Australia: Landmark Decision on Casual Employment

High Court clarifies what it means to be a casual employee in Australia

In the much-anticipated case of WorkPac Pty Ltd v Rossato & Ors [2021] HCA 23 (“WorkPac”), the Australian High Court clarified what it means to be a casual employee in Australia. This recent decision can be characterised as a win for businesses across Australia, as the High Court overturned a previous decision that could have set in motion the opportunity for long-term casuals to receive leave entitlements.

On 20 May 2020, the Full Federal Court held in WorkPac Pty Ltd v Rossato [2020] FCAFC 84 that a labour hire company, WorkPac, incorrectly characterised Mr Rossato as a casual worker. Mr Rossato had been employed as a production worker by WorkPac under a series of six contracts which expressly stated that Mr Rossato was engaged on a casual basis. Throughout his employment, Mr Rossato was provided with a casual loading (an additional percentage payment made to casual employees in lieu entitlements such as annual leave) but was not given paid leave entitlements or public holidays. The Full Court held that as Mr Rossato was given regular and ongoing shifts, he should have been classified as a permanent employee and awarded the associated benefits of leave and public holidays.

The Full Federal Court also rejected WorkPac’s claims that it would be entitled to set off, against the entitlements that may be claimed by Mr Rossato, payments it had made in lieu of those entitlements. WorkPac’s claim that it would be entitled to restitution in respect of the amounts it had paid to Mr Rossato in excess of his entitlement to remuneration as a permanent employee was also rejected by the Court. The decision provided that long term casuals who work regular and systematic hours are likely to be considered permanent employees regardless of whether or not they are characterised as ‘casual’ workers under their contracts of employment.

On 4 August 2021, the High Court unanimously overturned the Federal Court decision and held that Mr Rossato was correctly characterised and treated as a casual worker for the purposes of the Fair Work Act 2009 (Cth), the national workplace relations legislation, and the WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012, which governed Mr Rossato’s employment.

Meaning of the expression “casual employee”

The High Court held that a casual employee is an employee who has no “firm advance commitment” as to the duration of the employee’s employment or the days (or hours) the employee will work. It was found that for the employment relationship to be characterised as other than casual, “there must exist a firm advance commitment to continuing work unqualified by indicia of irregularity, such as uncertainty, discontinuity, intermittency and unpredictability.”

The High Court recognised that casual employment can be long term and can involve regular or systematic work arrangements. The High Court also held that although the “label” which the parties choose to attach to their relationship is not decisive of whether their employment relationship is casual or not for the purposes of the Fair Work Act, the use of the label “casual” might be a factor which influences the interpretation of their rights and obligations.

What is a “firm advance commitment”?

The High Court clarified that a “firm advance commitment” to work must be an enforceable commitment found in the employment contract or the conduct of the parties. The High Court determined that the lack of any obligation on WorkPac to continue each contract of employment beyond completion of the assignment to which each contract related indicated that there was no firm advance commitment on the part of WorkPac to the continuation of Mr Rossato’s employment.

Other factors that the High Court considered in determining that there was an absence of a “firm advance commitment” included that:

• Mr Rossato’s work hours could be varied by Workpac;
• an assignment could be varied by Workpac on one hours’ notice;
• Mr Rossato could reject any offer of an assignment or shift and could terminate an assignment on one hour’s notice;
• WorkPac was under no obligation to offer Mr Rossato further assignments;
• Workpac had made casual loading payments to Mr Rossato; and
• all six employment contracts expressly provided that the employment was on a casual “assignment-by-assignment basis”.

The High Court’s decision has provided Australian businesses with certainty as to the meaning of a casual employee, which is very similar to the definition of a ‘casual employee’ that was inserted in the Fair Work Act 2009 (Cth) in March 2021.

Key Action Points for Human Resources and In-house Counsel 

In light of the Workpac decision, employers in Australia are encouraged to:

• audit their current casual engagement practices to ensure that their engagement processes and actions do not indicate that a ‘firm advance commitment’ exists;
• review their casual employment contracts to ensure that the terms reflect a true casual engagement and are consistent with the new definition of “casual employee” in the Fair Work Act; and
• ensure that the employment contracts identify the casual loading as a separate payment that is to be paid in lieu of paid leave and other entitlements.

Authors: Sarah Younis and Liz Baradan