On 4 August 2021, the High Court unanimously allowed an appeal in WorkPac Pty Ltd v Rossato [2021] from a decision of the Federal Court regarding the nature of casual employment.

The Federal Court had determined that Mr Rossato was not a casual employee for the purposes of the Fair Work Act 2009 (Cth) (FW Act) and declared that he was entitled to the payments he claimed as a permanent employee. The High Court overturned this ruling, holding that Mr Rossato was a casual employee, noting that a “casual employee” is an employee who has no firm advance commitment from the employer as to the duration of the employee’s employment.

In March 2021, the FW Act was amended to include a new definition of casual employee partly in response to the Federal Court’s decision that Mr Rossato was not a casual employee. The amendments remove the uncertainty that casual employees could be held to be permanent employees based on their working arrangements during their employment.

The amendments to the FW Act were not considered by the High Court because they did not apply retrospectively to an employee who was subject to a court decision finding them not to be a casual employee. However, the Court’s focus on the terms of Mr Rossato’s employment contract to determine his status is consistent with the new definition of casual employee in the FW Act.

WorkPac v Rossato Background

Mr Rossato commenced employment with WorkPac, a labour-hire company specializing in the provision of the services of its employees to the coal mining industry, on 28 July 2014 and was employed until 9 April 2018. During his employment, Mr Rossato was engaged under a series of six separate casual contracts, or “assignments”, to perform work for WorkPac’s clients.

Each of the six separate casual contracts set out that Mr Rossato was a casual employee and was receiving a casual loading ‘in lieu’ of any leave and public holiday entitlements owing to him under the FW Act and the enterprise agreement which governed his employment.

During Mr Rossato’s approximately three and a half years of employment, he worked regular and systematic hours for WorkPac. In particular, Mr Rossato worked almost every shift he was rostered to work, performed a shift roster of 7 days on followed by 7 days off and was provided with a shift roster that was set some 7 months in advance of the date that it was provided.

The Federal Court held that Mr Rossato was a permanent employee despite his contract of employment stating otherwise. Accordingly, the Federal Court ruled that Mr Rossato should have accrued, and had access to, leave entitlements during his employment with WorkPac – being annual leave, paid personal/carer’s leave, paid compassionate leave, and payment for public holidays.

The decision of the Federal Court affirmed that an employee engaged as a casual can still be considered a permanent employee despite there being a contract of employment stating otherwise. The Full Court held that despite the existence of a set-off clause in Mr Rossato’s contract of employment, WorkPac could not rely on this clause to set off any outstanding leave entitlements owing to Mr Rossato. 

WorkPac appealed the decision to the High Court.

Casual Employee or Permanent Employee

The High Court unanimously allowed the appeal, finding that Mr Rossato was a genuine casual employee for the purposes of the FW Act. In line with the new definition of “casual employee” in the FW Act, the High Court held that:

• A causal employee is an employee who has no firm advance commitment from the employer as to the duration of the employee’s employment or when the employee works, and provides no reciprocal commitment to the employer. 
• For an employee to be found as anything “other than” a casual, there must exist a “firm advance commitment” to continuing work which is “unqualified by indicia of irregularity, such as uncertainty, discontinuity, intermittency and unpredictability”. 
• Mr Rosatto was subject to a written employment contract which was expressly on an “assignment-by-assignment basis”, and that he was entitled to reject work; and there was no obligation on WorkPac to continue employing him at the completion of each assignment, he was a casual for the purposes of entitlements under the FW Act.

Casual loading

WorkPac argued that even if Mr Rossato was a casual employee, it was entitled to a reduction in his claims because a casual loading was paid in satisfaction of various entitlements. As the High Court held that he was a casual employee, Workpac’s argument was not considered by the Court. 

Under the amendments to the FW Act, casual loading may now be set-off against claims by a casual for various leave entitlements (including annual leave and personal leave) and redundancy pay under the National Employment Standards, an industrial instrument or an employment contract.

What should employers do next?

The High Court’s decision is in line with the recent amendments to the FW Act which define what it means to be a casual employee.  

We recommend that each of the below factors are addressed (to the extent possible) in a written employment contract for each new casual employee:

• whether the employer can elect to offer work;
• ability of the employee to accept or decline work offered to them;
• whether the employee will work only as required according to the employer’s needs;
• whether the employment is described as casual employment; and
• whether the employee is entitled to receive identifiable casual loadings or a specific rate of pay.

Employers should also review past offers of employment which have been made and accepted by casuals to determine if the above factors are sufficiently addressed.

If you have any questions about the Decision or recent reforms to the FW Act, please contact our dedicated team of Employment lawyers.