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Are your casual employees really casual? The importance of correctly defining employment

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Casual employees are usually employees who do not have regular hours of work and do not have a guarantee of continued work. They also do not receive the same annual leave and personal leave entitlements (and other entitlements) that full time and part time employees receive. Instead of receiving these entitlements, casual employees receive a 25% loading on top of the minimum hourly rate they are entitled to. Whilst employing casuals may be beneficial for some businesses, a recent Federal Court case has shown the importance of correctly defining your casual employees.

The Case – Workpac Pty Ltd v Rossato [2020] FCAFC 84 (“Rossato Case”)

In the Rossato case, Workpac applied to the Court seeking declarations that Rossato, who had made a demand to Workpac for alleged unpaid entitlements, was a casual employee and was not entitled to the same entitlements that a permanent employee receives. Alternatively, Workpac sought a declaration that if it was found that Rossato was a permanent employee, Workpac could offset the 25% casual loading that was paid to Rossato against any entitlements, such as annual and personal leave, that were owing to Rossato.

This application followed the case of Workpac Pty Ltd v Skene [2018] FCAFC 131 (“Skene Case”), where it was decided that one of Workpac’s employee’s, Skene, was entitled to annual leave and personal leave after it was established that Skene was actually a permanent employee rather than a casual employee. In the Skene case, the Court stated that a casual employee has “no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work. Nor does a casual employee provide a reciprocal commitment to the employer.”

In both the Skene and Rossato cases, it was found that the employees had regular rostered hours, as well as an ongoing expectation of work, or a “firm advance commitment”. Accordingly, neither of the employees were casual employees, and were in fact found to be permanent employees, meaning that they were entitled to receive the same entitlements, such as annual and personal leave, that all permanent employees receive.

Why is the Rossato Case Important?

The Rossato case is important, and different to the Skene case, because not only did the Court decide that Rossato was a permanent employee, the Court decided that Workpac could not offset the casual loading that was paid to Rossato against the entitlements Rossato was owed. Essentially, this means that Rossato was able to ‘double dip’ as not only did he receive a casual loading during his employment, Workpac was also required to back pay Rossato the entitlements, such as annual and personal leave, that he did not receive.

Failing being able to offset the loading paid to Rossato, Workpac argued that Rossato should be ordered to repay Workpac for the loading paid, as it was a payment made by mistake by Workpac thinking that Rossato was a casual employee. This argument also failed.

One of the points made by the court was that Workpac’s employment contract with Rossato, and Workpac’s Enterprise Agreement, did not specify the exact amount of the loading paid to Rossato for being a casual employee. Further, Rossato’s employment contract did not include a provision allowing Workpac to offset the loading against any entitlements.

What does this mean for you?

Although it is highly likely that Workpac will appeal this decision, however, until this has occurred, or in the event that Workpac do not appeal, the Rossato case is the current authority with respect to casual employment. Accordingly, our recommendation is to undertake an audit of your casual employees to ensure they are in fact casual employees. Further, we recommend a review of your casual employment contracts to ensure that you are in the best position  with respect to any possible future claims from employees.

If upon investigation you find any grey area, this is something that our experienced employment law team can provide advice, and where work is required, MDL offer a competitive fixed fee price. You can contact me directly if you would like to know more.

 

Ben Schefe 
Director | Employment Law and Litigation
PHONE +61 7 3370 5100

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