The Long-Awaited 2021 Decision of Workpac: Time to Spring Clean Your Employment Contracts

KEY TAKE-OUTS:

There has recently been an exacerbated amount of attention on casual employees, (especially in light of the COVID-19 Pandemic), its subsequent payment schemes and amplified termination of employment.

Interestingly, the High Court has recently handed down its landmark decision in WorkPac Pty Ltd v Rossato & Ors [2021] HCA 23 (“WorkPac v Rossato”) on 4 August 2021, which saw the previous precedent held in the Full Court of the Federal Court of Australia and the 2018 judgment overturned in relation to the definition of a casual employee.

We have previously published blogs relating to the 2020 Full Court of the Federal Court and 2018 judgment.

In this long-awaited 2021 High Court decision of WorkPac v Rossato, the High Court has clarified and provided a final definition of “casual employment”, in an attempt to hinder confusion for employers that the previous decisions surrounding this had instigated.

The issue of defining casual employment has long endured and persisted prior to the immense upheaval of job insecurity following the emergence of COVID-19 in 2020. Since the decision of WorkPac Pty Ltd v Skene (“Skene”) (the original “Workpac decision that was handed down in 2018) many employers have been unsure and puzzled when distinguishing between a casual employee and their subsequent entitlements from those in a permanent role.

The 2018 Skene decision rejected the notion that an employee designated as casual under an award or registered agreement was casual for all purposes. The decision found that, when determining whether an employee was considered a casual employee, an assessment of the “substance of the relationship”, including post-contract conduct of the employer and the employee, was to be given greater weight than the terms of the employment contract, modern award or registered enterprise agreement. This meant, in practical terms, the characterisation of a type of employment could change over time.

The 2020 decision of Workpac v Rossato were both cases that tested the decision made in Skene and subsequently confirmed it.

The 2018 decision of Skene, along with the 2020 decision of WorkPac v Rossato, were both catalysts for the recently introduced legislation, whereby the Fair Work Act encompassed a definition of a casual employee. Finally, this 2021 WorkPac Pty Ltd v Rossato High Court decision overturned both of these cases.

In order to assess the 2021 High Court decision of WorkPac Pty Ltd v Rossato, we must first look at the facts of the case.

Mr Rossato was engaged as a casual employee under the registered enterprise agreement and described as a ‘casual employee’ under all six separate contracts of employment. Mr Rossato worked for WorkPac for approximately four years and was paid as a casual in accordance with the employment contracts and enterprise agreement. With complete reliance on the earlier Skene decision, some months after his retirement, Mr Rossato wrote to Workpac and tried to claim a number of entitlements such as annual leave, public holidays, and periods of personal leave and compassionate leave whilst employed by WorkPac.

WorkPac denied that Mr Rossato was entitled to any of those benefits, and asserted that he was a casual employee.

This led to the case being heard in 2020 in the Full Federal Court, where the Court found against WorkPac, noting that in accordance with the earlier Skene decision, the characterisation of employment as casual required an assessment of the conduct of the parties to the employment relationship, that is, the employer and the employee. The Court found that, when assessing the employment arrangements, Mr Rossato had a ‘firm advance commitment’ to continuing employment with Workpac, and as such, was not a casual employee.

Workpac appealed this decision to the High Court, with their main argument being that Mr Rossata did not have a ‘firm advance commitment’ to employment, due to the terms of his casual employment contract.

In August 2021, the High Court agreed with Workpac, and overturned the decision, instead of looking to the ‘firm advance commitment’ of the employee and superiority of the terms of the contract.

The High Court found that the term ‘casual employee’ in the Fair Work Act 2009 refers to an employee that has no ‘firm advance commitment as to the duration of the employee’s employment of the days (or hours) that the employee would work.’

So, what does this ‘firm advance commitment’ mean? Essentially, the Court found that the relevant assessment of whether there was a ‘firm advance commitment’ to constant work and the characterisation of employment is to be distinguished by evaluating the applicable contract of employment, and not the conduct of the parties after the contract of employment is formed.

When assessing Mr Rossato’s employment in particular, the High Court held that he was a casual employee, having specific regard to (among many things) his offers of employment and references to casual loading or a casual rate of pay. When looking at his firm advance commitment, although his hours were quite regular and systematic at numerous points within his engagement, his employment contract allowed for varied hours of work and his employment was on an assignment-by-assignment basis.

In what would be a relief for many business owners, this case overturns the notion that the court should assess the real substance, practical reality and true nature of the parties’ relationship. Instead, it relies on the ‘firm advance commitment’ principle and the terms within the employment agreement.

Key Takeaways

The 2021 decision in WorkPac v Rossato provides some much-needed clarity for employers in relation to their casual employees. The recently introduced legislation, namely, section 66B of the Fair Work Act, along with the 2021 WorkPac v Rossato decision allows employers to be more certain about their employees who do not have a firm advance commitment to ongoing employment embedded within their contracts.

This is also a timely reminder for employers to ensure their agreements with their employees are up to date and reflective of these decisions.