Introduction
On 20 May 2020, the Full Court of the Federal Court delivered WorkPac Pty Ltd v Rossato [2020] FCAFC 84 and, by doing so, caused employers around the country to ask whether their “casual employees” were actually casual employees. See our previous article here for more details.
On 4 August 2021, the High Court overturned the decision (WorkPac Pty Ltd v Rossato [2021] HCA 23), denying Mr Rossato the entitlements he sought but delivering a greater level of certainty to employers.
The facts
Workpac is a labour-hire company.
It employed Mr Rossato from 28 July 2014 until his retirement on 9 April 2018 pursuant to six different contracts, all of which stated that Mr Rossato was a casual employee. Mr Rossato did not receive entitlements to which full-time and part-time employees would have been entitled under the NES, being paid annual leave, paid personal/carer’s leave, paid compassionate leave and public holiday pay entitlements.
In an earlier case involving WorkPac (WorkPac Pty Ltd v Skene [2018] FCAFC 131), the Court found that, despite his contract saying he was a casual employee, Mr Skene was in fact a full-time employee and consequently entitled to various entitlements under the NES. Mr Rossato relied on Skene and made demand of WorkPac for these entitlements. In response, WorkPac commenced the Federal Court proceedings, seeking declarations that Mr Rossato was not so entitled.
The Federal Court’s decision
Mr Rossato was successful in the Federal Court.
The Court found that a casual employee was an employee who had no firm advance commitment from her or his employer to continuing and indefinite work according to an agreed pattern of work. This is broadly the definition that has since been incorporated into the Fair Work Act – see sections 15A (discussed below), 545A and clause 46(2)-(4) of Schedule 1. As those amendments occurred after the Federal Court’s decision, they were not relevant for Mr Rossato’s case.
The Federal Court looked at the “totality of the relationship” and various factors in the employment agreements and ultimately found that he was not, in fact, a casual employee. Broadly, this was because:
- the duration of the contracts were specified as being in the order of 6 months;
- the work was required to be performed pursuant to a pre-programmed and pre-allocated roster;
- the employer had the ability to stand Mr Rossato down without pay in circumstances of a strike, breakdown of machinery, or any stoppage of work for any cause for which WorkPac cannot be held reasonably responsible – had he truly been casual, he would simply not have been invited to perform the shift in question; and
- the contracts were inconsistent with any suggestion that Mr Rossato was entitled to choose whether or not to work a particular shift.
The High Court’s decision
The High Court was unanimously of the view that Mr Rossato was a casual employee.
The Court started by accepting that a “casual employee”, for the purposes of the Fair Work Act, refers to an employee who has no firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work.
It did not however accept that understandings or expectations as to the nature of the employment arrangements had any bearing on the issue unless they were legally enforceable obligations – that is, if they were actually terms of the employment contract or variations to the employment contract. The conduct of the parties and the “real substance, practical reality and true nature of that relationship” were irrelevant if they did not give rise to contractual terms or variations.
The Court did not consider that the regularity or predictability of shifts or work during the course of the assignment had any real bearing on whether the employee was casual or not. The Fair Work Act expressly contemplates the existence of casual employees who have been employed for more than 12 months and who have a reasonable expectation of continuing employment on a regular and systematic basis (section 65(2)). But if it is only an expectation of continuing employment and not a firm commitment, this will not be sufficient to turn casual employment into permanent employment.
Ultimately, there was nothing in Mr Rossato’s employment contracts that imposed a firm commitment on either party to continue the employment beyond the term of the contract. The fact that they may have both expected this to occur was irrelevant.
So if we call it ‘casual’ then it is ‘casual’?
Not quite.
The Court stressed that the use of the label ‘casual’ might be a factor which influences the interpretation of the employment relationship, but it is not decisive.
There was no suggestion in this case that the contractual agreements were sham transactions – that is, that the documents signed were intended to disguise the true nature of the relationship. If the contract is a sham, the Court will look beyond the label of ‘casual’ to determine the actual rights and obligations which constitute the relationship.
What does it all mean?
The High Court’s decision gives greater certainty to employers and employees. If the agreement reached does not contain a firm commitment to continuing work, it is likely to be considered casual employment. The fact that there may be regular, ongoing work and an expectation (but not an obligation) of continuing work will not change a casual employee to a permanent employee.
In the interim, the Fair Work Act has been amended to ameliorate the effect of the Federal Court’s judgment. The legislation focuses on whether there was a firm commitment to continuing work at the time the contract was entered and says that, in determining whether there was such a commitment, regard must only be had to:
- whether the employer can elect to offer work and whether the person can elect to accept or reject work;
- whether the person will work as required according to the needs of the employer;
- whether the employment is described as casual employment;
- whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.
The legislation also says that:
- a regular pattern of hours does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work;
- the question of whether a person is a casual employee of an employer is to be assessed on the basis of the offer of employment and the acceptance of that offer, not on the basis of any subsequent conduct of either party.
Broadly speaking, the High Court and the Fair Work Act are now consistent as to how to determine whether a person is a “casual employee” or not. This avoids the potential uncertainty that might have arisen if the concept of “casual employee” had changed upon the amendment coming into effect.
Conclusion
The High Court’s decision provides much-needed certainty to an area of employment law that was proving increasingly difficult to navigate. Whilst each case will turn on its own facts and sham contracts will continue to be overturned, genuine casual employment agreements are now more likely to be upheld on their terms.