To be casual or not to be casual? That is the question! 

The Full Bench of the Federal Court of Australia has again sounded a warning bell for employers that even though they may describe particular employees as casuals and pay them a casual loading throughout their employment, these workers may still be considered full-time or part-time employees at law and are therefore entitled to permanent employment benefits including paid annual leave, sick/personal leave, compassionate leave and public holidays.

The recent case

In the case of WorkPac Pty Ltd v Rossato [2020] FCAFC 84, Mr Rossato was employed by WorkPac as a casual production employee from July 2014 until he retired in April 2018. During his employment, Mr Rossato was subject to six different employment agreements, each of which described him as a casual employee. He was also covered by WorkPac’s enterprise agreement. During his period of employment, Mr Rossato worked regular hours on a drive-in drive-out basis. He was provided with his roster several months in advance and was given free accommodation during each block of shifts. In addition, Mr Rossato was paid a casual loading in lieu of permanent employee entitlements.

Following Mr Rossato’s retirement, he sought payment in respect of accrued but unused leave entitlements during his employment. However, WorkPac denied payment to Mr Rossato and initiated proceedings in the Federal Court, seeking declarations that Mr Rossato was a casual employee and had received a loading in lieu of the entitlements sought.

According to the Court, a casual employee is ‘an employee who has no firm advance commitment from her or his employer to continuing and indefinite work according to an agreed pattern of work’. After considering the particular working arrangements that applied to Mr Rossato, the Full Bench found that Mr Rossato was not a casual employee and was therefore entitled to outstanding paid annual leave, sick/personal leave and compassionate leave entitlements. The key factors that supported this finding were as follows:

  • Mr Rossato was provided with his roster several months in advance;
  • Mr Rossato worked a regular shift pattern and was provided with accommodation during his shift blocks;
  • Mr Rossato rarely declined to work the shifts he was rostered; and
  • There was a plain expectation as to Mr Rossato’s availability on an ongoing basis.

The Full Bench rejected WorkPac’s argument that it was entitled to restitution or to ‘set off’ the casual loading payments made to Mr Rossato during the course of his employment against its permanent employment liabilities. One of the key reasons for this was because the Full Bench found that paying a casual loading does not provide the same benefit to an employee as does their right to enjoy paid leave. A casual loading is not a substitute for paid leave entitlements.

Instructions for Employers

The Full Bench’s decision reiterates that just because an employer may describe particular employees as casuals in their employment contracts and pay them a casual loading does not mean those employees will be considered casuals at law. Rather, the courts will consider the totality of the relationship in determining whether a particular employee is a casual or permanent employee.

Employers who incorrectly treat employees as casuals will be exposed to a range of legal risks, including claims for outstanding permanent employment benefits as well as fines of up to $63,000 per breach for contravening the minimum terms and conditions of employment prescribed by the National Employment Standards and any applicable modern award or enterprise agreement.

Therefore, employers should carefully review the working arrangements of all their casuals to ensure that those employees are appropriately classified and treated as casuals at law. Employers should also review their casual employment agreements to ensure they appropriately reflect a casual employment relationship and otherwise protect the employer’s interests as much as possible.

Queries

If you have any questions about this article, please contact the authors, or any member of our Employment, Workplace Relations & Safety team.

Disclaimer

This information and contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders and is for reference purposes only.  It does not constitute legal or financial advice.  If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.

The Authors

Martin Alden

PARTNER, MELBOURNE

Jessica Cirnigliaro

LAWYER, MELBOURNE

Key Contacts

Martin Alden

PARTNER, MELBOURNE

Robert King

PARTNER, BRISBANE