather claims for the payment of entitlements conferred by the NES which he was actually owed. For example, Mr Rossato claimed payment for personal/carer’s leave for leave that he actually took.

Restitution Argument

The Restitution Argument also failed, as the Court was not able to find that a separate portion of Mr Rossato’s wage had been paid either due to a mistake or in reliance on Mr Rossato being a casual, rather than permanent, employee.

The Court also noted that (in the absence of an express set off term in the contract of employment), in order to make out the Restitution Argument, WorkPac would have needed to show that the mistake was so fundamental that the contract wholly failed and was void.

Take-away 

While (based on recent government announcements) there will likely be reform on this issue, the law as it currently stands subjects employers to increased liability for the misclassification of casuals. As we await further developments, we encourage employers to seek advice about the correct classification of their ‘casual’ employees.

Attention is now on casual employment contracts. Clearly drafted contractual provisions may assist an employer in distinguishing its arrangements from those in the Rossato and Skene cases and enable the possible claiming back of a casual loading paid if NES paid leave entitlements are claimed.

For further information, please contact our national Employment, Workplace Relations and Safety team.

Authors

Bridget Nunn | Special Counsel | +61 8 8236 1129 | [email protected]

Lauren Townsend | Special Counsel | +61 3 8080 3773 | [email protected]