09 Jun 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.
However, the Federal Court upheld the precedent WorkPac v Skene ruling in 2018, when it decided that a casual mine worker who had regular and predictable shifts was entitled to the same benefits as a permanent member of staff, including accrued annual leave pay, and despite arguments that Mr Rossato was a casual because of the lack of “firm advance commitment” as to his days and hours, the full bench ruled unanimously that the party’s description of the engagement as casual in a written contract is not determinative.
Workpac maintained that one of Mr Rossato’s contracts specifically provided that each proportion of the 25 per cent casual loading was paid in lieu of leave, notice and redundancy entitlements. Further, Mr Rossato was covered by an enterprise agreement which provided for the engagement of casual employees and the payment of a 25 per cent casual loading in lieu of leave entitlements.
The justices uniformly adopted the previous Federal Court decision in Skene v Workpac, endorsing the principles that:
- the parties’ description of the engagement as casual in a written contract is not determinative. One must look at all the features of the relationship;
- in contrast with on-going full-time or part-time employees, a casual employee “has no firm advance commitment from the employer to continuing and indefinite work”; and
- the basis of casual employment is the absence of a firm advance commitment from an employer and irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability.
The decision makes casual employment even more uncertain, and potentially more costly, at a time of widespread employment uncertainty in the wake of the COVID-19 business restrictions and close downs. It has been estimated that the cost impact of the Rossato decision could be as high as $8b.
The Rossato decision again brings into focus the many challenges facing employers in recent years. For casual employees these include increases in casual penalty rates in many modern awards, casual conversion provisions, unfair dismissal and other protections.
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.
In the meantime, for those Members engaging casuals on a regular basis, it would be prudent to discuss your specific arrangements with TTIA to minimise your exposure to any potential back payment claims. We can be contacted on (02) 9264 0011.