High Court decision on Casual Employment

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Mr Rossato was consequently declared a casual employee and not entitled to both the 25% casual loading and benefits belonging to permanent workers as far back as 6 years.

Key takeaways from the High Court Decision

When entering into casual employment, consider all the rights and obligations of the parties and ensure the contract:

• Defines ‘Employee’ as a casual employee;
• Includes that the Employee is entitled to a casual loading and specify what that loading is;
• Does not have a firm advance commitment to continuing employment;
• Does not have a notice of termination of the contract, or if there is one, it a very short notice and does not reflect notice available to a permanent employee;
• Specifies that the Employee is entitled to accept or reject any shifts;
• Specifies that the Employer is under no obligation to offer any shifts;
• States that daily working hours and length of assignment are for guidance only and could be varied on short notice; and
• States that both parties accept the above conditions of employment.

Details of the High Court Decision

On 4 August 2021, the High Court of Australia made its final decision in the matter of WorkPac v Rossato.  The previous decision of the Federal Court of Australia in this matter has resulted in great confusion as to the status of casual employees.

Employers feared that the Federal Court’s decision would allow casual employees to claim repayment of benefits belonging to permanent workers, in addition to the 25% casual loading. However, so called ‘double dipping’ was recently overturned by the High Court.

Case background

Mr Rossato was employed by WorkPac between 28 July 2014 and 9 April 2018 as a casual employee. In October 2018, Mr Rossato decided to claim repayment of benefits belonging to permanent workers (untaken annual leave, public holidays, personal and compassionate leave), in addition to the 25% casual loading.

WorkPac denied his claims and commenced proceedings in the Federal Court seeking a declaration that Mr Rossato had been employed on a casual basis. In the alternative, WorkPac claimed that it was entitled to set-off the casual loadings against entitlements claimed by Mr Rossato.

Federal Court Decision

On 20 May 2020, the Federal Court declared that Mr Rossato was ‘other than [a] casual employee’ within the meaning of ss 86, 95, and 106 of the Fair Work Act 2009 (Cth)’ (‘FW Act’). In summary, the test of permanent employment is a firm commitment of employment. The Court found that a firm advanced commitment was one with stable, regular and predictable employment, which includes:

1. Weekly rosters (often fixed far in advance),
2. Regular patterns of work, and
3. Full-time hours.

Further, the Federal Court rejected WorkPac’s claim to the set-off. As a result, Mr Rossato was entitled to both the 25% casual loading and benefits belonging to permanent workers as far back as 6 years.

Change to Fair Work Act

In response to the Federal Court’s decision, the FW Act was amended (‘FW Amendment Act’) to include a legal definition of a casual employee and a statutory set-off mechanism in case an employee is mistakenly treated as a casual. However, the FW Amendment Act did not apply to Mr Rossato as a binding decision was made before its commencement.

High Court

WorkPac challenged the Federal Court’s decision and appealed to the High Court. The High Court explained that ‘it is not a legitimate role for a court to force upon the words of the parties bargain’. Since the FW Act explicitly allows casual employment, the High Court analysed the case based on plain and ordinary meaning of the contracts entered into by the parties.

The High Court summarised that in order for employment to be other than casual, a firm advanced commitment to continuing work must exist. Firm advanced commitment is given in cases of regularity, qualified by certainty, continuity, non-intermittency and predictability.

However, the nature of casual employment does not exclude engagement on a regular and systematic basis. Although such a regular (casual) employee may have a reasonable expectation of continuing employment, this is an expectation only which falls short of a firm commitment. The Court concluded that the ‘search for the existence . . . of a firm advance commitment must be for enforceable terms, and not unenforceable expectations’.

In addition to the weekly rosters, and a regular pattern of work and full-time hours, the High Court focused on the following terms and conditions governing the employment of Mr Rossato:

1. Mr Rossato was described as a casual employee;
2. Mr Rossato’s employment was on an assignment-by-assignment basis;
3. Mr Rossato was entitled to accept or reject any assignment;
4. WorkPac was under no obligation to offer any further assignments;
5. Period of an assignment could have been varied or terminated by WorkPac on one hour’s notice;
6. Set daily working hours and length of assignment were a guidance only and could have been varied;
7. The contract referred to a casual loading;
8. No notice of termination of the contract was required; and
9. Both parties agreed to the above.

Although the label of a casual employee does not determine the employment relationship, the High Court acknowledged that it is a factor which affects the interpretation of the employment rights and obligations.

Considering the above, the High Court concluded that ‘the contractual arrangements between WorkPac and Mr Rossato did not include a mutual commitment to an ongoing working relationship between them . . .’ Mr Rossato was consequently declared a casual employee.

The above High Court’s decision is in line with the FW Amendment Act.

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