The High Court of Australia has recently redefined the parameters of what constitutes ‘casual employment’ in its much anticipated decision of WorkPac Pty Ltd v Rossato & Ors [2021] HCA 23, handed down on 3 August 2021.
The majority verdict quashed the previous Federal Court’s ruling, which alleviates Employer concerns related to the risks associated with hiring casual employees on a regular and systematic basis, who may later assert that they are entitled to permanent employment entitlements such as paid leave.
Background
The WorkPac case involved a dispute with a former mineworker employee, Robert Rossato, who claimed he was entitled to paid leave on the basis that he had been treated as a permanent employee throughout his six consecutive contract assignments between July 2014 and April 2018. This was despite receiving a 25% casual loading rate and being labelled as a casual employee by WorkPac.
The previous decision of the Federal Court that was handed down in May 2020 found that casual employees engaged in work on a regular and permanent basis could claim entitlements reserved for permanent employees. The impact of this decision was estimated to expose Australian employers to a potential $39 billion in cost claims.
The High Court overturned the approach taken by the Full Federal Court, and determined that Rossato was in fact a casual employee under both the Fair Work Act and the enterprise agreement that was agreed upon by both parties, therefore he was not entitled to leave and pay privileges.
Key takeaway
The High Court upheld the test that a casual employee has “no firm advance commitment” from their employer as to the duration of their employment or the days (or hours) that they will work, and provides no reciprocal commitment to the employer.
When determining if there was a ‘firm advance commitment’ to ongoing work, the High Court observed the terms of the contract that existed between Workpac and Rossato. It was determined that the clarification of the employment status is to be defined by the terms expressed in the respective employment contract. By observing conventional contractual arrangements, the necessary “firm advance commitment” will be found in the binding obligations of the parties.
Aligning with the amendments to the Fair Work Act earlier this year, the Rossato decision reinforces that the terms of the contract of employment are key in determining whether the employment relationship is casual or permanent in nature, regardless of employee expectations and conduct.
What this means for employers
The decision represents changes in how Courts will approach issues related to casual employment and provides employers with comfort concerning casual employment arrangements.
Mellor Olsson strongly recommend that employers review their contracts and dealings with their casual employees to ensure that the terms of the employment relationship reflect the nature and scope of the casual working relationship. Due care should also be taken to ensure these terms align with the relevant changes to the Fair Work Act and National Employment Standards.
If you would like assistance with reviewing the terms of your employment contract to ensure that the provisions adequately support the definition of casual employment, please contact the Mellor Olsson Employment and WHS Team.
This article was written by Partner, Dylan Steel, and Solicitor, Jordan Richards.