Not so casual workers: Full Federal Court on casual employees’ entitlements

If you are one of the 2.6 million casual workers currently employed in Australia, you may be entitled to more than you bargained for!

In a decision handed down on 20 May 2020, WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (“Rossato”), the Full Federal Court ruled that:

the nature of a person’s employment is to be characterised according to ‘the real substance, practicality and true nature’ of the employment relationship as well as the contract under which they are employed[1];
workers engaged as “casual” employees and receiving 25% casual loading, whose employment is “other than casual” in nature, may also be entitled to accrue benefits like paid annual leave, compassionate leave and personal leave; and
employers could not “set off” the debt in entitlements owed to casual employees by appropriating any casual loading already paid.

The case of Mr Rossato

Mr Robert Rossato had been employed by WorkPac Pty Ltd (“WorkPac”) for a continuous period between 28 July 2014 and 9 April 2018. Mr Rossato had been employed under six consecutive contracts, all of which identified the nature of his employment as casual.

The Court found that the nature of Mr Rossato’s employment was such that, despite being labelled a casual employee, he was other than a casual employee for the purposes of sections 86, 95, 106 and 116 of the Fair Work Act 2009 (Cth) (“the Act”) and not a casual employee under the relevant enterprise agreement. Therefore, Mr Rossato was entitled to paid annual leave, personal/carer’s leave and compassionate leave as well as payment for public holidays.

Who is a casual employee?

A casual employee is one who is engaged without ‘a firm advance commitment as to the duration of the employee’s employment or the days/hours the employee will work’. Such employment is often characterised by:

irregular work patterns;
uncertainty, discontinuity, intermittency of work and unpredictability;
employment contracts that provide the employer can choose to offer the employee work on a particular day and the employee can choose to decline the offer;
work that is ‘on demand’ and not pre-allocated;
the absence of a fixed, repeated roster; and
the possibility of termination at short or on no notice.

In determining whether there is such “firm advance commitment”, we are expected to look beyond any employment contract to ‘the real substance, practicality and true nature’ of the employment relationship. An individual’s employment is likely to be “other than casual” in nature with “firm advance commitment” where:

the employer and employee mutually understand the employment will be organised, structured, ongoing, regular and predictable;
the employment contract provides for continuing work to be performed according to an agreed pattern of full-time hours;
the employee’s hours are allocated in advance in a fixed roster;
the employee is required to work according to hours allocated on the roster; and
the employee cannot elect whether or not to work a shift.

Entitlements

Under the Act, employees characterised as “other than casual” are entitled to:

paid annual leave (section 87);
10 days of paid personal/carer’s leave (section 96);
paid compassionate leave (section 106); and
payment for absence from employment on a public holiday (section 116).

Can the employer offset these entitlements?

WorkPac’s contention that it be permitted to offset its debt in entitlements to Mr Rossato against payments already made to him in the form of 25% pay loading was rejected by all three judges.

The Court found that an employer could not pay a casual loading in lieu of an “other than casual” worker’s entitlement to payment for absence from employment on a public holiday and to paid annual leave, personal/carer’s leave and compassionate leave. The purpose of such paid leave is to allow workers absence from work for rest, recreation and various other reasons without any loss of pay. These entitlements are in no way related to casual loading and cannot be substituted by payment of the latter.

Casual loading is an over-award payment, paid by agreement, and cannot be used later to offset another entitlement.[2]

Before you march into your boss’s office…

The decision in Rossato is a heavy blow to WorkPac, which is currently facing two million dollar class actions for their misclassification of “casual’ employees and underpayment of entitlements. For this reason, despite there being no indication of WorkPac’s next move, many commentators are foreshadowing an appeal to the High Court.

Attorney-General and Industrial Relations Minister Christian Porter has noted the likelihood of an appeal and indicated that the Federal Government would consider intervening in the matter. He has also promised to consider legislation to addressing the characterisation of casual employees.

[1] WorkPac Pty Ltd v Skene (2018) 362 ALR 311 (“Skene”).

[2] Ray v Radano [1967] AR (NSW) 471; Poletti v Ecob (No.2) (1989) 31 IR 321.

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Not so casual workers: Full Federal Court on casual employees’ entitlements