Pub­li­ca­tions

Statu­to­ry Enti­tle­ments for Casu­al’ Employ­ees: Anoth­er Work­Pac Decision

The Full Court of the Fed­er­al Court recent­ly hand­ed down a deci­sion con­firm­ing that employ­ees cat­e­gorised and paid as casu­als” with reg­u­lar and sys­tem­at­ic work­ing pat­terns might be enti­tled to receive the paid leave enti­tle­ments of a per­ma­nent employee. 

This deci­sion, Work­Pac Pty Ltd v Rossato [2020] FCAFC 84 (Rossato), close­ly fol­lows the deci­sion in Work­Pac Pty Ltd v Skene [2018] FCAFC 131 (Skene) where sim­i­lar facts and issues were raised, and about which we wrote the arti­cle Casu­al Employ­ment: the new rules of engage­ment’ (here). If Skene was a movie, Rossato would be the less sur­pris­ing and dra­mat­ic sequel. 

Both Rossato and Skene high­light the real prospect that many employ­ees, who have a firm advance com­mit­ment from their employ­er for con­tin­u­ing and indef­i­nite work, are cur­rent­ly being mis­cat­e­gorised as causal employ­ees. As a con­se­quence, those employ­ees may have valid claims to receive the same enti­tle­ments as per­ma­nent employees. 

Fur­ther, Rossato shows that an employ­er may not be able to claim back the casu­al load­ing rates paid to a mis­cat­e­gorised casu­al employ­ee. The employ­ee might be able to dou­ble dip”. This is in spite of the reg­u­la­tion intend­ed post-Skene to address this very issue. 

Back­ground

In Rossato, Mr Rossato was employed by labour hire com­pa­ny Work­Pac Pty Ltd (Work­Pac) between 28 July 2014 and 9 April 2018 to work as a pro­duc­tion employ­ee at two Queens­land coal mines oper­at­ed by the Glen­core group (Glen­core).

Dur­ing this employ­ment, Mr Rossato was engaged under six con­sec­u­tive con­tracts which, although con­tain­ing minor dif­fer­ences, all pur­port­ed to pro­vide a casu­al employ­ment arrangement. 

Pur­suant to each con­tract, Mr Rossato was to be paid a casu­al load­ing of 25% in accor­dance with the applic­a­ble enter­prise agree­ment. The casu­al load­ing was in lieu of the enti­tle­ments pro­vid­ed to per­ma­nent employ­ees, such as annu­al leave, per­son­al leave, redun­dan­cy pay and notice of termination. 

Dur­ing his employ­ment, Mr Rossato worked along­side a num­ber of per­ma­nent Glen­core employ­ees. Mr Rossato worked full time hours (as well as addi­tion­al hours) and did not take any day or part-day off due to per­son­al ill­ness or injury. He worked every shift that he was ros­tered on (save for Christ­mas shut­down peri­ods, peri­ods of inclement weath­er when his labour was not required, an occa­sion where he was approved to take rest and recre­ation, and one occa­sion when he left work to sup­port his wife who had been tak­en to hospital). 

Three of the employ­ment con­tracts required Ms Rossato to work in accor­dance with the rel­e­vant Glen­core ros­ters, some of which were allo­cat­ed sev­en months in advance. These ros­ters were on a dri­ve-in, dri­ve-out basis for which Glen­core pro­vid­ed Mr Rossato and oth­er employ­ees accom­mo­da­tion dur­ing each block of ros­tered shifts. 

Despite Mr Rossato’s writ­ten engage­ment as a casu­al employ­ee, after his retire­ment in April 2018, Mr Rossato’s lawyers sought pay­ment on his behalf from Work­Pac for annu­al leave not tak­en by Mr Rossato dur­ing his employment. 

Work­Pac reject­ed this claim and sought a dec­la­ra­tion from the Fed­er­al Court that:

  1. Mr Rossato was a casu­al employ­ee at com­mon law and for the pur­pos­es of the Fair Work Act (the Act) and the applic­a­ble enter­prise agree­ment, and was there­fore not enti­tled to receive paid leave enti­tle­ments, such as annu­al leave and per­son­al leave; or
  2. in the alter­na­tive, if Mr Rossato was not found to be a casu­al employ­ee, that Work­pac could seek resti­tu­tion or set off Mr Rossato’s claim for leave enti­tle­ments against the casu­al load­ing paid to Mr Rossato on the mis­tak­en assump­tion that he was a casu­al employee. 
  3. the firm advance com­mit­ment may be lack­ing where the employ­ment is inter­mit­ted or irreg­u­lar, infor­mal and unlike­ly to con­tin­ue to any length of time and is not a reg­u­lar and sta­ble engagement;
  4. the firm advance com­mit­ment may be lack­ing where the employ­er can elect whether to offer employ­ment on a par­tic­u­lar day, and whether the employ­ee can elect whether or not to work when such work is offered;
  5. the firm advance com­mit­ment may be absent where the employ­ee works only on demand or as required over a short period;
  6. the employ­ment being described as by the hour and can be ter­mi­nat­ed on an hour’s notice is a rel­e­vant but not con­clu­sive consideration;
  7. the descrip­tion which the par­ties assign to the employ­ment rela­tion­ship is a rel­e­vant but not con­clu­sive consideration;
  8. the pos­tu­lat­ed firm advance com­mit­ment does not need to be expressed, but can be dis­cerned from the employ­ment arrange­ment con­sid­ered as a whole;
  9. a firm advance com­mit­ment may be deter­mined by ref­er­ence to the cir­cum­stances known at the time of the engage­ment and the man­ner of per­for­mance of the con­tract; and
  10. changes in the employ­ment rela­tion­ship post-com­mence­ment may be tak­en into account. 

Casu­al employ­ment defined

Fol­low­ing the deci­sion in Skene, Bromberg J in Rossato not­ed that a casu­al employ­ee is an employ­ee who has no firm advance com­mit­ment from her or his employ­er to con­tin­u­ing and indef­i­nite work accord­ing to an agreed pat­tern of work” (at [31]). Notably, the Court in Skene had iden­ti­fied irreg­u­lar­i­ty, uncer­tain­ty, unpre­dictabil­i­ty, inter­mit­ten­cy and dis­con­ti­nu­ity in the pat­tern of work” as the key indi­ca­tors” of the absence of a firm advance commitment. 

Upon review of the rel­e­vant author­i­ties, White J for­mu­lat­ed the fol­low­ing propo­si­tions rel­e­vant in deter­min­ing the exis­tence of a firm advance com­mit­ment” (at [444]):

The Court con­sid­ered these propo­si­tions in rela­tion to the employ­ment arrange­ment of Mr Rossato. 

Among a num­ber of fac­tors, it was not­ed that Mr Rossato worked hours full-time and over­time hours in accor­dance with Glen­core’s long-term shift ros­ters. Mr Rossato’s hours were as reg­u­lar and as pre­dictable as Glen­core’s full-time employ­ees, and the employ­ment con­tracts did not sug­gest that shifts would be irreg­u­lar or intermittent. 

The employ­ment con­tracts between Mr Rossato and Work­Pac did not pro­vide that the shifts allo­cat­ed to Mr Rossato would be an offer which he could freely accept and reject as he saw fit. Rather, pecu­niary penal­ties could be imposed where shifts were reject­ed. Indeed, the fact that Mr Rossato was pro­vid­ed free accom­mo­da­tion by Glen­core dur­ing each block of ros­tered shifts empha­sised that it would have been unlike­ly that Mr Rossato was able to freely accept or reject shifts in practice. 

Ulti­mate­ly, the Court held that Mr Rossato’s employ­ment includ­ed a firm advance com­mit­ment from Work­Pac to con­tin­u­ing and indef­i­nite work. As such, Mr Rossato was not con­sid­ered a casu­al employ­ee for the pur­pos­es of the Act and the applic­a­ble enter­prise agree­ment. He was there­fore enti­tled to receive the same paid leave enti­tle­ments as a per­ma­nent employ­ee under the Act. 

Dou­ble Dip­ping: set-off and resti­tu­tion claims 

Work­Pac sub­mit­ted that, as Mr Rossato had been mis­cat­e­gorised as a casu­al employ­ee, he had already received a 25 per­cent casu­al load­ing on his ordi­nary rate of pay in lieu of receiv­ing paid leave entitlements. 

As such, Work­Pac claimed that Mr Rossato should not be per­mit­ted to dou­ble dip” in this respect – that is, retain the 25 per­cent load­ing he received for being a casu­al under the applic­a­ble enter­prise agree­ment and also be paid the statu­to­ry enti­tle­ments afford­ed to per­ma­nent employees. 

Work­Pac raised a num­ber of argu­ments in this regard, includ­ing a claim for resti­tu­tion, set off and reg­u­la­tion 2.03A of the Fair Work Reg­u­la­tions (the Reg­u­la­tions) (which was intro­duced by the gov­ern­ment after Skene to address dou­ble dip­ping” from casu­al employees). 

For a set off claim, the gen­er­al com­mon law posi­tion pro­vides that a pay­ment made for a con­trac­tu­al pur­pose can­not be used to sat­is­fy an award oblig­a­tion, unless there is a close cor­re­la­tion between the con­trac­tu­al pur­pose and the award oblig­a­tion. (Notably, there was no set off clause in the rel­e­vant employ­ment con­tracts in Rossato which dis­placed the com­mon law posi­tion.) Ulti­mate­ly, the Court found that a close cor­re­la­tion did not exist in the present sit­u­a­tion, and there­fore Work­Pac could not seek to set off their oblig­a­tion to pro­vide paid leave enti­tle­ments against the 25 per­cent casu­al load­ing pro­vid­ed to Mr Rossato. 

With respect to the resti­tu­tion claim, Work­pac sub­mit­ted that it should be able to claim back the casu­al load­ing amounts paid to Mr Rossato, as those amounts had been paid to Mr Rossato on the mis­tak­en belief that he was a casu­al employ­ee. The Court also reject­ed this argu­ment on the basis that there was no rel­e­vant mis­take, and no fail­ure of con­sid­er­a­tion which would sup­port resti­tu­tion­ary relief. Even where casu­al load­ing is an iden­ti­fi­able amount, the Court did not con­sid­er it a sev­er­able por­tion of a pay­ment for which resti­tu­tion could be sought. 

The Court also found that Work­Pac’s reliance on reg 2.03 of the Reg­u­la­tions was mis­placed. One rea­son for this was that reg 2.03 pro­vides a con­nec­tion between the set off with claims in lieu of” enti­tle­ments under the Nation­al Employ­ment Sys­tem (NES). In Rossato, Mr Rossato’s claims were not con­sid­ered in lieu of” the NES enti­tle­ments; rather, he was claim­ing the actu­al NES enti­tle­ments. The effi­ca­cy of this reg­u­la­tion must now be in sig­nif­i­cant doubt. 

What does this mean for your business? 

The deci­sion in Rossato con­firms the approach under­tak­en by the Court in Skene; that is, that just because an employ­ee is engaged and clas­si­fied as a casu­al” and is paid as a casu­al does not nec­es­sar­i­ly mean they will be, in sub­stance, a casu­al. The result of a find­ing of mis­cat­e­gori­sa­tion is that the employ­ee will be enti­tled to the var­i­ous statu­to­ry enti­tle­ments afford­ed to per­ma­nent employ­ees, such as annu­al leave and per­son­al leave. Fur­ther­more, an employ­er may not nec­es­sar­i­ly be able to claim back or set off any casu­al load­ing paid to an employ­ee mis­cat­e­gorised as a casual. 

This deci­sion has under­stand­ably caused con­sid­er­able con­cern among many employ­ers. The deci­sion in Rossato, like Skene, is from the Full Court of the Fed­er­al Court of Aus­tralia. It was expect­ed that Work­Pac would have appealed Skene to the High Court of Aus­tralia, though ulti­mate­ly no appeal was pur­sued. There is an expec­ta­tion, how­ev­er, that the Rossato deci­sion will be appealed. This would mean that there is poten­tial for the High Court to over­turn this deci­sion and the case will no longer be con­sid­ered good law. Of course, the fact the deci­sion might be deeply prob­lem­at­ic for some busi­ness­es does not mean it is not legal­ly sound. Two Fed­er­al Court appeal bench­es have reached the same conclusions. 

It is pos­si­ble that the Gov­ern­ment will inter­vene and leg­is­late to pre­vent such claims being made by employ­ees. The Com­mon­wealth Attor­ney-Gen­er­al has indi­cat­ed he is con­cerned about the Rossato deci­sion, and busi­ness groups are call­ing for the Gov­ern­ment to imme­di­ate­ly address the issue. Unsur­pris­ing­ly, the Unions and Labor oppo­si­tion do not sup­port that view. 

In the mean­time, employ­ers will need to watch this space close­ly. Employ­ers should reg­u­lar­ly review their employ­ment con­tracts and care­ful­ly assess engage­ment of casu­als in prac­tice. Fol­low­ing the fac­tors iden­ti­fied in Rossato and Skene (and the author­i­ties those cas­es relied on), employ­ers will need to ensure that their casu­al employ­ees are tru­ly engaged on a casu­al basis; that is, there will need to be the absence of a firm advance direc­tive. This may be demon­strat­ed through evi­dence of irreg­u­lar work pat­ters, uncer­tain­ty, dis­con­ti­nu­ity, inter­mit­ten­cy of work and unpredictability.