High Court overturns decision for casuals to claim paid leave entitlements

The High Court of Australia has overturned the Federal Court decision in WorkPac v Rossato [2020] FCAFC 84 in a unanimous decision putting an end to the idea that some casual workers may be entitled to leave entitlements, such as annual leave, sick leave, and holiday pay.

Employer groups have claimed this decision will stop potential backpay claim against employers totalling $40 billion.

Previous decisions

In 2018, the Full Court of the Federal Court[1] found that, in the absence of a definition of casual employment under the Fair Work Act 2009 (Cth) (FWA), the courts would look at the true nature of the employment relationship. This is regardless of whether an employer calls the arrangement “casual”.

In fact, the court made the finding that a casual employee was actually a permanent employee (and entitled to accrue leave and other benefits), the written terms of the enterprise agreement and employment contact expressly stating the employment was casual.

In making this decision, the Court looked at the employee’s pattern of work and determined that his work was regular, systematic and predictable, and that meant it had the characteristics of permanent employment, not casual employment.

The recent High Court decision

In this recent decision, Mr Rossato (the applicant) worked for WorkPac as a production coal mine employee for a period of four years on six separate consecutive casual contracts between 2014 and 2018 (collectively, Employment Contracts).

Throughout his employment with WorkPac, Mr Rossato was treated as a casual employee and was paid pursuant to the Workpac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012 (EBA) as a casual employee. Under the EBA a casual employee was entitled to be paid a higher rate of pay, however, was not entitled to accrue statutory leave entitlements such as annual leave, sick leave, and holiday pay.

After ceasing employment with Workpac in 2018, Mr Rossato claimed that he was a permanent employee on the basis that his employment was ongoing, regular and systematic pursuant to the Federal Court case law. Accordingly, Mr Rossato claimed he was entitled to be paid his outstanding leave entitlements under the FWA and the EBA.

The High Court found that a casual employee is an employee who has no “firm advance commitment of work from an employer as to the duration of the employee’s employment or the day (or hours) the employee will work”. However, it stated that “a mere expectation of continuing employment on a regular and systematic basis is not sufficient” to render the employment permanent in nature.

The High Court found that Mr Rossato’s employment was truly casual, having regard to the following facts:

Mr Rossato was engaged on an “assignment-by assignment basis”;

he was entitled to accept or reject any offer of employment;

WorkPac was not under any obligation to offer any further assignments and there was no commitment to ongoing employment beyond the completion of each assignment, and

the casual assignments could be varied or terminated with minimal notice.

The Hight Court also held that where an employment agreement expressly states the nature of the employment relationship, and the parties adhere to the terms, there must be a firm advance commitment of work found within the terms of the agreement for the employee to be considered otherwise. In this matter, the employment contracts provided for variations of Mr Rossato’s daily working hours and assignment length, supporting the casual nature of the employment.

What does this mean for employers?

The High Court’s decision in Workpac v Rossato provides clarity for employers who engage casual employees under a contract of employment.

In addition to the High Court’s decision in Rossato, there have been legislative changes to the FWA whereby a definition of casual employment has been added (Amending Legislation).

The Rossato decision and the Amending Legislation provides greater certainty to employers on the nature of the employment relationship where a casual contract of employment does not give rise to “a firm commitment to ongoing employment”.

Employers should get in contact with CJM Lawyers now to have their casual contracts of employment reviewed to ensure that terms for casual employees support the nature of the work being performed.

  [1] WorkPac Pty Ltd v Skene [2018] FCAFC 131