High Court of Australia hands down long-awaited decision on casual employees – confirmation that employees with casual contracts are not entitled to annual and other leave entitlements

On 4 August 2021, the High Court of Australia unanimously allowed an appeal from the Full Court of the Federal Court of Australia (“FCAFC”).

The appeal in Workpac Pty Ltd v Rossato [2021] HCA 23 finally resolves the issue of long-term casual employment.

Background

The first respondent (“Mr Rossato”) was employed for three and a half years by the appellant (“WorkPac”) as a mining truck driver. He was engaged under six consecutive contracts of employment, with the following features:
• each contract expressly identified Mr Rossato as a casual employee; and
• three of the contracts referred to a casual loading rate of 25 per cent which was incorporated into Mr Rossato’s rate of pay.
• one contract contained an express clause which stipulated the casual loading rate as being in lieu of annual leave, notice of termination and redundancy pay.

He was also covered by an enterprise agreement which further stipulated he was engaged on a casual basis and the 25 per cent loading was paid in lieu of leave entitlements available only to permanent employees.

On 16 August 2018, judgment was delivered in WorkPac Pty Ltd v Skene (2018) 264 FCR 536 (“Skene”). In that decision, it was held that Mr Skene, who had been employed by WorkPac in similar circumstances to that of Mr Rossato, was not a casual employee.

In reliance on that decision and after his employment ceased, Mr Rossato made a similar claim in respect of unpaid annual leave, personal/carer’s leave and compassionate leave entitlements under the National Employment Standards of the Fair Work Act 2009 (Cth) (“Fair Work Act”), as well as public holiday pay entitlements under the WorkPac’s enterprise agreement.
First Instance
WorkPac subsequently sought declarations that Mr Rossato was characterised as a casual employee for the purposes of the National Employment Standards and WorkPac’s enterprise agreement and was consequently not entitled to payment of the entitlements he was claiming. In the alternative, WorkPac argued that if Mr Rossato was found to be a permanent employee, WorkPac was entitled to set off, under each of his six contracts, the 25 per cent casual loading paid to him against any claim for unpaid leave entitlements.

In WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (“Rossato”), the FCAFC ruled that Mr Rossato was a permanent employee because WorkPac and Rossato had “agreed on employment of indefinite duration, which was stable, regular and predictable” which was indicative of a “firm advance commitment” by WorkPac to continuing and indefinite employment.

The fact that Mr Rossato had received weekly rosters which were often fixed for long periods of time and were promulgated well in advance (sometimes up to seven months in advance), was a key consideration of the Court when determining that there was a firm advance commitment of employment, akin to that of which is ordinarily only afforded to permanent employees.

Satisfied that a firm advance commitment was evidenced in the six contracts, the FCAFC ordered Workpac to back pay Mr Rossato the entitlements he claimed under the Fair Work Act with respect to paid annual leave, paid personal/carer’s leave, paid compassionate leave and payment for public holidays.

Interestingly, the Full Court also ruled that WorkPac was not entitled to set off Mr Rossato’s 25 per cent casual loading paid to him against any claim for unpaid leave entitlements, effectively allowing Mr Rossato to double dip on casual loadings and leave entitlements.

By grant of special leave, WorkPac appealed to the High Court.

Decision of the High Court

In this long-awaited landmark ruling, the High Court found that the mere fact that Mr Rossato had an expectation of continuing employment was not a basis for there being a “firm advance commitment” to ongoing work. Rather, where parties commit the terms of their employment relationship to a written contract and thereafter adhere to those terms, the focus needs to be on the express contractual obligations of the parties.

Despite the fact that Mr Rossato was required to work in accordance with an established shift structure fixed long in advance by rosters, the Court was satisfied that Mr Rossato’s employment was expressly on an “assignment-by-assignment” basis, and that Mr Rossato was entitled to accept or reject any offer of an assignment.

In short, the requirement to work in accordance with an established shift structure, fixed long in advance by rosters, does not establish a commitment to an ongoing employment relationship beyond the completion of each assignment. The mere expectation of continuing employment on a regular and systematic basis is not sufficient to enliven the entitlements of a permanent employee under the National Employment Standards.

What this means

The Skene and Rossato decisions were one of the key drivers behind the Federal Government’s industrial relations overhauls earlier this year, following widespread fears that employers would be forced to spend as much as $40 billion nationally to back pay “casual”
employees for six years of accrued leave.

Consequently, and unsurprisingly, this decision is a huge win for Australian businesses. Had the decision gone the other way it could have applied to more than one million Australian employees in many sectors of the Australian economy.

Unions and employee groups, on the other hand, are very disappointed with the outcome as it means that casual employees will continue to not receive annual leave entitlements.

Moving forward, long-term casual staff who wish to go permanent will need to rely upon the recent changes to the Fair Work Act which allows for certain casuals who work regular and systematic employment to convert to permanent status after one year of employment.

If you would like to seek advice concerning workplace law in Cairns, our team of employment lawyers can help. Get in touch today to arrange a no obligation consultation or to find out more about our legal services.

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