Are your casual employees truly ‘casual’?

17 June 2020

The Full Federal Court decision has reaffirmed the test of when an employee is engaged other than a casual employee. 

The decision in WorkPac v Rossato will have a significant impact for businesses that regularly engage casual employees. It is now timely for employers to review its practices and to put measures in place to ensure those it employs on a casual basis are properly classified and ‘treated’ as casual employees.

By: Luisa Gonzaga (Partner) and Marcus Di Blasio (Lawyer)

The Fair Work Act 2009 (Cth) (FW Act) does not provide a definition for ‘casual employees’, except for providing a definition on ‘long term casual employees’.

It was not until 2018 when the court handed its decision in WorkPac v Skene [2018] FCAFC 131 (Skene) that it was clarified where an employee works on a ‘regular and certain’ manner that they will be characterised as ‘other than casual employees’.

The Full Federal Court has re-affirmed the decision in Skene in WorkPac v Rossato [2020] FCAFC 84 (Rossato).

What happened in Rossato?

WorkPac employed Mr Rossato as a casual employee for the period of 28 July 2014 until 9 April 2019. Over these periods, six consecutive contracts were executed between WorkPac and Mr Rossato, all of which indicated that he was employed on a casual basis.

Mr Rossato was rostered consistently in advance and worked every shift he was rostered to work except during workplace closures.

Mr Rossato claimed that throughout his three and a half years of continuous employment with WorkPac, he was not paid nor did he receive any paid annual leave, personal, carer’s or compassionate leave including Christmas Days, Boxing Days or New Year’s Days which were not worked by him over the Christmas shut-down periods.

WorkPac argued that:

  • in each of the six contracts of employment, Mr Rossato was an employee of WorkPac under a written contract and was a casual employee at common law and within the meaning of sections 86, 95 and 106 of the FW Act;
  • Mr Rossato was a Casual Field Team Member and not a Permanent Field Team Member within the meaning of the Enterprise Agreement. Therefore, Mr Rossato was not entitled to be paid annual, personal, carer’s, or compassionate leave under the FW Act or the Enterprise Agreement or payment for public holidays under the Enterprise Agreement;
  • Mr Rossato’s pay incorporated a casual loading of 25% of the minimum rate of pay, payable under the Enterprise Agreement which was in part paid in lieu of Mr Rossato’s entitlements to annual, personal, carer’s and compassionate leave under the FW Act; and
  • WorkPac is entitled to restitution for the casual loading paid to Mr Rossato. 

How did the court deal with the proper characterisation of casual employees?

The nature of a casual employment relationship is built on the absence of a ‘firm advance commitment’ as to the hours or days an employee is expected to work and the terms of the employment.

In Rossato, the court held that it is not necessary for a “firm advance commitment” to be a contractual term instead, an objectively justified expectation of continuing work according to an agreed pattern of work would be sufficient. 

The Court held that the nature of the employment relationship suggested that Mr Rossato was not a casual employee because:

  • he was rostered to perform regular and predictable hours of work with a fixed pattern;
  • WorkPac was aware that there would be a set pattern of work during Mr Rossato’s employment as his timesheets were pre-filled with set hours;
  • it was clear from both WorkPac and Mr Rossato that the nature of the employment relationship was ongoing; and
  • the contracts of employment contained terms which imposed significant penalties and disincentives if Mr Rossato did not attend his rostered shift. 

Therefore, Mr Rossato was entitled to a back payment in respect of his:

  • accrued entitlement to annual leave;
  • absences from work which he should have been paid such as personal, carers and compassionate leave; and
  • public holidays which he was not rostered to work.

WorkPac was not entitled to receive restitution for the proportion of casual loading it paid Mr Rossato because it was unable to prove that the casual loading was identifiable and severable.

Tips for employers on how to manage casual employees

The impact of the Rossato could have a wide-ranging effect on organisations that regularly engage casual employees.

Below are some tips for organisations to consider when engaing casual employees:

  • review your current practices when engaging and managing casual employees;
  • review and update your employment contracts to ensure:
    • there are clear express terms to reflect that the employee is employed as a casual employee and not on an ongoing basis;
    • there is a clause that stipulates the employee will be paid a casual loading on top of the base rate of pay; and
    • that there is a clause in the event an employee is found to be ‘other than a casual employee’ that any casual loading paid is recoverable by the employer,
  • ensure payslips issued to employees clearly distinguish casual loading paid to employees from their regular base rate of pay;
  • conduct periodic review of the arrangements you have with all long-term casual employees to ensure that their hours and days of work do not form a pattern or set roster; and
  • provide training to your relevant personnel who are responsible for engaging and managing casual employees.

Hentys Lawyers welcomes the opportunity to provide you advice on this matter. 

For further information, please contact our experienced Employment Law team by emailing hjk@hentys.com.au.