The Federal Court has confirmed that an employee engaged as a casual but where there existed a “firm advance commitment as to the duration of the employee’s employment or the days/hours the employee will work” is entitled to paid annual leave, personal leave, compassionate leave and payment for public holidays under the National Employment Standards of the Fair Work Act 2009 (Cwlth).
You will recall from our e-bulletin of 27 November 2018, the labor hire company WorkPac Pty Ltd elected to run a further test case in the matter of WorkPac Pty Ltd vs Rossato  FCAFC 84 on similar facts to the original decision in WorkPac vs Skene (see our article on this decision). In its new 261 page judgment, the full Federal Court has again confirmed that employers who incorrectly classify a casual employee based merely on the written terms of the agreement will none the less be liable for employee entitlements attaching to permanent employment as well as the ostensible casual loading already paid by the employer.
Key points to note from Rossato:
- The judgment sheds no new light on this unsatisfactory state of affairs placing reliance on the common law test of what constitutes casual employment, that is the presence or absence of a “firm advance commitment as to the duration of the employee’s employment or the days/hours the employee will work.”
- The full Federal Court also held that the employer was not entitled to set off the casual loading ostensibly paid to the employee against these employee entitlements under common Law or in reliance upon the Commonwealth Government’s new Regulation 2.03A of the Fair Work Regulations 2009 introduced in December 2018 to mitigate this unexpected employer exposure (see link to our article from September 2019). According to the full Federal Court, Regulation 2.03A(d) can only apply when the employee makes a claim to be paid an amount in lieu of one or more of the relevant NES entitlements. This was not the case as Mr. Rossato sought payment of the entitlements to annual leave, personal leave etc, not payments in lieu. This literal interpretation by the full Federal Court has likely rendered the Commonwealth Government’s Regulation 2.03A to be entirely ineffective for employers seeking to avoid “double dipping”.
Where to from here:
- The decision can be appealed to the High Court but this can take some time and, in the meantime, employers are exposed to claims by casuals for employee entitlements going back for 6 years where the casuals have been incorrectly classified as casual employees.
- The Commonwealth Industrial Relations Minister Christian Porter has indicated that the Commonwealth will consider intervening in any High Court appeal to support the employer position and it may also be necessary to consider legislative options to legislate away the “double dipping” inherent in these decision by providing a statutory definition of what constitutes casual employment for the purposes of the NES entitlements.
Recommended steps for employers to take in the meantime:
- Ensure casual employees are engaged in a manner that is irregular, intermittent or variable without a firm advance commitment to ongoing or indefinite employment.
- If that is not possible, mitigate the risk by using a Common Law set off clause in the contract of employment which specifically identifies the employee entitlements being set off in a composite rate of pay.
Please discuss any concern or queries you have with a member of our Workplace Relations team.