Rossato – the High Court says ‘casual’ means ‘casual’

Businesses, large and small, rely on casual employees to provide flexibility to cater for erratic changes in trading conditions.

Casual employment in Australia

A casual employee is not entitled to annual or personal leave, notice of termination, nor a redundancy payment. However, they are paid a 25% loading on their hourly rate to compensate for the loss of these entitlements.

Classification disputes about whether an employee is casual or permanent are common. For example, Mr Skene alleged his employer, a labour-hire company called WorkPac Pty Ltd (WorkPac), should have classified him as a permanent, not a casual, employee. WorkPac provided its employees’ service to its clients in the coal mining industry.

WorkPac dismissed Mr Skene without paying any accrued annual leave. The Full Federal Court of Australia in August 2018¹ determined Mr Skene was not a casual employee. WorkPac was ordered to pay Mr Skene’s accrued annual leave.

Meanwhile another casual WorkPac employee, Mr Rossato, also succeeded in his claim that he was a permanent employee in May 2020, before the Full Federal Court. WorkPac appealed this decision to the High Court of Australia.

Employers watched on anxiously about their own casual employment arrangements. Could their casual workforce take annual leave and be paid a redundancy payment, if no longer needed?

Some employers feared their businesses were no longer financially viable.

What did the High Court Say?

In the much-awaited decision of WorkPac Pty Ltd v Rossato², the High Court recently found in WorkPac’s favour!

Every employer must note this critical decision, which clarifies the definition of a casual employee and the integral role of how the employment contract defines that relationship.

Background

Mr Rossato was employed from July 2014 to April 2018 on a series of six employment contracts or “assignments” to perform work for WorkPac’s coal mining clients. WorkPac had classified Mr Rossato as a casual employee throughout his employment.

Mr Rossato sued WorkPac for unpaid entitlements including leave entitlements and public holidays. The Full Court of the Federal Court of Australia concluded that just like Mr Skene, Mr Rossato was not a casual employee and was entitled to the claimed entitlements.

WorkPac appealed that decision because Mr Rossato ought to have been found to be a casual employee. Alternatively, if the High Court found Mr Rossato was not a casual employee, then the casual loading received by Mr Rossato throughout the course of his employment must be set off against any entitlements Mr Rossato was claiming.

The High Court did not consider whether the casual loadings offset any permanent employee entitlements because WorkPac succeeded with its primary argument by establishing Mr Rossato was a casual employee.

The Findings

The High Court set aside the orders made by the Full Federal Court, and then examined the nature of the contracts and what was expressly entered into and agreed by Mr Rossato.

The High Court determined that Mr Rossato was a casual employee throughout all of his six assignments based on the following grounds:

• The employment contracts contained express terms inconsistent with any commitment for ongoing employment; and
• Any regularity of work in rostering Mr Rossato for one of WorkPac’s clients cannot establish a commitment between the parties that they had agreed an ongoing working relationship after each of the assignments were completed.³

The Court in reaching their final decision considered the following:

• Mr Rossato signed contracts which expressly referred to offers of casual employment, where the parties entered and committed to those terms.
• A casual employee is one who has no firm advance commitment from the employer as to the duration of the employee’s employment or the days (or hours) the employee will work and provides no reciprocal commitment to the employer.
• For the engagement to be deemed ongoing and not casual, the contract of employment must expressly contain a firm advance commitment and the expectation of continuing employment on a regular and systematic basis is not.
• In each of Mr Rossato’s assignments, he would perform work as directed by WorkPac’s clients. As such, his engagement was deemed to be on an assignment basis.

A “firm advance commitment” was deemed to be enforceable terms and not unenforceable expectations or understandings that might be said to reflect the manner in which the parties performed their agreement” provide such a commitment⁴. Therefore, the commitment derives from the enforceable terms in the contract of employment.

The High Court also found that the Full Federal Court had erred by placing an emphasis of the roster system and that the systematic nature of his work for one of WorkPac’s clients, Glencore. Regular and systematic rostering was compatible with the application of casual employment under the Fair Work Act 2009 (Cth)⁵. Further, the element of WorkPac’s ‘firm advance commitment’ remained missing from the engagement as there was no commitment to continuing work beyond the completion of each assignment.

Conclusion

Employers must be mindful of what is contained in their written contracts when engaging casual employees.

In particular, the Federal Government introduced new casual employment provisions into the Fair Work Act on 27 March this year, which employers must also consider, in managing their casual employment needs. For example, all casual employees must receive a Casual Employment Information Statement by 27 September 2021.

Please contact Rigby Cooke’s Workplace Relations team if you wish to have your current casual contracts of employment reviewed in light of this recent decision.

1. (WorkPac Pty Ltd v Skene (2018) 264 FCR 536)
2. [2021] HCA 23
3. WorkPac Pty Ltd v Rossato [2021] HCA 23 at [105]-[106]
4. See paragraph [57].
5. See paragraph [96].