WorkPac v Rossato – Double-dipping for “casual” employees confirmed by Full Court of the Federal Court of Australia

The Full Court of the Federal Court of Australia (the Full Court) in WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (Rossato) has reconfirmed that a person paid and designated by their employer as a “casual employee” can still be considered a permanent part-time or full-time employee, despite a contract of employment stating otherwise. Rossato follows the Full Court’s decision of WorkPac Pty Ltd v Skene [2018] FCAFC 131 (Skene) which considered a similar factual scenario involving the same employer, as summarised here. Although WorkPac Pty Ltd (WorkPac) sought to differentiate Mr Rossato's employment arrangements from those of Mr Skene, the Full Court held that Mr Rossato was, for the entire period of employment with WorkPac, not a casual employee and thus entitled to the various benefits pursuant to the National Employment Standards (NES) of the Fair Work Act 2009 (Cth) (the FW Act) and the applicable enterprise agreement.

Facts

Mr Rossato was an employee of WorkPac from 28 July 2014 to 9 April 2018 pursuant to six consecutive contracts of employment. WorkPac treated each employment period as causal employment and Mr Rossato as a casual employee. Following Skene, Mr Rossato wrote to WorkPac claiming that he had not in fact been a casual employee and sought outstanding entitlements to paid annual leave, paid personal/carer’s leave, paid compassionate leave and public holiday pay entitlements pursuant to the FW Act and the WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012 (the Enterprise Agreement).

Unusually, it was WorkPac that commenced proceedings in the Court and sought declarations to the effect that Mr Rossato was a casual employee of WorkPac pursuant to the six contracts of employment he was engaged under, at common law and for the purposes of the FW Act and the Enterprise Agreement. WorkPac also ran two alternative arguments in support of its claim that Mr Rossato was a casual employee. Firstly, WorkPac argued that Mr Rossato’s pay incorporated a 25% casual loading and WorkPac is therefore entitled to “set-off” any amount owed to Mr Rossato with respect to the entitlements sought. Further, WorkPac argued that by reason of a total failure of consideration or alternatively, by mistake, it was entitled to restitution (i.e. recovery) of part of the remuneration paid to Mr Rossato in accordance with the Enterprise Agreement.

Decision

The Full Court reiterated that, as in Skene, a casual employee is an employee who has no firm advance commitment from his or her employer to continuing and indefinite work according to an agreed pattern of work. A ‘firm advance commitment’ is likely to be absent where there are irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability.

WorkPac’s position was that the assessment of whether Mr Rossato was a casual employee should be conducted purely by referring to the relevant employment contracts, not ‘post-contractual conduct’ or the way in which the work was actually carried out. However, the Full Court determined that due to the “dynamic and fluid environment of a contract of employment, the subsequent actions of the parties may impliedly vary or amend the contract such that the true agreement between the parties is no longer reflected by the written contract.”

In any event, the Full Court found that even on the pure assessment of the six contracts of employment, Mr Rossato was not a casual employee. The Full Court considered that the following aspects of the employment contracts supported this conclusion:

• The work to be performed by Mr Rossato was allocated to him by a roster and performed in accordance with the pattern of work required by the roster, without the ability to accept or reject shifts;
• The provision of free on-site accommodation to Mr Rossato during each swing of shifts;
• The language within the contracts of employment which suggested a commitment being sought by WorkPac from Mr Rossato to fulfil his contractual obligations to the employer; and
• Regular and predictable hours in alternating shifts.

The Full Court found that Mr Rossato was not a true casual employee for the duration of his employment with WorkPac and was entitled to the various benefits sought.

In relation to WorkPac’s “set-off” claim, the Full Court rejected this argument on a number of grounds. One of those reasons was that WorkPac expressly designated in some of the employment contracts the purpose for which the various portions of the casual loading were made, and they were not made in respect of an entitlement to leave. Therefore, the Full Court did not allow WorkPac to now seek to have the payments made to Mr Rossato re-designated so as to satisfy its liabilities. Importantly, the Full Court held that “an obligation to provide a particular entitlement will not ordinarily be discharged by not providing the entitlement and by instead providing a substitute.”

WorkPac also sought to invoke Regulation 2.03A of the Fair Work Regulations 2009 (Cth) which allows claims to offset certain amounts. Regulation 2.03A is intended to apply if a person has been mistakenly classified as a casual employee during all or some of the employment period. One criterion for this regulation to apply is that “the employer pays the person an amount that is clearly identifiable as an amount paid to compensate the person for not having one or more relevant NES entitlements during a period.” This argument fell short in Rossato due to its non-applicability in the present circumstances as Mr Rossato was not claiming to be paid an amount ‘in lieu of’ the NES entitlements.

In respect of its claim for restitution, WorkPac sough to recover part of the remuneration which it had already paid to Mr Rossato, being the difference between the amount payable to a flat rate ‘Permanent FTM’ employee and a flat rate ‘Casual FTM’ employee as defined in the Enterprise Agreement or, in the alternative, the casual loading incorporated into the flat rate of a flat rate ‘Casual FTM’ under the Enterprise Agreement. (As a Casual FTM, Mr Rossato’s flat rate was higher than that of a Permanent FTM).

WorkPac’s claim for restitution failed because the Full Court refused to accept that the casual loading paid to Mr Rossato was paid by WorkPac by mistake or as consideration which had totally failed.

Take Home Messages

WorkPac’s argument ultimately failed due to the way in which its casual employment contracts were drafted and the characterisation of Mr Rossato’s engagements in reality.

The Rossato case reinforces the Full Court’s views in Skene and is another reminder for employers who engage casual employees to assess whether there truly is an absence of a firm advance commitment in respect of its casuals. It is important that employees are correctly engaged either as a casual, part-time or full-time, and that their employment contracts accurately reflect that relationship. However, while the contractual terms are important, the actual conduct of the parties will be taken into account by the relevant court or tribunal in determining whether an employee is truly a casual employee or not.

The Rossato case may be appealed to the High Court of Australia. Additionally or alternatively, the Commonwealth Government may seek to amend the FW Act or Regulations (it is worth noting that the Commonwealth Government was a party to the Rossato case, arguing unsuccessfully in support of WorkPac, as summarised earlier here). However, until any change in the law, employers must observe the law regarding casual employment as it presently stands in Skene and now Rossato.

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 Anastasia Gravas on +61 8 8217 1331 or agravas@normans.com.au.