Casual employees and their employers now have clarity as to the nature of their rights and entitlements at law, thanks to the recent decision of the High Court in WorkPac Pty Ltd v Rossato  HCA 23. The High Court held that, in deciding whether an employee is a casual employee, consideration must be given to the express written terms of the relevant employment contract. This decision overruled the previous decisions of the Full Federal Court in WorkPac Pty Ltd v Rossato (2020) 278 FCR 179 (First Judgement) and WorkPac Pty Ltd v Skene (2018) 264 FCR 536 (Skene).
Mr Rossato (Rossato) was employed by labour hire company WorkPac Pty Ltd (WorkPac) as a production worker to perform work for one of WorkPac’s clients. Rossato’s employment with WorkPac was governed by a series of six contacts, each titled “”Notice of Offer of Casual Employment – Flat Rate”. Accordingly, at all relevant times WorkPac treated Rossato as a casual employee and did not pay him leave or public holiday entitlements which are available to non-casual employees under the Fair Work Act 2009 (Cth) (FWA).
In the decision of Skene, the Full Federal Court held that an employee of WorkPac, who was employed in circumstances similar to that of Rossato, was in not a casual employee. Relying on the Skene decision, Mr Rossato wrote to WorkPac claiming that he was also not a casual employee and that he should be paid for untaken annual leave, public holidays, and periods of personal leave and compassionate leave taken during his employment. WorkPac denied Rossato’s claims and applied to the Federal Court seeking declarations that Rossato was a casual employee for the purposes of the FWA.
Full Federal Court Decisions
Both before the Full Federal Court and the High Court, the parties agreed that a casual employee is an employee who has no firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work. Accordingly, both courts were asked to determine if such a firm advance commitment existed in relation to Rossato.
In both Skene and the First Judgement, the Full Federal Court held that the characterisation of employment as casual or otherwise required an assessment of the conduct of the parties to the employment relationship and the real substance, practical reality and true nature of that relationship and that the character of the employment relationship may be discerned from the course of dealing between the parties and their conduct, not only in the written terms of the contract which created the relationship.
As Rossato had regularly received weekly rosters that were made far in advance and often fixed for long periods of time, the Full Federal Court held in the First Judgement that Rossato was not a casual employee such rosters indicated a firm advance commitment of employment, despite the fact that his employment contracts identified him as a casual worker.
The Full Federal Court also held in the First Judgement that WorkPac was not entitled to set off the entitlements it should have been paying Rossato under the FWA against the 25% loading he received as a casual employee. The First Judgement led to the amendments to the FWA discussed in our previous article, which prevented misclassified employees from receiving both a casual loading and employee entitlements under the FWA.
High Court Decision
Contrary to the Full Federal Court, the High Court held that “The search for the existence or otherwise of a “firm advance commitment” must be for enforceable terms, and not unenforceable expectations or understandings that might be said to reflect the manner in which the parties performed their agreement.” Accordingly, where parties have entered into a written agreement, it is to the terms of the written agreement “one must look to determine the character of the employment relationship.”
Noting that the contracts entered into by Rossato provided that:
- employment with WorkPac was on an “assignment-by-assignment basis”;
- an employee could accept or reject any offer of an assignment;
- on completion of an assignment, whether satisfactory or otherwise, WorkPac was under no obligation to offer any other assignment/s;
- the period of an assignment could be varied by WorkPac, or by WorkPac’s client, on one hour’s notice; and
- casual assignments could be terminated by either WorkPac or the employee on one hour’s notice,
the High Court held that, on the plain and ordinary meaning of the terms of the contracts, the parties had deliberately avoided a firm commitment to ongoing employment once a given assignment had been completed. Accordingly, Rossato was a casual employee. The fact that Rossato’s working hours were fixed by rosters was of limited significance to the High Court, as the rosters did not constitute a firm advance commitment to continuing employment beyond a particular assignment.
In light of the High Court’s decision, in determining whether an employee is casual regard must be had to the terms of the relevant employment agreement. Accordingly, employers should ensure that their written casual employment agreements clearly state that there is no firm advance commitment of ongoing employment.
If you have any questions or concerns related to the classification of casual employees or the terms of a casual employment contract, please do not hesitate to contact us.