When is a casual not a casual?

Posted by on Jun 2, 2020

Following on from the 2018 decision of WorkPac Pty Ltd v Skene [2018] FCAFC 131, the Federal Court has again demonstrated that workers engaged as casual employees can be found to be permanent employees with entitlements to paid leave and paid public holidays.  In WorkPac Pty Ltd v Rossato [2020] FCAFC 84, the Full Federal Court found that a casual mine worker was not in fact a casual and therefore had been entitled to paid annual leave, personal/carer’s leave and compassionate leave, and payment for public holidays not worked during his employment due to the employment relationship involving a firm advance commitment to continuing and indefinite work.

Was Mr Rossato a casual employee or an ongoing
employee?

Mr Rossato was employed by WorkPac for just under four years.  WorkPac considered him to be a casual employee.  Mr Rossato worked under the applicable shift roster that had been issued in advance, and was employed under a succession of six contracts.  On one occasion, he was given approval to take rest and recreation when the start-up roster at the Collinsville Mine changed to a roster of seven days on/seven days off, and on another occasion, he required time off when his partner was in hospital. Otherwise, Mr Rossato worked every one of his rostered shifts, with some limited exceptions due to Christmas shut downs and times where his crew was not required due to inclement weather.

After his employment ended, Mr Rossato made a claim for outstanding paid leave entitlements, such as annual leave, and payment for public holidays not worked, on the basis that he was not in fact a casual employee.

Both parties accepted that a casual employee was an employee with no firm advance commitment from their employer to continuing and indefinite work in accordance with an agreed pattern of work. As such, a key question was whether or not the employment relationship gave rise to a firm advance commitment to continuing and indefinite work for Mr Rossato. If the employment relationship involved irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability, this was more likely to demonstrate that Mr Rossato was a casual employee because there was no firm advance commitment to continuing and indefinite work.

Although Mr Rossato’s employment contracts did not contain an express written term giving Mr Rossato a firm advance commitment to continuing work, the Full Court considered that the conduct of the parties should also be taken into account. However in this instance, Justice Bromberg noted that one of Mr Rossato’s employment contracts stated that the length of assignment was “6 months (This may vary and is a guide only)” and that this contract could be terminated by giving one hour of notice. This led Justice Bromberg to conclude that this particular contract was for on-going or indefinite employment subject to its termination on the giving of notice.

Justice Bromberg also considered that it was unnecessary for a firm advance commitment to continuing and indefinite work to be a contractual term. Where there is an objectively justified expectation of an agreed pattern of work, this is more representative of permanent employment, rather than casual employment. Relevantly Mr Rossato worked the equivalent of full-time hours according to the shift roster applying at each particular workplace.  The shift roster was a fixed roster which provided for a certain number of days on, followed by a certain number of days off.  

The fact that Mr Rossato’s work was pre-programmed and rostered long in advance, in one instance up to seven months in advance, and in another instance 12 months in advance, rather than being performed on demand, was found to be strongly indicative of a firm advance commitment. Casual work, which is generally unpredictable, irregular or intermittent, is not suited to being pre-programmed and pre-allocated under a fixed roster in advance.  Additionally, the roster presented to Mr Rossato did not allow him to pick and choose which shifts he would work, as Justice Bromberg found that he was required to perform the work in accordance with the roster. A hallmark of casual employment is the ability to refuse shifts that are offered, something Mr Rossato did not have.

The Court has found that there was a firm advance commitment to continuing and indefinite work, and that Mr Rossato’s employment was “stable, regular and predictable.” Accordingly, Mr Rossato was found not to be a casual employee.  Therefore, he was entitled to paid personal/carer’s leave, annual leave, compassionate leave and payment for public holidays.

How did the casual loading apply to this claim?

While Mr Rossato’s six employment contracts differed in how and whether they referred to a casual loading, the first and second contracts expressly made reference to his “flat rate of pay” being inclusive of a casual loading. WorkPac considered that it had already paid a casual loading to Mr Rossato and so, if Mr Rossato was found not to be casual, then WorkPac considered it should not have to pay for both the paid leave claimed and the casual loading.  The Full Federal Court held that WorkPac could not use any casual loading paid to Mr Rossato to set off NES entitlements owed to him as a permanent employee, such as paid leave, nor could they argue that the payment was a mistake or a failure of consideration.

The Fair Work Amendment (Casual Loading Offset) Regulations 2018 came into effect in late 2018, allowing employers to make a claim to have the casual loading amount taken into account in determining any amount payable by the employer to the person in lieu of one or more relevant NES entitlements. However, all three members of the court found that these regulations did not apply in this case. This was because they considered that Mr Rossato was not making a claim “in lieu of” his NES entitlements. Instead, he was making a claim for payment of his accrued but untaken annual leave, and payment for personal/carer’s leave and compassionate leave that was taken without pay during Mr Rossato’s employment. In addition, Justice Wheelahan noted that the regulations allow an employer to make a claim to have a loading amount taken into account, but it does not alter the substantive law that is applicable to the determination of these claims.

The result was that WorkPac, which considered that it had already paid Mr Rossato a casual loading, was required to pay for leave, and public holidays, in addition to any such casual loading. 

Lessons for employers

This case has made it clear that even where employees are paid and designated as casual employees, they may in fact be found to be permanent employees at law.  How an employer chooses to label an employee, and that they pay the employee a casual loading, while relevant, does not determine whether the employee is a casual or not.

Courts will examine the entire employment relationship and the conduct of the employer and employee, rather than merely considering the employment contract. In this case, there were many factors that pointed towards Mr Rossato being an on-going employee, such as Mr Rossato being rostered to work pre-determined hours and patterns of work on a long-term basis, and being obligated to work those rostered shifts rather than having the option to refuse shifts. It appears that each case is dependent on its facts, which creates a degree of uncertainty regarding casual employees going forward.

Employers should:

  • ensure that any roster system for casual employees is not set too far in advance;
  • ensure that the roster system is not rigid, and allows casual employees the flexibility that is inherent in true casual employment; and
  • where rosters are in place, they should not be set in stone, and must allow employees the ability to reschedule or cancel their shifts if they so wish, as well as allowing employers the right to cancel shifts if needed.

If your expectation as an employer is that the employee will not refuse shifts and will work every time they are rostered, or if you require the employee to work regular set shifts, you may need to consider employment on a full-time or part-time basis instead.

This case also indicates that it will be difficult for employers to argue that a casual loading should be used to set off any owed leave entitlements in similar cases where a casual is found to be on-going. Parliament may legislate to address this uncertainty in future, and to prevent employees “double dipping” by receiving a casual loading in addition to leave entitlements.

If you would like assistance in assessing the risks in your organisation’s casual workforce, please contact the team at Justitia.