On 20 May 2020, the Full Federal Court of Australia handed down a decision on casual employment that has left employers nervously wondering what it means for them. This update provides an overview of the decision and guidance around what is (and is not) a true casual and how you should be managing these employees in your business.
In the case of WorkPac Pty Ltd vs Rossato , Mr Rossato was engaged by WorkPac as a causal employee under 6 separate engagements over the course of 3.5 years.
During his employment, Mr Rossato worked on a rostered basis, often working 7 days on, 7 days off, and driving in and out of site accommodation provided by WorkPac’s clients. The rosters often extended for significant periods of time beyond his contract commencement date. For example, the roster Mr Rossato worked on when first employed by WorkPac was scheduled 7 months in advance.
The employment contracts deemed Mr Rossato a casual employee and had wording to the effect that his pay rate was inclusive of casual loading in lieu of other entitlements.
The Federal Court’s Decision
The Full Federal Court found that while Mr Rossato was engaged as a casual employee and his contracts were worded to that effect, he was actually considered a permanent employee.
The Court reinforced that casual employees working regular and systematic hours, and predictable shifts committed to in advance, are likely to be considered permanent employees regardless of their contract wording and any casual loading paid.
Consequently, WorkPac was ordered to backpay Mr Rossato for unpaid public holidays, annual leave, personal leave and compassionate leave.
WorkPac argued that it should be able to set off the casual loading it had previously paid to Mr Rossato or recover the ‘mistaken’ casual loading paid to him (given he was found to be permanent). The Court rejected these claims in their entirety.
This decision is likely to be appealed to the High Court. We will keep you informed if this occurs.
What is a ‘true’ casual?
The Court relied on the “essence of casualness” principles first referred to in Hamzy v Tricon International Restaurants trading as KFC (2001), which includes:
the absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work;
no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work (and the casual employee will also not provide a reciprocal commitment to the employer);
irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability.
When determining if someone is a true casual in your business, you should consider these principles.
What are the alternatives to casual employment?
The answer to this question depends on many variables so each case must be considered individually. Some of the alternatives to casual employment may include:
Casual then converting to another employment type listed below
Full time (permanent) employment
Part time (permanent) employment
Fixed term employment
We strongly recommend businesses seek advice on which option/s best suit their individual circumstances.
What should business owners be doing now?
We recommend all businesses immediately undertake a review of the casuals they employ, including their length of service, days/hours worked from week to week (including any work committed in advance), employment contracts, and the casual employment and casual conversion provisions of any relevant modern award or enterprise agreement. You will then be able to determine your level of exposure and any changes necessary.
Moving forward, there are a number of other steps you can take to minimise the risks associated with employing casuals:
Ensure employment contracts are appropriately worded for your business, including confirmation that casuals have no guarantee of regular and systematic hours and that 25% casual loading is payable in lieu of other entitlements.
Understand both the casual employment and casual conversion clauses in the Awards/Enterprise Agreements specific to each of your employees and ensure they are followed.
Convert casual employees to an alternative employment type when available.
Ensure your payslips are compliant (refer to this Fair Work Ombudsman page) and note the 25% casual loading payable.
Where possible, limit rosters to weekly or fortnightly and ensure shifts are not a predictable, regular pattern.
Ensure all related discussions and changes to employment conditions are documented.
While the decision is likely to be appealed, it currently sets the precedent to be relied upon in future cases.
All businesses should be aware that employees (including past employees) have 6 years to make a claim for unpaid entitlements so it is in your best interest to assess your current situation and ensure you are compliant.
You can contact the team at Edwards HR on 0459 818 011 for further guidance or to arrange your HR Health Check (including casual assessment).
Copyright © Edwards HR 2020, All rights reserved.