Authors:  Sarah Younis & Liz Baradan

6 August 2021

High Court clarifies what it means to be a casual employee in Australia

In a recent decision that can be characterised as a win for businesses across Australia, the High Court has overturned a decision that could have set in motion the opportunity for long-term casuals to receive leave entitlements. In the much-anticipated case of WorkPac Pty Ltd v Rossato & Ors [2021] HCA 23 (“WorkPac”), the High Court has clarified what it means to be a casual employee in Australia.

On 20 May 2020, the Full Federal Court held in WorkPac Pty Ltd v Rossato [2020] FCAFC 84 that a labour hire company, WorkPac, incorrectly characterised Mr Rossato as a casual worker
(https://harmers.com.au/legal-update-8/). Mr Rossato had been employed as a production worker by WorkPac under a series of six contracts which expressly stated that Mr Rossato was engaged on a casual basis. Throughout his employment, Mr Rossato was provided with a casual loading and was not given paid leave entitlements or public holidays. The Full Court held that as Mr Rossato was given regular and ongoing shifts, he should have been classified as a permanent employee and awarded the associated benefits of leave and public holidays.

On 4 August 2021, the High Court unanimously overturned the Federal Court decision and held that Mr Rossato was correctly characterised and treated as a casual worker for the purposes of the Fair Work Act 2009 (Cth) (“FW Act”) and the WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012, which governed Mr Rossato’s employment.

The High Court recognised that casual employment can be long term and can involve regular or systematic work arrangements. The High Court held that a casual employee is an employee who has no “firm advance commitment” as to the duration of the employee’s employment or the days (or hours) the employee will work. The High Court clarified that a “firm advance commitment” to work must be an enforceable commitment found in the employment contract or the conduct of the parties. The High Court determined that the lack of any obligation on WorkPac to continue each contract of employment beyond completion of the assignment to which each contract related indicated that there was no firm advance commitment on the part of WorkPac to the continuation of Mr Rossato’s employment.

Other factors that the High Court considered in determining that there was an absence of a “firm advance commitment” included that:

• Mr Rossato’s work hours could be varied by Workpac;
• an assignment could be varied by Workpac on one hour’s notice;
• Mr Rossato could reject any offer of an assignment or shift and could terminate an assignment on one hour’s notice;
• WorkPac was under no obligation to offer Mr Rossato further assignments;
• Workpac had made casual loading payments to Mr Rossato; and
• all six employment contracts expressly provided that the employment was on a casual “assignment-by-assignment basis”.

The High Court’s decision has provided businesses with certainty as to the meaning of a casual employee, which is very similar to the definition of a ‘casual employee’ that was inserted in the FW Act in March 2021 (https://harmers.com.au/legal-alert-7/).

What employers need to know

In light of the Workpac decision, employers are encouraged to:

• audit their current casual engagement practices to ensure that their engagement processes and actions do not indicate that a ‘firm advance commitment’ exists;
• review their casual employment contracts to ensure that the terms reflect a true casual engagement and are consistent with the new definition of “casual employee” in the FW Act; and
• ensure that the employment contracts identify the casual loading as a separate payment that is to be paid in lieu of paid leave and other entitlements.

If you employ casual employees, this decision may have implications for your business. Please contact our Harmers team on +61 2 9267 4322 if you require legal advice.

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