Casual employment clarified: WorkPac Pty Ltd v Rossato

In brief 

On 4 August 2021, the High Court of Australia handed down a long awaited and landmark decision in WorkPac Pty Ltd v Robert Rossato & Ors [2021] HCA 23. 

Employers of casual employees can breathe a sigh of relief as the High Court has clarified on a final basis how casual employees are characterised, unanimously overturning the Full Federal Court's earlier decision in WorkPac Pty Ltd v Rossato, which had created significant confusion for employers with large casual cohorts. 

The High Court accepted that the test for casual employment based on whether there was a "firm advance commitment" can only be referrable to whether there were enforceable terms of a contract of employment to that effect, and as such, unenforceable "expectations" or "understandings" about the relationship between the parties must be rejected. 

In this case, the High Court found that where parties have committed themselves to an express written agreement, the 'firm advance commitment' must be found in the binding contractual obligations contained in the written agreement, not some mere expectation. 

Background

The uncertainty around casual employees has been an ongoing issue for employers since the decision of the Full Court in WorkPac Pty Ltd v Skene (Skene), where the Court held a casual miner who had regular and predictable shifts was entitled to permanent employee benefits under the National Employment Standards.

In reliance on the Skene decision, Mr Rossato claimed that he had not worked as a casual employee for WorkPac and sought to be paid for a number of entitlements including annual leave, public holidays, and periods of personal leave and compassionate leave taken by him during his employment.

WorkPac denied those claims and sought declarations that Mr Rossato had been a casual employee for the purposes of the Fair Work Act 2009 (Cth) (FWA) and the relevant enterprise agreement. 

The Full Federal Court found against WorkPac, suggesting the characterisation of employment as casual or otherwise required an assessment of "[t]he conduct of the parties to the employment relationship and the real substance, practical reality and true nature of that relationship". 

The High Court overturned the approach taken by the Full Federal Court. 

The 'firm advance commitment' and primacy of the contract

The High Court has clarified that 'firm advance commitment' is to be determined by reference to the legal rights and obligations which constitute that relationship. 

The search for the existence of a 'firm advance commitment' must be by reference to "enforceable terms, and not unenforceable expectations or understandings that might be said to reflect the manner in which the parties performed their agreement". (at [57])

In relation to the employment relationship, the High Court said that: 

1. while mutual undertakings may not always be express, where there are express terms of the contract between the parties, they must be given effect unless they are contrary to statute;

2. if the mutual undertakings are said to be implied in what has been agreed, they cannot be inconsistent with the express terms of the contract; and

3. if the mutual undertakings are to be inferred from conduct, then they may take effect as contractual variations.

Having found that Mr Rossato was a casual employee by reference to his written employment contract, the High Court did not consider the issues of set-off and "double dipping". 

Predicable patterns of work are not inconsistent with the casual employment 

Mr Rossato was required to work in accordance with rosters which involved regular, full-time hours according to a fixed pattern of work, albeit on series of six separate assignments of work. 

The High Court, noting an "inordinate emphasis" had been placed on the roster system, held the Full Court erred in attributing the systematic nature of Mr Rossato's work as one that involved a firm advance commitment to continuing work beyond the completion of a particular assignment.

Whilst Mr Rossato may have had a reasonable expectation of employment on the basis of regular rosters, that does not in itself represent a firm advance commitment of continuing employment. Rather, the terms of Mr Rossato's employment contract expressly provided that work was on an "assignment-by-assignment basis", and WorkPac was under no obligation to offer any further assignments.

The High Court's decision recognised that engagement of employees on the basis of irregular or discontinuance work patterns would have been uncommercial for WorkPac and the host employer, and the qualities of regularity and systematic organisation in the performance of assignments is entirely compatible with the notion of 'casual employment' under the FWA. 

Implications for employers 

Employers should ensure that written contracts applying to casual employees contain express provisions relating to the nature and scope of the relationship, consistent with legislative rights applicable to casual employees, taking into account the key features of the High Court's reasoning. 

The decision may result in a reduction in the incidence of class actions where such claims seek payment of permanent entitlements and are otherwise solely predicated on the existence of regular and systematic patterns of work. 

Employers should also keep in mind their obligations under the recently introduced section 66B to the FWA, which requires employers to offer casual employees the choice to become permanent if they have been employed for 12 months and have worked regular and systematic patterns in the previous six months.