Insights Paper | Employment Law Alert - HCA Overturns Casual “Double Dipping” DecisionAUGUST 2021
The High Court has handed down its highly anticipated decision in the matter of Workpac v Rossato. The decision will come as a relief for employers, many of whom had potentially been facing unanticipated and significant leave liabilities for casual employees. In this Alert, we explain what this means for your workplace moving forward.
The original decision under appeal
Our readers will recall that the Full Federal Court found that Mr Rossato was not a casual employee, and was entitled to paid leave and paid public holidays. This was not without controversy, particularly given Mr Rossato’s contract stated that he was casual, and that he was paid a casual loading in lieu of paid leave entitlements.
That finding paved the way for significant claims to be agitated by casual employees seeking permanent entitlements like paid leave, even where those employees were employed as a casual and paid a casual loading.
Of further concern to many employers was the finding, by the Full Federal Court, that Workpac was unable to set-off or “allocate” the casual loading (already paid to Mr Rossato) towards a later claim for paid leave. Again, this finding was not without controversy, and led to some describing it as the “casual-double-dipping” case.
Workpac appealed the Full Federal Court decision to the High Court. The High Court agreed with Workpac, and unanimously upheld the appeal by finding that Mr Rossato was a casual employee for the purposes of the Fair Work Act.
The High Court reaffirmed the commonly understood position that a true “casual employee” is an employee without a firm advance commitment, by the employer, as to the duration and timing of future engagements. Similarly, the employee provides no reciprocal commitment to the employer.
The High Court further clarified that the mere expectation of ongoing employment held by a worker, even if reasonably held, is not enough to deem a worker a permanent employee. Like the statutory definition of “casual employee” introduced this year, the High Court found that when considering whether the employer had provided a “firm advance commitment” of ongoing work, the wording of the employment contract will be a fundamental consideration.
Accordingly, the High Court looked to the express written terms of Mr Rossato’s employment contract with Workpac. Those contracts made clear that work was offered on an “assignment by assignment” basis and that Workpac was under no obligation to offer further assignments to Mr Rossato following the completion of an assignment. Similarly, Mr Rossato was able to accept or reject any further offer of an assignment. It is largely this reasoning, based on the wording of the employment contract, which led to the High Court finding in favour of Workpac.
Finally, given the finding of casual employment, it was not necessary for the High Court to consider Workpac’s arguments relating to contractual setoff and restitution. This does mean that employers will have to wait awhile longer to be provided with greater clarity around this notoriously complex area of law, and what it means for their contracts of employment.
Implications for employers
The HCA decision is largely good news for employers, who for decades have had to grapple with the notoriously vague definition of “casual employment” in Australian employment law. This decision, along with the introduction of the statutory definition of casual employment earlier this year, will hopefully provide both employees and employers with greater clarity moving forward.
In what will give many larger employers some comfort, the High Court specifically found that if a casual employee is engaged on a formal fixed roster, with established shift patterns determined in advance, this fact alone will not establish a permanent employment relationship.
Similarly, the impact of the High Court’s decision is arguably lessened by, but remains largely consistent with, the legislative changes that now retrospectively define casual employment, including to define a casual worker on the basis of the employment contract agreed at commencement, rather than the focus being on subsequent conduct.
This leads to our most important advice for employers: all employers should have their casual letters of offer and/or contracts of employment carefully reviewed. Despite these recent developments, it remains entirely possible that a poorly drawn letter of offer or employment contract could give rise to unintended rights or obligations, particularly in circumstances in which “the law of set-off” will continue to be unnecessarily complex. Please ensure that you obtain specialist advice, particularly in relation to your contractual clauses that define or address casuals, casual loadings, and an employer’s right to set-off payments against one or more employment entitlements.
Please do not hesitate to contact one of our specialist corporate employment lawyers if you would like to discuss. We would be happy to assist your organisation with a fixed-fee quote for us to review and update your templates for your casual employees.
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The content of this newsletter is for general information purposes only and should in no way be treated as formal legal advice.