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High Court hands down landmark decision on casual employment

28 September 2021

By Workplace Relations & Safety Partner, Rachel Drew

On 4 August 2021, the High Court handed down its decision in the landmark case of WorkPac v Rossato & Ors [2021] HCA 23 (WorkPac v Rossato). In its decision, the High Court found that Mr Rossato was a casual employee for the purpose of the Fair Work Act 2009 (FW Act) and Workpac’s Enterprise Agreement, and, as such, Mr Rossato was not entitled to paid annual leave, personal leave and compassionate leave under the FW Act nor entitlements for permanent employees under the applicable Enterprise Agreement.

The High Court’s decision has overturned the earlier first instance decision of the Full Court of the Federal Court of Australia in Workpac Pty Ltd v Rossato [2020] FCAFC 84 and the precedent set in the Full Federal Court in the earlier 2018 judgment of Skene v WorkPac Pty Ltd (2018) 264 FCR 536 (Skene Case) on the nature of casual employment. Those decisions rejected the commonly understood position that an employee designated as a casual under an award or enterprise agreement is a casual for all purposes.

Those earlier decisions were also the catalyst for the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth) (Amending Legislation). The Amending Legislation amended the FW Act and inserted a definition of “casual employee” consistent with the commonly understood position. It also provided a mechanism for an employer to effectively off-set any court award of compensation for permanent employment entitlements payable to an employee who was mistakenly treated as a casual employee. It allowed the amount of compensation to be reduced by the identifiable casual loading paid to the employee. See our earlier article on the Amending Legislation.

Importantly for the High Court’s decision, the Amending Legislation expressly excluded from its application employees whom the courts had made a binding decision before the commencement of the Amending Legislation that the employee is not a casual employee. In this case, the Amending Legislation did not apply to Mr Rossato. Therefore, the Court was not required to consider the application of the new definition of “casual employee”, which had been inserted into the FW Act or the provisions regarding compensation for misclassification of a permanent employee as a casual.

In this article, we explore the High Court’s decision in WorkPac v Rossato.

Background

WorkPac is a labour hire company that provides the services of its employees to its clients engaged in the open cut black coal mining industry. Robert Rossato was a qualified and experienced production worker employed by WorkPac between 2014 and 2018.

During his employment, Rossato was employed on six consecutive contracts of employment (collectively, ‘Contracts of Employments’) and was placed with Glencore Australia at its mining sites in Collinsville and Newlands. Each of the Contracts of Employment was variously titled as “Offer of Casual Employment”.

Mr Rossato was regarded by WorkPac as a casual employee and paid accordingly. Rossato was also covered by the WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012 (Enterprise Agreement). Under the Enterprise Agreement, Rossato was categorised as a ‘Casual FTM’. Under the category, Rossato was entitled to a higher pay but not to statutory leave entitlements.

After ceasing employment with WorkPac, Rossato claimed that his regular and ongoing employment meant that he was not a casual employee, but rather a permanent employee. He approached WorkPac following the Skene decision to claim outstanding unpaid entitlements as a permanent employee. Rossato claimed he was entitled to payments for annual leave, carer’s leave, compassionate leave and public holiday pay under the FW Act and the Enterprise Agreement. WorkPac denied Mr Rossato’s claim and sought declarations from the Federal Court that Mr Rossato was, at all times, a casual employee of WorkPac.

At first instance, the Full Court of the Federal Court of Australia found that Rossato was not a true casual employee at law for the purpose of the FW Act entitlements and also found that Rossato was not a casual employee for the purposes of the Enterprise Agreement. Therefore, he was entitled to accrue paid annual leave, personal/carer’s leave, compassionate leave and public holiday entitlements under the FW Act and the Enterprise Agreement.

For further information, see our discussion on the first instance decision.

Issues to be determined on appeal

In November 2020, WorkPac was granted special leave to appeal the first instance decision to the High Court. In summary, the grounds of appeal were:

  • Rossato was a casual employee for the purposes of the FW Act
  • Rossato was a casual FTM for the purposes of the Enterprise Agreement.

Or alternatively,

  • Rossato’s remuneration exceeded the amount he would have been entitled to as a permanent employee and that Rossato’s casual loading discharged his leave and holiday pay entitlements under the FW Act and Enterprise Agreement.

Decision

The High Court upheld the test of casual employment advanced by both parties, being employment where the employee has no “firm advance commitment as to the duration of the employee’s employment or the day (or hours) the employee will work” (at [32] and [122]).

However, the majority of the High Court rejected the approach of the Full Federal Court in the first instance decision and the Skene Decision, which centred upon the conduct of the parties and the “real substance, practical reality and true nature of that relationship” (at [37]), which is a similar approach adopted in the assessment of whether a person is an employee as distinct from an independent contractor at law.

The majority of the High Court found that the relevant assessment of whether there was a “firm advance commitment” to ongoing work and the characterisation of employment is to be determined by the terms of the applicable contract of employment in circumstances where parties have committed the terms of employment to a written contract.

The Court referred to the decision of French CJ, Bell and Keane JJ in Commonwealth Bank of Australia v Barker, in which the majority said that “The employment relationship, in Australia, operates within a legal framework defined by statute and by common law principles, informing the construction and content of the contract of employment.”

The majority of the High Court found at paragraph [57]:

“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. The search for the existence or otherwise of a “firm advance commitment” must be for enforceable terms, and not unenforceable expectations or understandings that might be said to reflect the manner in which the parties performed their agreement. To the extent that Bromberg J [in the decision at first instance] expressed support for the notion that the characterisation exercise should have regard to the entirety of the employment relationship, his Honour erred.”

The majority of the High Court held that Mr Rossato was a casual employee for the purpose of the FW Act having regard to the following findings on the terms of Mr Rossato’s terms of employment:

  • the Offers of Employment included General Conditions which provided that:
    • employment was on an assignment-by-assignment basis, each assignment representing a discrete period of employment
    • Mr Rossato could accept or reject any offer of an assignment
    • WorkPac did not have an obligation to offer any other assignments after the completion of an assignment
    • casual assignments could be varied or terminated on one hour’s notice, and
  • the Offers of Employment:
    • specified daily working hours as a guide and which could be varied
    • specified an assignment length of six months as a guide and which could be varied
    • included either a reference to casual loading or a casual rate of pay.

In its decision, the High Court noted the importance the Full Federal Court had placed on the roster system under which Mr Rossato worked. The High Court found that the rostering arrangement had limited significance to the consideration of the employment relationship. The High Court found that “In as much as the rosters imbued Mr Rossato’s employment with the qualities of regularity and systematic organisation during the period of each assignment, those qualities have been demonstrated to be entirely compatible with the notion of “casual employment” in the Act.” The High Court held that what was absent, in Mr Rossato’s case, was a firm advance commitment to continuing work beyond the completion of the particular assignment.

Takeaway for employers

Following the Amending Legislation, the High Court’s decision in Workpac v Rossato reinforces the primacy of the contract of employment in determining the nature of casual employment.

The Amending Legislation and the High Court’s approach in WorkPac v Rossato now will give certainty to employers who engage casual employees under contracts of employment which do not give rise to “a firm advance commitment to ongoing employment”.

Employers should seek advice to review their casual contracts of employment to ensure that the terms for casual employees support the characterisation of casual employment in the context of the work being performed.

For more information, please see WorkPac v Rossato & Ors [2021] HCA 23 full decision and summary.

Author: Rachel Drew

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.