Primacy of the contract of employment20 August 2021
By Sagorika Platel (Associate)
On 4 August 2021, the High Court handed down its much anticipated decision in WorkPac Pty Ltd v Rossato  HCA 23 about when a casual employee is in fact a casual employee.
WorkPac Pty Ltd v Rossato  HCA 23
Mr Rossato was employed by WorkPac Pty Ltd (Workpac), a labour hire company, to work in its client’s mines.
Mr Rossato’s engagement consisted of a document titled “Casual or Maximum Term Employee Terms & Conditions of Employment – Employee Declaration” (General Conditions),and six “Notice of Offer of Casual Employment” (NOCE) characterised as ‘assignments’ spanning some nearly four years.
Following his retirement in April 2018, Mr Rossato wrote to WorkPac claiming that he had not worked as a casual employee these past few years, and that as a result, he was entitled to be paid for untaken annual leave, public holidays, and periods of personal leave and compassionate leave he had taken.
WorkPac denied these claims and sought a declaration in the Federal Court that Mr Rossato was a casual employee.
On 21 December 2018, Chief Justice Allsop referred the matter to the Full Court of the Federal Court (Full Court). The Full Court decided the matter in Mr Rossato’s favour.
WorkPac appealed the Full Court’s decision to the High Court.
WorkPac submitted that the Full Court erred and that it ought to have found Mr Rossato was a casual employee for the purposes of the Fair Work Act 2009 (Cth) (the Act) and the WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012 (the Agreement).
The crux of WorkPac’s argument was that, Mr Rossato’s classification as a casual employee should depend on the terms of the contract of employment and that there should be no reference to post-contractual conduct in characterising the nature of the employment relationship.
Adopting the hallmark of casual employment as ‘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”’, Mr Rossato argued that he did in fact have firm advance commitment to his working hours by reason of his rosters which were prepared well in advance of performing the rostered arrangements.
The High Court did not regard the rosters, which gave Mr Rossato’s employment the character of regularity and consistency, as sufficient grounds to establish a ‘firm advance commitment to continuing work beyond the completion of each assignment’.
The majority of the High Court found that the “search for the existence or otherwise of a “firm advance commitment” must be for enforceable terms, and not unenforceable expectations or understandings that might be said to reflect the manner in which the parties performed their agreement.”
Critical to their Honours’ conclusion was that the General Conditions, which Mr Rossato agreed to and signed, “expressly provided that Mr Rossato’s employment was on an “assignment by assignment basis”. Their Honours viewed this clause as indicative of the parties deliberately avoiding a firm advance commitment to ongoing employment.
Additionally, their Honours found that the existence of the following written terms aptly characterised the nature of Mr Rossato’s employment as a casual worker who had no firm advance commitment of ongoing employment:
- The General Conditions expressly stipulated that either party could vary the period of, or terminate the assignment by providing one hour’s notice;
- Each NOCE described Mr Rossato as a casual employee and he was paid a casual loading in accordance with that description; and
- The Agreement expressly provided that employees, covered by that instrument, would be informed of the status and terms of their employment at the time of their engagement.
In arriving at their decision, their Honours referred to the notion of freedom of contract and reaffirmed the primacy of the written contract of employment.
The High Court, in a decidedly explicit manner, asserted that nothing less than binding contractual terms would characterised the legal relationship between employee and employer and that it is no part of the judicial function to reshape or recast these relationships.
Consistent with its preferred approach, the High Court reiterated three key principles of contractual construction:
- First, where mutual undertakings are express terms of the contract between the parties, they must be given effect unless they are contrary to statute;
- Second, if the mutual undertakings are to be implied, they cannot be inconsistent with the express terms of the contract; and
- Third, if the mutual undertakings are to be inferred from conduct, then they may take effect as contractual variations.
What are the lessons?
- In determining the true character of the employment relationship, Courts must first and foremost have regard to the express and implied terms of the contract of employment.
- Casual employment is characterised by a lack of a ‘firm advance commitment to the duration of the employment relationship’, whether it be days, hours or longer.
- A well written and unambiguous employment contract could play a pivotal role in providing a measure of certainty to both parties and staving off costly entitlement disputes in situations similar to that of WorkPac Pty Ltd v Rossato.
- Labels, such as ‘casual employee’, in a contract of employment, is not by itself decisive. However, each party’s actions, in keeping with that ‘label’, could be a compelling indication that the label used is indeed determinative of the relationship.
- Employers should act consistently with the terms of the employment contract and legislation or be at risk of having varied the contract via conduct or engaged in sham arrangements.
Where to from here?
- Employers should take the opportunity to review their casual employees’ contracts of employment to ensure that these are unambiguous and able to weather a challenge like the one brought by Mr Rossato against WorkPac.
- Employers should be cognisant of the recent amendments to:
- Section 15A of the Act which provides a definition for casual employees; and
- Sections 66B and 66F with respect to casual conversions.