Unpaid leave entitlements for casual employees has been an ongoing industrial relations battle in recent years. In an historic decision by the High Court of Australia, employers can now be satisfied that recent reforms to the Fair Work Act 2009 (Cth) and casual employment appear to have achieved their purpose.
WorkPac vs Rossato
In May 2020, the Full Federal Court of Australia (the “Federal Court”) determined a casual employee of WorkPac – who had been engaged for over three and a half years on six separate casual employment contracts – was, on the facts, a permanent employee.
This finding resulted in the employee being entitled to back-pay of leave entitlements and public holidays over the Christmas period, despite having been paid a casual loading.
The decision added to the mounting case law that courts would consider a multitude of factors when assessing a purported casual employment relationship, rather than a narrower set of considerations such as whether the employee was referred to as a casual employee (on pay slips, etc.) and/or signed a casual employee employment contract.
This created a worrying lack of certainty and the possibility of extraordinarily high back-pay liabilities for employers around the country. Due to the far-reaching implications of the Federal Court’s ruling, WorkPac appealed the decision to the High Court of Australia.
On 4 August 2021, the High Court handed down its ruling and declared that the employment relationship was that of a casual - rejecting the Federal Court’s earlier contrary finding.
Fair Work Act reforms
Recent reform to the Fair Work Act 2009 (Cth) defined the meaning of a casual employee to be contingent on the offer of employment made by the employer. The reforms outline that the offer must be made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
On 4 August 2021, the High Court, having regard to this definition, held that a “casual” employee is an employee who has “no firm advance commitment from the employer as to the duration of the employee's employment or the days (or hours) the employee will work, and provides no reciprocal commitment to the employer”.
In assessing the offer made to the employee through the casual employment, it found the contractual arrangements between WorkPac and the employee “did not include a mutual commitment to an ongoing working relationship between them after the completion of each assignment. The express terms of the relationship between WorkPac and the [employee] were distinctly inconsistent with any such commitment.”
While the earlier Federal Court ruling had found the employee had an expectation of continuing employment on a regular and systematic basis, the High Court found this ‘mere expectation’ was insufficient for the purposes of the Fair Work Act and was not indicative of a permanent employment relationship.
As the employee’s employment was based on an assignment-by-assignment basis, where he could accept or reject any work at any given time, there was no obligation for WorkPac to offer any new assignments. This was in line with Fair Work Act requirements and satisfied the High Court the employment relationship was casual. Put simply, the High Court confirmed a casual employee is an employee who is offered employment on this indefinite work basis, irrespective of whether that employee ultimately begins working hours which are more regular and systematic than initially anticipated.
How business is impacted
This landmark case supports the reforms made to the Fair Work Act earlier this year and quashes fears that casual employees may have a pathway for back-payment of leave entitlements on the basis of ongoing, regular, and systematic work. The high Court’s decision will also have significant implication for various class actions which commenced since the Federal Court’s earlier ruling.
The case also provides significant relief for any employers with long-serving casual employees.
When engaging a casual employee, businesses should have regard to the basis on which they make the offer and ensure that when offering work, the casual employee can elect to accept or reject the work offered.
An employment contract describing the nature of the work as casual, specifying the entitlement to a casual loading (or a casual rate of pay under the applicable industrial instrument), and which makes no firm advance commitment to continuing and indefinite work, may act as further confirmation of the terms of the employment relationship.
How we can help
Recent casual employment reforms to the FW Act and award system have been significant. The Fair Work Act now requires employers to consider the basis on which they make offers of casual employment, along with subsequent requirements for employers to make offers of ‘casual conversion’ (to permanent employment) in certain circumstances.
The Fair Work Act also specifies how employers must provide a ‘Casual Employment Information Statement’ to all casual employees. For a copy of the Casual Employment Information Statement and further information on such changes, please log on to the member portal on the Victorian Chamber website. It is critical that employers understand their requirements.
Still unsure about casual employment? The Workplace Relations Advice Line offers general advice on Award classifications and minimum entitlements. In addition, the Workplace Relations Advice Line offers advice on a range of workplace issues, including:
- Award interpretation
- Performance management
- Personal illness and injury
- Parental leave and flexible working arrangements
- Occupational Health and Safety and WorkCover
For assistance with any aspect of your employment obligations, please call the Victorian Chamber Workplace Relations Advice Line on 8662 5222.
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