May 22, 2020
If you’ve been holding your breath for the double-dipping precedent set by WorkPac v Skene to be overturned, unfortunately your wait isn’t over.
On Wednesday, the Federal Court in WorkPac Pty Ltd v Rossato confirmed that Rossato, who had been employed as a ‘casual’ by WorkPac, was entitled to paid annual, personal/carer’s and compassionate leave, plus payments for public holidays.
The Court rejected the employer’s claim that they could off-set these entitlements via a higher hourly rate, stating that “where the purpose of a payment is not to provide the entitlement in the terms required but to provide a substitute, there will not be a “close correlation” between that purpose and the entitlement”.
Significantly, WorkPac’s bid for restitution of the casual loading paid to the employee was also rejected.
The Rossato decision upholds the precedent set by WorkPac v Skene in 2018, where a casual miner who had regular and predictable shifts was found to be entitled to permanent employee benefits.
Controversially, WorkPac chose to run Rossato using a different employee with a different Full Court, rather than appeal WorkPac v Skene to the High Court.
In Rossato the employee was classed by WorkPac as a ‘casual’ but had been engaged under six consecutive contracts for a period of four years.
WorkPac’s primary case this time round was that, unlike in Skene, because Mr Rossato’s written contract had no firm advance commitment regarding days or hours, he was a casual employee.
“Permanent casuals” can’t exist; employers can’t seek restitution
WorkPac’s primary case was rejected.
Instead, the Court found that WorkPac and Rossato “had agreed on employment of indefinite duration which was stable, regular and predictable such that the postulated firm advance commitment was evident in each of his six contracts”.
Under each contract, Rossato was ‘other than a casual employee’ for the purposes of the Fair Work Act and not a casual FTM (Field Team Member) under the 2012 WorkPac EA. This meant that Mr Rossato became entitled to payments of annual, personal/carer’s and compassionate leave and payment for public holidays.
Significantly, the Court also held that WorkPac was not entitled to recover any amount from Mr Rossato as restitution of the casual loading paid to Mr Rossato in a bid to off-set any liabilities.
Can the decision in Rossato be distinguished from other casual engagements?
We think so.
Mr Roassato’s employment was covered by an Enterprise Agreement as well as six consecutive common law contracts. The Court looked at the interaction of respective contracts with the Enterprise Agreement(s) and held that the Enterprise Agreement(s) did not provide for the payment of a casual loading in lieu of annual leave entitlements and personal leave entitlements. In addition, the underpinning award to the Enterprise Agreement was an award that did not provide for casual employment.
Mr Rossato and the CFMMEU also disputed WorkPac’s claim that it had paid Mr Rossato a causal loading of 25%. White J agreed with this proposition in respect of each of the fourth, fifth and sixth contracts, on the basis that those contracts did not contain an independent express term that a casual loading was to be paid in substitution of leave or public holidays.
However when assessing whether WorkPac could successfully say it had ‘set off’ the entitlement to paid leave by paying a higher rate under the first, second and third contracts, the Court still found there was no entitlement to set off portions of the casual loading paid to Mr Rossato.
But didn’t the Government amend the FW Regulations to enable employers to offset certain amounts?
It did. You will recall that in December 2018, regulation 2.03A was introduced and WorkPac sought to rely on this regulation. Importantly, the regulation applies if:
- a person is employed by an employer on the basis that the person is a casual employee; and
- the employer pays the person an amount (the loading 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 (the employment period); and
- during all or some of the employment period, the person was in fact an employee other than a casual employee for the purposes of the National Employment Standards; and
- the person makes a claim to be paid an amount in lieu of one or more of the relevant NES entitlements. (our emphasis)
However none of Mr Rossato’s claims were for ‘an amount in lieu of’ an NES entitlement.
Rather Mr Rossato sought payments of the entitlements (namely annual leave for the entire period of his employment, personal and paid compassionate leave for leave he took but did not receive payment and public holidays in which he was rostered off over the period of employment). On this basis, the Court rejected WorkPac’s set off claim.
Takeaway for Employers
So where does this leave employers?
The situation remains unchanged from Skene in the sense that the critical issue is the characterisation of the ‘casual’ employment. Ask yourself, are your casual employment arrangements ‘stable, regular or predictable’ and is there an indefinite period of engagement or advance commitment?
The decision in Rossato does however present further concerns for those employers who do or have had ‘permanent casuals’ on their books and this decision will also have a critical impact on several pending class actions. Whilst each case will stand and fall on its own facts, the decision of the Court not to accept WorkPac’s offset argument is significant.
Allowing casuals to effectively “double-dip” through accessing both leave entitlements and hourly casual loadings, without entitling businesses to restitution, could have significant financial and logistical impacts on employers, especially in the context of COVID-19.
What is abundantly clear is that legislative change will be needed if Regulation 2.03A is going to have any practical work to do moving forward.
Whilst there are (many) calls for legislative intervention, the fact remains that employers need to deal with the practical issues arising from the decisions now.
Some initial steps to be taken by businesses responding to these decisions could include:
- reviewing all existing casual employees and considering converting those who work on a regular, ongoing basis with an advance commitment to more work;
- considering the interaction of any common law contract with an underlying industrial instrument, including any applicable enterprise agreement;
- ensuring casual employees are engaged from now in a manner that is irregular, uncertain, intermittent and unpredictable; and
- implementing a framework that allows you to monitor the nature of your casual employees.
Should you be worried about your exposure, or how to implement the above, please feel free to reach out to us here at Kingston Reid to discuss.
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