In brief – The High Court of Australia has granted labour hire company WorkPac Pty Ltd special leave to appeal the controversial decision in WorkPac v Rossato in an attempt to correct the confusion around the definition of casual employment

UPDATE August 2021: Read our latest article on the High Court's landmark decision Casual employment clarified: WorkPac Pty Ltd v Rossato.

The High Court has granted a labour hire company special leave to appeal the controversial decision of the Full Court of the Federal Court in WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (Rossato) which currently represents the legal position on the definition of casual employment in Australia. 

What will the High Court be considering in Rossato

WorkPac submits that the Rossato decision is of widespread importance because it has the capacity to apply to more than a million employees, in many sectors of the Australian economy, and in doing so alters the legal classification of their employment from casual to permanent, at an enormous cost to the Australian economy of more than $14 billion.

WorkPac will seek to argue before the High Court that Mr Rossato was a genuine casual employee for the purposes of the Fair Work Act 2009 (Cth) and the applicable enterprise agreement that applied to him.

In the alternative, WorkPac seeks an order preventing ‘double-dipping’ by casual employees, allowing the Court to ‘set off’ any leave entitlements owed against the renumeration received which included casual loadings.

The outcome of the High Court is not expected to be delivered until mid 2021.

What is the current legal test?

The current reasoning drawn from Rossato and an earlier case of WorkPac Pty Ltd v Skene [2018] FCAFC 131 suggests that the “essence of casualness” takes into account the following factors:

  1. The absence of a firm advance commitment as to the duration of an employee’s employment or the days (or hours) of work is the essence of casualness.

  2. The key indicia of casual employment includes irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability. 

  3. Payment of casual employees on an hourly basis, will be of less significance in determining the presence/absence of a firm advance commitment, if all the employees are paid on an hourly basis. 

  4. Despite mechanisms existing in a contract which contemplate some variability as to the actual hours of work to be allocated to an employee, where an arrangement can be construed as being an offer of continuing work to be performed according to an agreed pattern of full-time hours of work, together with an ambiguous or indefinite contract duration, it is indicative of a "permanent" employment relationship.

  5. Shorter notice is not traditionally consistent with regular or permanent employment. 

  6. Contractual machinery, which provides an employee a right to refuse or choose between shifts, or gives an employee an opportunity to provide her or his service in response to a specific demand, is consistent with a casual employment relationship.

  7. The key indicators of a casual arrangement will commonly reflect the fact that, whilst employed, the availability of work for the employee is short-term and not-ongoing and that the employer’s need for further work to be performed by the employee in the future is not reasonably predictable. 

  8. Whether an employee is paid a casual loading is a relevant consideration. To effectively identify the loading, contracts of employment should specify which component of the rate of pay is allocated to a casual loading or monies in lieu of paid annual leave. However, these references will not be sufficient, if in reality the employment is for an indefinite duration with stable, regular and predictable work. 

What should employers do between now and the outcome of the High Court decision?

Until or unless overruled by the High Court later in 2021, the Rossato decision represents the current legal position on the definition of casual employment in Australia for the purposes of certain entitlements. The outcome may result in further legislative intervention with both employer and employee groups, with the case emphasising the shortfalls and uncertainties in the current legislative framework for casual workers and their employers.

For now and unless overruled, employers are encouraged to consider at least the following:

  1. Review your casual cohort: Regularly review your workforce to consider whether any long-term casuals are more appropriately classified as permanent employees. This may mean applying the casual conversion clauses already in modern awards or enterprise agreements.

  2. Educate internal HR and recruitment: Ensure those responsible for hiring staff within your organisation are aware of the casual employment indicia and the factors that would influence a genuine casual employee morphing into a permanent employee.

  3. Ensure enterprise agreements and contracts are clear about casuals: To reduce the risk of employees claiming they are not casuals, ensure contracts or enterprise agreements include a detailed definition of "casual employee". 

  4. Separately identify the casual loading: Casual loadings should be separately identified in employment contracts and payslips and expressly stated that to be paid in lieu of paid annual leave and other entitlements. 

  5. Set-off clauses: Review set-off clauses in contracts to endeavour to ensure they meet the specific needs in this complex area of law to increase the chance that casual loadings can be claimed back in the event of a challenge. 

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2021.

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