Landmark casual employment decision: High Court overturns Rossato and Skene

On 4 August 2021, the High Court of Australia delivered its long-awaited judgment of WorkPac Pty Ltd v Rossato & Ors [2021] HCA 23 (the High Court’s Decision) where it overturned the decision of the Full Court of the Federal Court of Australia[1] (the Full Court’s Decision) which held that Mr Rossato was not a casual employee for the purposes of the Fair Work Act 2009 (Cth) (the FW Act) and the applicable enterprise agreement. A summary of the Full Court’s Decision can be accessed here.

In addition to allowing WorkPac Pty Ltd’s (WorkPac’s) appeal and declaring that Mr Rossato was a casual employee for the abovementioned purposes, the High Court also determined that the Full Court fell into error in its decision of WorkPac Pty Ltd v Skene [2018] FCAFC 131 (Skene).

The High Court’s Decision, together with recent amendments to the FW Act, now provide employers and employees with added clarity in respect of casual employment.

Facts

WorkPac is a labour hire company which provides the services of its employees to firms engaged in the mining of black coal. Mr Rossato was employed by WorkPac as a casual employee from 28 July 2014 to 9 April 2018 on six consecutive contracts of employment. The contracts were entitled ‘Notice of Offer of Casual Employment’ (the Contracts). WorkPac treated each employment period as causal employment and Mr Rossato as a casual employee.

Mr Rossato worked as a product operator at mines owned and operated by Glencore Australia Pty Ltd (Glencore). Relevantly, Mr Rossato was allocated to work in crews pursuant to shift rosters issued by Glencore. Shift arrangements were set well in advance by the distribution of rosters and both WorkPac and Mr Rossato were familiar with the regular patterns of work pursuant to those rosters. Towards the end of the year, Glencore provided rosters for each of its mining sites for the whole of the following year.

High Court’s Decision

The parties accepted, as was determined in Skene, that the expression ‘casual employee’ in the FW Act refers to an employee who has no “firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work.”

The key issue before the High Court was whether such a firm advance commitment existed in respect to Mr Rossato.

WorkPac submitted that the characterisation of an employee as ‘casual’ depends entirely on the express or implied terms of the employment contract and without reference to post-contractual conduct. The High Court concurred with WorkPac’s submissions and held that: “the search for the existence or otherwise of a “firm advance commitment” must be for enforceable terms, and not unenforceable expectations or understandings that might be said to reflect the manner in which the parties performed their agreement.”

The High Court explicitly rejected the Full Court’s Decision that the characterisation exercise should have regard to the entirety of the employment relationship.

Significantly, to determine whether an employee is a casual employee at law, the High Court now says that regard should not be had to the real substance, practical reality and true nature of the employment relationship. The High Court’s reasoning was that if that position were to be accepted, it “would mean that the parties could not know what their respective obligations were at the outset of their employment relationship and would not know until a court pronounced upon the question”. The High Court determined that the Full Court’s decision in Skene therefore fell into error in that regard.

The High Court also made references to provisions in the FW Act which contemplate different subsets of casual employment. For example, a casual employee is protected from unfair dismissal where the employment as a casual employee was on a regular and systematic basis and the employee had a reasonable expectation of continuing employment on a regular and systematic basis. The High Court held that “a reasonable expectation of continuing employment is simply not the kind of firm advance commitment to continuing employment the absence of which typifies casual employment.”

Therefore, a reasonable expectation of continuing employment on a regular and systematic basis is not inconsistent with the nature of casual employment.

Applying the above principles to Mr Rossato’s employment, the High Court determined that Mr Rossato was a casual employee because:

• The Contracts specifically stated that Mr Rossato’s employment was on an ‘assignment-by-assignment’ basis, he was entitled to accept or reject an offer of an assignment and WorkPac was under no obligation to offer any further assignments.

• The wording of the relevant provisions in the Contracts indicate that the parties deliberately avoided a firm commitment to ongoing employment once a given assignment had been completed.

• The provision of Glencore’s rosters to Mr Rossato, although exhibiting features of regularity and consistency, fell well short of being a contractual promise that he would be entitled or required to work all the shifts listed.

Given that the High Court found Mr Rossato to be a casual employee of WorkPac, it did not consider WorkPac’s alternative grounds of appeal regarding its set off and restitution claims.

Recent changes to the FW Act

Following Skene and the Full Court’s Decision, the FW Act has been amended to, among other things, clarify the nature of casual employment. The FW Act now includes at section 15A that a person is a casual employee of an employer if:

• an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and

• the person accepts the offer on that basis; and

• the person is an employee as a result of that acceptance.

The FW Act goes further in prescribing the following considerations as the only matters to be taken into account in determining whether, at the time the offer is made, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person:

• whether the employer can elect to offer work and whether the person can elect to accept or reject work;

• whether the person will work as required according to the needs of the employer;

• whether the employment is described as casual employment;

• whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.

Another key amendment to the FW Act is the insertion of section 545A which provides that an award of compensation for permanent employee entitlements payable to an employee mistakenly treated as a casual must be reduced by the amount of any identifiable casual loading paid to the employee.

Take Home Messages

The High Court’s Decision has now changed the way employers must characterise casual employment. Given that the conduct of parties is no longer deemed relevant in determining the nature of casual employment, it is imperative that contracts of employment are properly drafted before a casual employee is engaged to ensure the absence of a ‘firm advance commitment’.

For more specific information on any of the material contained in this article please contact Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au or Lincoln Smith on +61 8 8210 1203 or lsmith@normans.com.au.

[1] WorkPac Pty Ltd v Rossato [2020] FCAFC 84.