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The recent decision handed down by the Full Federal Court in WorkPac Pty Ltd v Rossato [2020] FCAFC 84 could see many thousands of casual employees claiming entitlements such as annual, sick and compassionate leave and public holiday payments.
While this decision will undoubtedly be welcomed by casual employees across all industries, there is serious cause for concern for employers who engage long term casual staff leading to many businesses considering their options with respect to converting casuals to permanent employees.
WorkPac Pty Ltd v Rossato [2020] FCAFC 84
The Facts
Rossato was employed on a casual basis by a labour-hire firm, WorkPac as a mine worker at two QLD mines over a period of 3 ½ years. Various employment contracts stated that 25% casual loading was to be paid in addition to Rossato’s flat rate of pay. Rossato was largely employed pursuant to rosters, some of which extended for many months.
Rossato claimed that because he had a reasonable expectation of continuing employment and his rostered shifts were regular and systematic within the meaning of the Fair Work Act, he was eligible for accrued entitlements and ought to be compensated for working public holidays. WorkPac claimed this would amount to “double-dipping” as Rossato would be paid benefits but would also receive a 25% loading.
The Ruling
The Full Bench held Rossato’s employment to be “regular, certain, continuing, constant and predictable”, and as he was rostered for shifts well in advance, he was eligible to entitlements that permanent employees would ordinarily receive.
WorkPac argued that it should be able to set off the casual loading paid to Rossato, however, this was rejected with the Court finding that contracts were not adequately expressed to give an option for contractual set-offs. All Justices held that loading was expressed as “in lieu” of leave entitlements, and therefore the loading was incapable of being used to gratify leave entitlements.
It was further held that loading was paid in many cases before the leave entitlements accrued and as wages with respect to hours worked. Therefore, the loading was incapable of being used to reduce the amounts owing with respect to leave entitlements or public holidays.
What does this mean for employees and employers?
The presumption that casual employees engaged to work on an agreed pattern of ordinary hours are entitled to similar benefits as those employed permanently is not a new concept. However, the decision in WorkPac Pty Ltd v Rossato confirms past decisions (including WorkPac Pty Ltd v Skene (2018) 264 FCR 536) in that the true test for determining whether an employee is casual or not, will depend upon the nature of employer/employee relationship rather than the mere casual label.
While WorkPac Pty Ltd v Rossato may appear to be a victory for casual workers for now, the Federal Government will likely back an appeal to the High Court and consider changing workplace laws to prevent the disastrous effect this may have on business, particularly small to medium-sized enterprise. Industry groups estimate the judgment could affect more than 1 million workers across the country and cost businesses $8 billion.
Employers who engage casual staff may need to review their current arrangements in light of this development and consider offering long term and permanent casual employees permanent part-time positions to reduce potential liability for current and future arrangements. Employers should be equally vigilant not to take adverse action against an employee who does not wish to convert to permanent employment to avoid industrial action including claims for unfair dismissal.
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