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Casual Employees; A Permanent Problem June 1, 2020

When is a casual employee not a casual employee?  The answer seems to be when they have a “firm advance commitment” from their employer to continuing and indefinite work according to an agreed pattern of work.

On 20 May 2020 the Full Court of the Federal Court, in WorkPac Pty Ltd v. Rossato, held that an employee who was identified in his employment contract to be a casual employee was in fact a permanent employee and was allowed entitlements associated with permanent employment.  These entitlements included annual leave, personal/carer’s leave and compassionate leave under the National Employment Standards (NES) and the Fair Work Act (FWA) and public holiday payments under the FWA.

Potentially more concerning for employers was that Workpac was not entitled to set off against these entitlements the “casual loading” which had been paid to Mr Rossato.

Casual or Permanent Employee?

Following an earlier decision, the question of whether Mr Rossato was in fact a casual employee for the purposes of the FWA provisions dealing with entitlements was answered by asking the question of whether there was a firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work.  In answering that question the Court took into account all of the circumstances (including post-contract events), not just the terms of the contract.

In the circumstances of the case, it was not surprising that Mr Rossato was found to not be a causal employee.   He was employed for nearly four years under six consecutive contracts.  The contracts contemplated work being performed under long term “rostered arrangements”. The Court found that the contracts constituted an offer of indefinite employment in which Mr Rossato would work the standard ordinary hours of a full‑time employee in accordance with the pattern of work fixed by alternating shift rosters.  This, according to the Court, was by its very nature employment which includes a firm advance commitment.

By contrast, a firm advance commitment is likely to be absent where, for example, work patterns are irregular, uncertain, intermittent and unpredictable.

Offset of Casual Loading?

But what about the “casual loading” paid to Mr Rossato?  Workpac argued it was entitled to restitution for the casual loading or was entitled to a set off for that amount. Neither of Workpac’s arguments were successful.

The Court was not satisfied that the rate of pay of Mr Rossato was fixed on the mistaken belief that Mr Rossato was a casual, as distinct from the market rate for guaranteeing his service.  Therefore, Workpac was not entitled to restitution.

The set off was not allowed for various reasons including:

  • a casual loading is not paid to an employee in satisfaction of the entitlements claimed by Mr Rossato. Indeed, a casual loading is paid because a casual employee does not get those entitlements.
  • to allow a set off would have allowed the “cashing out” of leave entitlements in contravention of the Fair Work Act.
  • the payment to Mr Rossato was of a different character to the entitlements, the entitlements being the right to be absent from work and not lose wages; the payment simply being that, a payment.
  • Regulation 2.03A of the Fair Work Regulations (which allows a set off of a casual loading against a claim for payment in lieu of NES entitlements) was not of assistance because Mr Rossato’s claim was a claim for the entitlements, not for payment in lieu of those entitlements.

Conclusion

We at Stokes Lawyers suspect an appeal to the High Court or legislative intervention is likely.

However, as the law stands, arguments for restitution and set off do not look good.

Pending an appeal or legislative intervention, any employers with “casual” employees may benefit from a review of their arrangements to ensure either:

  • the employee has no firm advance commitment of continuing and indefinite work; or
  • the employer treats any such employees as permanent employees and pays them accordingly.

For advice or information regarding any employment issues, contact Director of Dispute Resolution, Scott Eustace, at [email protected] or phone 3439 8880.

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