The Federal Court decision in Rossato has caused some uncertainties to the definition of casual employment in Australia.

The High Court of Australia has subsequently granted special leave to WorkPac Pty Ltd (“WorkPac”) to challenge the Federal Court decision in Rossato.

Background

A casual employee is generally an employee who usually works irregular hours and does not have guaranteed hours of work. Unless specified otherwise in an agreed award or contract, a casual employee does not get paid for sick leave, annual leave, payment in lieu of notice nor redundancy entitlements, and therefore is entitled to a higher pay rate known as casual loading.

In Rossato, WorkPac employed Mr Rossato as a truck driver in a mine under six (6) consecutive contracts. Each of Mr Rossato’s contracts expressly identified him as a casual, and Mr Rossato was paid 25% casual loading in lieu of leave entitlements available only to permanent employees.

Mr Rossato worked a regular and systematic shift that was set by rosters up to seven months in advance, which demonstrated a firm advance commitment of employment. Accordingly, the Court held that Mr Rossato was a permanent employee and therefore was entitled to paid leave under the National Employment Standards.

WorkPac originally sought to prevent Mr Rossato from double dipping on casual loading and leave entitlements. However, the Court held that WorkPac was not entitled to set off Mr Rossato’s casual loading against his claim for the leave entitlements on several grounds, including that the casual loading is not a substitute for taking actual time off, and that the casual loading could not be carved out from Mr Rossato’s wages.

Changes to Legislation Post Rossato

On 26 March 2021, the Fair Work Act 2009 (“Act”) was amended to change workplace rights and obligations for casual employees via the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Amendment Act). The salient amendments which have retrospective effect include, inter alia:

• A new definition for casual employees – Section 15A defines casual employees as  workers who have:

Firstly, received an offer of employment on the basis that their ‘employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work’ for them, and

Secondly, accepted the employer’s offer on that basis and as a result, become an employee.

• Protection against ‘double-dipping’ entitlement claims by longstanding casuals under Section 545A – where criteria are met, the amount payable by the employer to a person who was initially employed on casual employment, but was deemed a permanent employee subsequently, by an amount equal to the loading amount.

Further amendments were also made to the Act recently in respect to minimum entitlements of casual employees.

In addition, the Fair Work Ombudsman has introduced a Casual Employment Information Statement (“CEIS”), which addresses the amendments to the Act, and it is compulsory for the employers to provide a copy of the CEIS to both existing and new casual employees.

Conclusion

It is important for employers to review the casual employment contracts against the new definition and keep abreast with the recent changes to legislation to ensure compliance.

Any businesses who are engaging casual employees on a regular and systematic basis (e.g. retail, hospitality, education, and mining) should seek immediate advice, including calculating possible significant backdated liabilities, and then consider the available options.