The Federal Court Allows ‘Double Dipping’ in the Latest Casual Employment Decision

On 20 May 2020, a Full Court of the Federal Court handed down its Workpac Pty Ltd v’s Rossato (Rossato) decision. This decision, following on from the Federal Court’s Skene decision in 2018, found that an employee engaged as a casual but with a ‘firm, advance commitment’ can be considered ‘other than a casual employee’ and not excluded from the entitlements to paid annual leave, paid personal/carer’s leave, paid compassionate leave and payments for public holidays in accordance with the Fair Work legislation.

The decision continues to put at risk the status of Australia’s 2 million casual employees, a proportion of which have been engaged for more than 6 months on a regular and systematic basis.

The decision also raises concerns, that ‘double dipping’ claims for NES entitlements may succeed, despite payments of casual loadings, and despite the Federal Government’s Casual Loading Offset Regulation.

Long held industrial relations custom and practice has been that casuals do not accrue annual leave entitlements, because the casual loading sees them effectively paid a higher hourly rate in lieu of such accrued entitlements.

Background

Mr. Rossato was employed by Workpac, a labour hire company, between July 2014 and April 2018, under six consecutive employment contracts. Throughout the engagements, Workpac provided Mr. Rossato, an experienced production employee, work at coal mines operated by Glencore Australia Pty Ltd, and for the most part he worked all shifts allocated to him. The employment contracts described his employment as casual.

For Mr. Rossato’s first contract, he worked pursuant to an alternative shift roster for four crews at one of the mines (Crew A, Crew B, Crew C and Crew D). The roster pre-dated Mr. Rossato’s employment but dates included in the roster extended seven months after Mr. Rossato’s first employment commenced. Mr. Rossato’s first contract stated under the heading ‘Daily Working Hours’: ‘your ordinary hours shall be a standard work week of 38 hours. Additional reasonable hours may be worked in your rostered arrangements.’ It also stated: ‘This may vary and is a guide.’

In October 2018 Mr. Rossato made a claim to his employer, relying on the Full Federal Court’s decision in Skene, in 2018 that he was not a casual employee during the previous three and a half years, and was, therefore, entitled under the NES, and an enterprise agreement which applied to his employment, to payment for annual leave, personal/carer’s leave, compassionate leave and public holidays.

The Full Court of the Federal Court matter

Only days after Mr. Rossato made his claims, which occurred about 3 months after the Skene decision, WorkPac commenced proceedings in the Federal Court, seeking declarations that:

• Mr. Rossato could not make claims for paid leave entitlements under the NES, or the enterprise agreement, because he was a casual employee or, as a casual employee, claim payment for public holidays;
• that if the Court found that Mr. Rossato was not a casual employee, that Workpac was entitled to restitution of the casual loading paid in Mr. Rossato’s hourly rate, on the basis of mistake and/or partial failure of consideration; and,
• Workpac was entitled to ‘set off’ the payments it made to Mr. Rossato on the basis that he was a casual employee.

The Federal  Minister  for  Jobs  and  Industrial Relations  (the  Federal Minister) intervened in the matter, supporting in particular Workpac’s claims for restitution and ‘set off’.

It was not contested in the Rossato case that the meaning of ‘casual employee’ was correctly determined in the Skene Decision, as:

‘an employee who has no firm advance commitment from his or her employer to continuing and indefinite work according to an agreed pattern of work.’

According to the Rossato Decision: ‘the intention of the parties as to whether to provide a firm advance commitment will likely be revealed by a consideration of the agreement as a whole but with a particular focus upon the indicia…of casual or non-casual employment.’

Indicia of casual employment

Some of the indicia of an ‘absence of firm advance commitment’ (i.e. casual employment) referred to in the decision included:

• Irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability. [71]
• A person who stands and waits, or in other words, is only given the opportunity to provide her or his service in response to a specific demand that a period of specific working time be worke [72]
• An employee’s capacity to choose whether or not to work a period
• of working time demanded or requested by the employer. [73]
• A provision permitting a short period of notice of termination of the contra [74]

Employer not entitled to ‘set off’ casual loading: WorkPac was not entitled to ‘set off’ amounts described by WorkPac as ‘overpayments’ (including amounts described as ‘casual loading’) against the liability to pay outstanding leave entitlements to Mr. Rossato. This was in part because the payments  did not  have  a  ‘close  correlation in purpose’  to  the  leave entitlements sought by Mr. Rossato. Rather, ‘any loadings were ostensibly paid on account of the absence of those entitlements’.

The Court found that WorkPac’s reliance on the Fair Work (Casual Loading Offset) Regulation, (the Offset Regulation) which was introduced by the Federal Government in late 2018 directly in response to the Skene decision, was misplaced, and also failed. In reaching this conclusion, the Court determined that the regulation can apply only when the person makes a claim to be paid an amount in lieu of one or more of the relevant NES entitlements, and Mr. Rossato’s claim was not for payment ‘in lieu of’ NES entitlements. Rather, Mr. Rossato’s claim was for payment in accordance with the NES entitlements.

What does the decision mean for employers?

The Full Court of the Federal Court’s decision is significant, as was also the earlier Skene decision, and is currently the highest judicial authority on casual employment for the purposes of the FW Act. In the absence of a definition of casual employee in the FW Act, the common law test, as outlined above, applies.

A greater concern for employers, however, is the Court’s rejection of the claims for restitution and ‘set off’, which were supported by the Federal Minister.

As outlined above, the Offset Regulation was introduced specifically in response to the Skene decision.  It was intended to enable employers to make a claim to “offset payments of identified casual loading amounts in circumstances where a person makes a subsequent claim to be paid one or more entitlements under the National Employment Standards (NES)…”. (Explanatory Memorandum). The Explanatory Memorandum also noted, however, that it would then be ‘a matter for a court to determine whether the payment may be taken into account in any particular case’.

The uncertainty surrounding casual employment post Skene continues along with further concerns about the utility of the Offset Regulation in defraying potentially very costly claims for NES entitlements.

TTIA and a number of other employer groups are pressing the Federal Government for urgent legislative changes to provide some certainty to employers.  Specifically, what is required is a change to the Fair Work Act in line with the common definition included in modern awards, i.e. “a casual employee is an employee engaged and paid as such”. 

As a result of the fallout of this decision for employers both in the forest products industry and the economy in general, it is likely that this decision may be appealed to the High Court.