Success and clarity for labour hire companies across Australia: casual workers are just that, casual.
Date: August 6, 2021
It is a question which has challenged and confused Australian employers, particularly labour hire companies, in recent years.
While it has been a long time coming, employers now have clarity that casual workers are just that, casual. They are not required to be paid leave entitlements – leave entitlements are reserved for permanent employees.
This follows a landmark decision handed down by the High Court of Australia on 4 August 2021.
WorkPac, a labour hire company, employed Mr Rossato under a series of six employment contracts/assignments. He was treated by WorkPac as a casual employee.
Relying on the earlier decision of WorkPac Pty Ltd v Skene  FCAFC 131, which held that Skene was not a casual employee under s 86 of the Fair Work Act 2009 (Cth) (the Act), Mr Rossato argued that he was entitled to be paid for untaken annual leave, public holidays and periods of personal leave and compassionate leave, in accordance with the WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012.
WorkPac denied these claims, arguing he had been paid at a rate which incorporated 25% casual loading in lieu of these entitlements.
The Full Court of the Federal Court held that Mr Rossato was not a casual employee, and made declarations that Mr Rossato was entitled to the payments claimed.
WorkPac appealed the decision. The case went to the High Court of Australia.
The High Court’s Decision:
The High Court of Australia overturned the Full Court’s decision and found Mr Rossato was in fact a casual employee and was not entitled to annual leave or public holiday pay.
The High Court commented that Mr Rossato was employed pursuant to a series of six contracts/ assignments by WorkPac, specifying he was a casual employee and, although his shifts were provided to him a year in advance, that did not mean he was guaranteed ongoing employment.
The High Court’s reasoning was:
- while the Act did not define “casual employment”, the Act made clear that a “firm advance commitment” was necessary to distinguish it from other forms of employment. Section 62(2)(b)(i) does contemplate that an employee may still be casual despite being employed for a period of at least 12 months. A “reasonable expectation of continuing employment … on a regular and systematic basis” is, according to the Act, not inconsistent with casual employment. A reasonable expectation therefore would not constitute a firm commitment.
- the existence of a written contract, to which Mr Rossato and WorkPac had agreed to be bound, demonstrated the “real substance, practical reality and true nature of the relationship”.
- the Skene decision was wrongly decided in that it had failed to take adequate account of the parties’ relationship as reflected in their written agreement.
- Mr Rossato was a casual employee, noting that the rostering arrangements and the contractual stipulations fell short of being a contractual promise that Mr Rossato would be entitled to work all the shifts listed.
- the written agreement noted that Mr Rossato would be employed on an assignment-by-assignment basis, and he was free to accept or reject any offer of assignment.
- on completion of an assignment, there was no obligation to offer any other assignments. Either party could also terminate an assignment on one hour’s notice.
- the agreement stated that Mr Rossato would be paid casual loading at 25% in lieu of leave entitlements. In the circumstances, there was no “firm advance commitment” in the assignment-by-assignment basis of Mr Rossato’s employment.
- the fact that Mr Rossato’s obligations involved features of regularity and consistency, did not establish a commitment between the parties to an ongoing working relationship.
For more information please contact:
Courtney Steele, Partner
Jacob Stekhoven, Solicitor