Perhaps unsurprisingly to some, yesterday’s Full Federal Court decision of WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (Rossato) has delivered the same outcome as the landmark decision of WorkPac Pty Ltd v Skene [2018] FCAFC 131 (Skene). See here to read our previous Skene update.
Rather than appealing the Full Court’s decision in Skene to the High Court, WorkPac elected to launch the Rossato case to have the law in this area reconsidered. Unfortunately for employers, WorkPac was unsuccessful.
Substance of the case
WorkPac submitted that aspects of the decision in Skene were in error. Further, Mr Rossato’s circumstances were different to that of Mr Skene, although the Court ultimately found that the circumstances of his employment could not be distinguished in a material way from those in Skene.
The crux of WorkPac‘s case was that Mr Rossato was a casual employee on the basis that there was an absence of a “firm advance commitment as to the duration of the employee’s employment or the days/hours the employee will work”. WorkPac submitted that the presence or absence of such a commitment was to be determined by reference to the express terms of the written employment contract and without reference to other materials, including evidence of the way in which the contract was performed in practice.
However, the Full Federal Court found that the presence or absence of the “firm advance commitment” may be assessed by regard to the employment contract as a whole, including how the contract was performed in practice by considering the following:
- whether it provided for the employment to be regular or intermittent;
- whether it permitted the employer to elect whether to offer employment on a particular day;
- whether it permitted the employee to elect whether to work; and
- the duration of the employment.
The Court also found that the label or description given to the relationship by the parties is relevant, but not conclusive.
It was ultimately held that Mr Rossato was not a casual employee for the purposes of the Fair Work Act 2009 or for the purposes of the relevant enterprise agreement.
In coming to its decision, the Court found that the parties had agreed on employment of indefinite duration which was stable, regular and predictable such that the “firm advance commitment” existed in each of Mr Rossato’s six employment contracts.
Significantly, the Court also ruled that WorkPac was not entitled to restitution or to “set off” Mr Rossato’s 25% casual loading against any claim for unpaid leave entitlements – in effect, allowing Mr Rossato to ‘double dip’.
Implications for employers
The Full Court decisions in Skene and now Rossato affect all employers who employ casual staff, not just those operating in the labour-hire space.
Until this area of law is overturned by the High Court or we see the legislative change that so many employer groups are currently pushing for, these decisions will create unwanted challenges for Australian businesses, and potentially significant liabilities for the back payment of wages and leave entitlements arising from the engagement of their casual employees.
And while Rossato remains the law of the land, one must continue to be particularly vigilant when engaging casual staff because getting it wrong may result in employers footing the cost of both loading and leave entitlements.
In the era of the silent virus, the Rossato decision also comes at a sensitive time when many employers eligible for Jobkeeper may have already been nominating all of their long-term casuals to receive the Jobkeeper Payment during this pandemic.
Identifying who is, or is not, a casual employee is a complex exercise (especially where they work pursuant to a roster) but employers should now also consider any unintended consequences (potentially in the form of underpayment/backpay and unfair dismissal claims) of simply nominating all of their long-term casuals to receive the Jobkeeper payment without properly clarifying the casual nature of the employment relationship.
In the current climate, employers must now more than ever continue to be particularly mindful when engaging and managing their casual workforces. Specifically, we think that employers with casuals should be doing the following:
- Where possible, implement the payment of casual loading as a separately monetary amount rather than pay a loaded rate.
- Continually review your casual employees who do not have the “absence of a firm advance commitment as to the duration of their employment or the days or hours they work” (including the way in which their contract of employment is performed in practice).
- Consider now and regularly thereafter whether to convert casual employees, who do not have the “absence of a firm advance commitment”, to permanent part-time or full-time arrangements (including consistently with any applicable modern award or enterprise agreement obligations).
- Properly clarify the casual nature of the employment relationship of long term casuals (that is, not just assess their employment duration being a period of 12 months ending on 1 March 2020) when assessing Jobkeeper eligibility and consider any unintended consequences of simply nominating all of your long-term casuals to receive the Jobkeeper payment if not doing so.
For those looking for some overnight reading, the full 175 page decision of Rossato can be found here. Alternatively, a 3 page summary of the Rossato decision can be found here.
Please reach out to us if you would like to further discuss the Rossato decision, its implications for your business and any unintended Jobkeeper considerations.
