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WorkPac v Rossato: What does the “casual double-dipping” case mean for your workplace?

May 2020

At a glance

  • Contrary to what has been reported, the Workpac v Rossato decision has not created a blanket entitlement for all casuals, and turned on a particularly complex set of factual and legal considerations
  • An appeal to the High Court is almost a certainty. Alternatively, the Attorney General has indicated that urgent consultation will occur with unions and employers in light of the decision, and legislative change may follow.
  • In the interim, Employers should review their existing workforce considering any particular ‘higher risk’ casuals, review rostering and methods of engagement and ensure that new and current employees have clear employment contracts dealing with the issues at hand. 
  • It is strongly advised that Employers seek legal advice in regards to these issues.  


The recent Full Federal Court decision in WorkPac Pty Ltd v Rossato [2020] FCAFC 84 has rightly caused significant concern for employers who engage casual employees. Employers with highly casualised workforces, in particular, must consider obtaining urgent advice.

Those who work in HR or employment law will know that the risk of a long term casual being “deemed permanent” for certain purposes, is nothing new. What is new, and what rightly sent shockwaves through the business community, is the concept of “double dipping” – that is, being paid a 25% casual loading and receiving paid leave in addition to that loading. 

However, contrary to what has been reported, the decision has not created a blanket entitlement for all casuals, and turned on a particular complex set of factual and legal considerations specific to WorkPac.

The decision is 273 pages long. In very brief terms, the Full Court found that paid leave was payable to Mr Rossato due to a combination of the following:

  • Mr Rossato worked regular and systematic hours over a long period;
  • Mr Rossato had an advance commitment from the employer that he would continue to receive regular and ongoing hours;
  • the applicable enterprise agreement excluded the underlying Award entirely, meaning the Award definition of a casual being “engaged and paid as such” was not a primary consideration. To the contrary, the Full Court found that the enterprise agreement did not “provide that any component of the EA hourly rate payable to Mr Rossato [was to] be paid as a casual loading”; and
  • WorkPac did not have a clear contractual right to set-off or allocate the casual loading towards the claim for leave.

The decision in Rossato follows the Full Court’s decision in WorkPac v Skene [2018] FCAFC 131, where a similar finding was made in respect of a different casual employee of WorkPac. However, rather than appeal the earlier decision in Skene, WorkPac instead commenced proceedings to seek declarations in respect of another casual employee, Mr Rossato, hoping for a more beneficial outcome for the employer. It was not to be; at least for now.

In the present case, WorkPac sought declarations that Mr Rossato could not make claims with respect to annual leave, personal/carer’s leave and compassionate leave entitlements on the basis that he was a casual employee.

However, the Court found that Mr Rossato was not a casual employee for the purposes of the Fair Work Act and the applicable enterprise agreement.

The Court focussed on the characteristic of casual employment being that a casual employee “has no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work”. The Court did not accept WorkPac’s argument that the  “firm commitment to ongoing work” should be ascertained by reference to the contract of employment. Rather, the Court found it is necessary to look at all the circumstances of the employment.

After looking to all the facts of Mr Rossato’s employment, the Court found that WorkPac and Mr Rossato had agreed on employment of indefinite duration which was stable, regular and predictable such that the required “firm advance commitment” was evident for the course of his employment at WorkPac.

As the Court found that Mr Rossato was not a casual employee, he was “deemed” to be a permanent employee, and was therefore entitled to paid leave entitlements that a casual employee would not normally be entitled to.

WorkPac’s (unsuccessful) attempt to recover the casual loading already paid

The fact that Mr Rossato was “deemed” to be a permanent employee, given the longevity and regularity of his employment, was not entirely unexpected. However, the fact that he was found to be entitled to paid leave in addition to the casual loading he had already been paid, is where the controversy arguably arises. 

WorkPac had submitted that the casual loadings already paid to Mr Rossato could be “set-off” or allocated against any entitlements to paid leave. Alternatively, Workpac submitted that given the claim now being brought, that it should be entitled to recover the casual loading paid to Mr Rossato on the basis that those payments had been paid by “mistake” on the basis that Workpac had, understandably, paid Mr Rossato on the basis he was a casual employee.

However, the Full Federal Court disagreed. In very brief terms, they found that WorkPac was not entitled to set-off the casual loading already made to Mr Rossato, because those payments (at least on these particular facts) did not have a clear enough correlation or connection to the entitlements that Mr Rossato sought, namely paid leave, now that he had been “deemed” permanent.

Complicating matters further for WorkPac was the complex law of set-off. Mr Rossato’s contract did not include any express set-off provision. In very simple terms, if an employment contract does not contain a carefully drafted contractual right for an employer to “set-off” one or more payments against one or more entitlements, in this case one that specifically contemplates that a casual loading is paid as compensation for paid leave, an employer will have great difficulty arguing otherwise.

Similarly, WorkPac was also unsuccessful in its claim for restitution on the basis that additional amounts paid to Mr Rossato were mistakenly made on the assumption that he was engaged as a casual employee. The law of “contractual mistake” is complex. In short, the degree or type of “mistake” required was found not to have occurred in this case.

For completeness, it is worth noting that WorkPac also sought to rely on regulations that were, somewhat ironically, introduced after the decision in Skene, but was still unsuccessful. In short, despite regulation 2.03A of the Fair Work Regulations expressly allowing an employer to set-off payments made as a casual loading against any entitlement to payment in lieu of paid leave entitlements, this still did not help Workpac. Why? A technical but important point: Mr Rossato sought payment of actual leave entitlements, rather than a payment in lieu. Consequently, the Regulation was found not to apply, and was no defence.

What now?

An appeal to the High Court is almost a certainty. Alternatively, the Attorney General has indicated that urgent consultation will occur with unions and employers in light of the decision, and legislative change may follow.

Importantly, until there is any appeal decision to overturn the judgment, or relevant legislative change, the findings in Rossato remain “good law” and must be complied with.

Consequently, it is critical that in the interim, employers do at least three things:

  • Review and “map” their existing casual workforce and consider any potential higher risk or problem areas that will require advice. This will include a review of length of service of casuals, considering the wording of your existing contracts, and reviewing your enterprise agreement(s) and the relevant award(s) (including any relevant interaction between the two).
  • Ensure that new employees (and to the extent practicable, existing employees) have a contract of employment that makes abundantly clear that a separately identifiable casual loading is being paid in lieu of, in connection to, and can be set off against all “permanent” entitlements, whether annual leave or otherwise. We strongly suggest you obtain tailored advice in relation to the wording of your contracts in this particular respect, given the complexities of the legal considerations addressed in Rossato.
  • Ensure you review and consider your methods of engagement and rostering practices. Employers with casual employees who are rostered in advance, and work on a regular basis, should consider whether there would be benefit in converting those employees to permanency, or at least offering a permanent position. Alternatively, if you do employ casuals in identical or comparable circumstances to Mr Rossato, you could unfortunately be liable to one or more employees for back-payment and/or varying leave accruals. Again, if you think you may be in this category, it is critical you obtain urgent legal advice.

Importantly, whether a casual employee will be entitled to claim any paid leave entitlements in accordance with this decision will turn on the relevant award, enterprise agreement and contracts of employment. We cannot stress enough that the facts of each engagement will be key to defending any claim.

If you are an employer of casual employees and are concerned about the implications of this decision, please seek tailored advice from one of our specialist employment lawyers listed below:

Disclaimer

The content of this newsletter is for general information purposes only and should in no way be treated as formal legal advice.