On 27 March 2021 the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery Act 2021 (Cth) (“Amending Legislation”) amended the Fair Work Act 2009 (Cth) (“FWA”) and inserted a definition of “casual employee”. This new definition provides that a person’s status as a casual employee is determined at the beginning of the employment relationship, regardless of subsequent conduct. It is important to note that the Amending Legislation applies to offers of employment that were given before, on, or after commencement, but not in place of binding decisions made by courts before the Amending Legislation.
Until recently, there was no legal definition of a casual employee, at common law or under legislation. The term “casual worker” was not a precise legal term but rather a colloquial expression. In the absence of a definition, the facts of each arrangement were examined on a case-by-case basis in order to determine whether a worker was casual.
The legislative changes for casual employees were made in response to this perceived uncertainty created by the application of the common law meaning. After the Amending Legislation and the High Court decision of WorkPac Pty Ltd v Rossato [2021] HCA 23 (“WorkPac v Rossato”) the common law and the FWA are now more aligned.
Background of WorkPac v Rossato
WorkPac Pty Ltd is a labour hire company which supplies labour to mining companies in Queensland. Mr Robert Rossato was an experienced ‘production operator’ who had been engaged by WorkPac at various coal mine sites in Queensland for an unbroken period from July 2014 until his retirement in April 2018.
In the first instance the Full Federal Court held that Rossato, employed by WorkPac as a casual employee on 6 consecutive contracts, was a permanent employee with leave entitlements, including annual, personal and compassionate leave plus payment for public holidays.
The Full Court reached this conclusion on the basis that his employment arrangements were such that, in accordance with the common law understanding of casual employment at the time, Rossato had a “firm advance commitment” to continuing employment with WorkPac.
The High Court’s decision
The High Court unanimously overturned this decision and determined that Mr Rossato was a casual employee, and consequently was not entitled to the various benefits he had claimed.
The High Court held that the Rossato’s employment was on an “assignment-by-assignment basis” and there was no “firm advance commitment” to ongoing work, which was indicative of the casual nature of the employment relationship. The court found that WorkPac and Rossato had committed the terms of their employment relationship to written contracts and had then adhered to those terms. Those contractual arrangements did not include a mutual commitment to an ongoing working relationship after the completion of each assignment.
The High Court emphasised the importance of the terms of the employment contract, stating:
“To insist upon binding contractual promises as reliable indicators of the true character of the employment relationship is to recognise that it is the function of the courts to enforce legal obligations, not to act as an industrial arbiter whose function is to synthesise a new concord out of industrial differences …
To insist that nothing less than binding contractual terms are apt to characterise the legal relationship between employer and employee is also necessary in order to avoid the descent into the obscurantism that would accompany acceptance of an invitation to enforce ‘something more than an expectation’ but less than a contractual obligation.”
In reaching its conclusion, the High Court adopted a strict contractual analysis to the task of characterising the relationship between Mr Rossato and WorkPac.
What does this decision mean for employers?
The Amending Legislation and the High Court’s decision in WorkPac v Rossato reinforces the primacy of the contract of employment in determining the nature of casual employment. It is therefore prudent that employers seek legal advice to review their casual contract of employment to ensure that the terms for casual employees do not give rise to “a firm advance commitment to ongoing employment”.
For more information contact Ben Schefe, Director.
