Employers are rightly concerned about the possibility of having to pay their casual workers leave entitlements and exposure to very significant claims.
The recent decision of the Full Federal Court in Workpac Pty Ltd v Rosatto [2020] FCAFC 84 on 20 May 2020, has prompted calls for urgent legislative review.The facts were unremarkable and are reflected in many workplaces around Australia.
Facts
Rossato was employed as a casual worker by labour hire company, Workpac under six consecutive contracts of employment for over 3 years.
Rossato asserted that despite the description of his employment and the 25% loading paid to him, that his employment relationship was not in truth and law, that of a casual employee.
Workpac applied to the Federal Court seeking:
• declarations that Rossato was a casual employee and not entitled to leave entitlements provided for permanent employees under the National Employment Standards in the Fair Work Act 2009 (Cth) (FW Act); or
• that Rossato’s pay included a 25% casual loading which should be ‘set off’ against any amount owed to him.
The Rosatta case followed on from an earlier decision in WorkPac Pty Ltd v Skene [2018] FCAFC 131 in August 2018, where it was determined that work of a regular nature and on-going basis is not genuinely casual.
Decision
In Rosatta, the Court decided that Rosatta, a casual employee who worked regular and systematic hours with predictable rosters and was paid as a casual, was not a casual for the purpose of sections 86, 95 and 106 of the FW Act.
Consequently, such an employee was entitled to receive both a casual loading plus paid annual leave, personal leave, compassionate leave and public holiday payments (for public holidays during the annual shut down) since he was a permanent employee.
The decision affirmed that casual employment is characterised by an absence of a “firm advance commitment as to continuing and indefinite work according to an agreed pattern of work”.
In determining the nature of the employment relationship, the Court determined that the absence of a firm advance commitment may be assessed by considering the employment contract as a whole, including whether it:
• provided for employment to be intermittent or irregular;
• permitted the employer to elect to offer employment on a particular day;
• permitted the employee to elect whether to work;
• is unlikely to continue for any length of time; and
• terminable on short notice.
The fact that the parties might agree to call the relationship one of casual employment is relevant, but is not conclusive to the true nature of the relationship. The actual practice and factual matrix must be considered.
In Rosatto, the facts which lead to the finding that the employment was not “casual” were:
• the parties had agreed upon employment for an indefinite duration;
• there was an agreed pattern of full-time hours (seven days on/seven days off with some variability of hours allocated);
• there were long term rosters (shift rosters at the mines were set up to seven months in advance);
• free on-site accommodation during a roster cycle, implying he was expected to work all shifts; and
• dealings between the parties over six contracts and different locations suggested mutual assumptions of continuity of employment.
Rosatta may yet be appealed, but if it is not-there are at least 2 class actions ready and waiting to file claims on behalf of casual workers, which may run into many millions of dollars in compensation for the unfortunate employers.
Can Casual Loading be set-off if work found not to be casual?
A set off of the 25% loading against the monies owed was not accepted because the Court found that:
• the employment contracts themselves did not clearly allow contractual set off; and
• paying a casual loading is not a substitute for enjoying paid annual leave since the purpose of paid annual leave is to provide for rest and recreation without loss of income. Casual loading is paid because an employee is understood not to be entitled to such leave.
What should you do if you employ casual workers?
1. Review your employment contracts immediately, particularly for any longstanding “casual” employees and identify any risks.
2. Review actual work practices for those workers.
3. Consider revising or restructuring workplace arrangements.
How can we help?
We can help you in the following:
1. Review your workforce employment contracts and work practices, and assess your exposure and risks.
2. Preparation of carefully drafted employment contracts that:
• remove as much doubt or scope for mischaracterising the relationship
• permit a set-off of any paid loading
3. Assist with any restructuring of your workforce.
If you have concerns in relation to casual employees in your business, please contact Michael Sing to discuss how we can help on 07 3009 8444.
