employees

Justice Bromberg and the Full Federal Court of Australia have once again delivered bad news for employers.  In certain circumstances, like a George Costanza corn chip, employees can legally double dip.

On Wednesday 20 May 2020, amid the COVID-19 Pandemic, the Full Federal Court of Australia handed down a decision in WorkPac Pty Ltd v Rossato (“Rossato”).[1] 

The decision in Rossato has a profound effect on both employers and employees as the decision leaves the door open for permanent casuals to “double dip” by receiving casual loading as well as permanent employee entitlements such as personal leave, carer’s leave and compassionate leave.

This case upholds the 2018 decision of Workpac Pty Ltd v Skene (“Skene”)[2] where the Court awarded Mr. Skene permanent employee entitlements as a casual who had regular and predictable shifts. In Skene, the Court determined that a casual employee is an employee who has no firm advance commitment from her or his employer to continuing and indefinite work according to an agreed pattern of work.

WorkPac challenged the Skene decision before a new full bench using a different employee, Mr. Rossato.

Case Summary

Mr. Rossato was employed by WorkPac, under six consecutive contracts between the period 28 July 2014 to 9 April 2018.[3]

WorkPac argued that Mr. Rossato was unable to claim permanent employee entitlements as he was a casual within the meaning of ss 86, 95 and 106 the Fair Work Act 2009 (Cth) (FWA).  In support of its argument, WorkPac relied on each of the contracts which identified Mr. Rossato as a casual employee and confirmed that he was being paid casual loading in lieu of leave entitlements only available to permanent employees.

WorkPac contended that if, contrary to its submissions, Mr. Rosatto was a permanent employee it sought declarations that it be entitled to restitution of that part of the hourly rate attributable to a casual loading that was paid to him on the basis of mistake and/or partial failure of consideration. WorkPac also sought to ‘set off’ the outstanding leave entitlements against any casual loading paid to Mr. Rossato.

The Court unanimously found that Mr. Rossato was a permanent employee, based on his pattern of work, as his employment was stable, regular and predictable. The Court also found that the circumstances of Mr. Rossato were unable to be distinguished from Skene. As a result, the Court determined that, Mr. Rossato is entitled to the entitlements that he claimed with respect to paid annual leave, paid personal/carer’s leave, paid compassionate leave and payment for public holidays.

The Court was then required to determine the following two key questions:

1. whether WorkPac was entitled to restitution of any portion of the casual loading (“restitution”); and
2. whether WorkPac was entitled to offset any amount paid to Mr. Rossato against the permanent employee entitlements he now claims (“set-off”).[4]

The Court rejected WorkPac’s claim for restitution and confirmed that WorkPac was unable to off-set the casual loading paid for permanent employee entitlements.

The full court has given WorkPac and Mr. Rossato a week to confer and file proposed orders and declarations, with any reply due by June 3.

Implications

The Court emphasised Mr. Rossato was not a casual within the FWA or 2012 Enterprise Agreement, “even taking WorkPac’s case at its highest”.[5] This has prompted discussion of a government intervention as employers call for protection for underpayment claims potentially amounting to $8 billion.

The decision is seen as a win for casual employees unable to claim permanent employee benefits. Undoubtedly, whilst casual employment has already suffered a devastating blow as a result of the COVID-19 pandemic, the decision has created greater uncertainty in relation to engagement of casual employees moving forward.

This decision highlights the need for Employers to mitigate risk and exposure by:

• closely reviewing casual engagements currently in place and potential engagements;
• monitoring casual work patterns and updating contracts of casual employment;
• Reviewing payslips to ensure casual loading amounts are separately identifiable (as determined in Skene);
• ensuring that contracts encompass an appropriately worded and effective off-set clause which would permit the employee to reclaim casual loading in the event that the employee was deemed a permanent employee;
• complying with casual conversion obligations; and
• obtain advice about casual conversions to permanent employment.

Please contact Simon Abraham or Amy La Verde from our employment team if you require assistance managing your casual engagements moving forward.

[1] [2020] FCAFC 84.

[2] [2018] FCAFC 131.

[3] [2020] FCAFC 84 [20].

[4] Ibid [952].

[5] Ibid.