On 4 August 2021 the High Court handed down its decision in WorkPac Pty Ltd v Robert Rossato & Ors [2021] HCA 23, reversing the previous finding of the court that Mr Rossato, who had purportedly been engaged as a casual employee, was in reality a permanent employee.
In other words, the High Court found that Mr Rossato had been a “true” casual throughout his employment, and so was not entitled to the trappings of permanent employment he would have been entitled to (paid leave, notice of termination, etc).
In reaching its decision the court made a number of findings about what constitutes a true casual employment relationship.
Ordinarily, the findings of an appeal court on the true meaning of casual employment would be especially significant, however in the time since the Workpac v Rossato litigation began, the Government implemented sweeping changes to the Fair Work Act 2009 which (amongst other things) for the first time introduced a statutory test of who a true casual employee is (see our previous article).
Prior to these legislative changes (which came into effect on 27 March 2021) there was no definition in legislation of what casual employment means, and employers therefore had to rely on previous decisions of courts developed over time (the “common law”) to work out who was and who wasn’t a true casual.
Although the new statutory definition generally applies retrospectively (i.e. it applies to all periods of employment regardless of whether or not this occurred before or after 27 March 2021), there are very limited exceptions where it won’t apply. One of those exceptions is where a court has already made a decision on whether an employee is or isn’t a casual. This was the case with Mr Rossato, given the original court decision was on his employment was in 2020. The new statutory definition was therefore irrelevant to his case.
This exception is going to rarely apply. Unless a court has already determined whether any of your employees are casuals, the relevant test will be that which is in the new legislation (which we explain further below).
Casual conversion: Remember, remember 27 September
Another matter that it is important for employers not to lose sight of with all the “noise” about the Workpac v Rossato appeal, is the new obligations for non-small business employers to offer existing casual employees “conversion” to permanent employment before 27 September 2021. This basically applies to:
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- Any employer with 15 or more employees
In respect of:
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- Any casual employee who has been employed for 12 months or more and in at least the last 6 months they have worked a regular pattern of hours
There are exceptions from offering conversion where there are “reasonable grounds” not to do so.
For any casual employees not eligible to convert (because, for example, they have not yet been employed for 12 months), they not to be informed in writing that they are not eligible before 27 September 2021.
After 27 September 2021, new casual employees will need to be offered conversion (if they have worked the last 6 months in a regular pattern of hours) when they reach 12 months employment with their employer.
Full details of these obligations are explained in our previous article, which contains a free downloadable flow chart explaining the conversion process. The article also explains the obligations of businesses with less than 15 employees.
Employment Innovations have developed a number of documents to assist with this process, including template letters you will need to provide to casual employees, all available free to Employment Innovations’ clients with a HR subscription.
Given Mr Rossato’s employment ended in 2018, he will not be affected by the new casual conversion laws. However, if he were still employed as a casual today, it is very likely that Workpac would have had to offer him conversion to permanent employment. The frequency of cases such as Workpac v Rossato arising in the future are therefore likely to arise less and less, given an employer’s positive obligation to offer permanent employment to eligible casual employees. If such an employee is offered permanent employment and they choose to remain a casual, it will be very difficult (if not impossible) for them to challenge their employment status in the future.
Furthermore, the changes to the Fair Work Act that came into effect on 27 March 2021 also mean that an employer of a casual employee who is later found in reality to be a permanent employee can use any casual loading paid to the employee to “offset” any entitlement to paid leave, redundancy pay, notice of termination, etc that the employee will later claim (so long as this is provided for in the employee’s contract of employment, see previous article). This will make an employee much less likely to challenge the nature of their employment.
Employers therefore have less reason to worry about a Workpac v Rossato-type challenge in their workplace, so long as their casual employment contracts have been updated to take advantage of these new protections.
The new statutory definition of casual employment and the court’s findings in Workpac v Rossato
The new statutory definition of casual employment (which didn’t reply to Mr Rossato for the reasons explained above) can be described as follows:
A true casual employee is a person who:
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- is offered employment without a “firm advanced commitment to continuing and indefinite work”; and
- accepts employment on that basis.
This is a point in time test, to be assessed at the start of employment. The Fair Work Act now prevents courts from considering the subsequent conduct of the parties. In other words, if you get the terms of engagement right at the start, you don’t need to worry about the employee later being found to be a permanent employee.
As to determining whether a firm advance commitment to continuing and indefinite work exists, the Fair Work Act provides that (only) the following factors are relevant:
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- whether the employer can elect to offer work and whether the person can elect to accept or reject work;
- whether the person will work as required according to the needs of the employer;
- whether the employment is described as casual employment; and
- whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.
Although the appeal court in Rossato was not required to consider the new statutory definition of casual employment (for the reasons stated above), in finding Mr Rossato was a genuine casual employee, the court’s reasoning was (luckily!) consistent with the new statutory definition.
The court found as follows:
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- Mr Rossato was required to work in accordance with rosters (some set well in advance) which involved regular, full-time hours in a fixed pattern of work. Throughout his employment Mr Rossato worked accordingly to six successive rosters.
- These rosters should be properly regarded as six separate assignments.
- Whilst Mr Rossato may have had a “reasonable expectation” of continued employment during this period, that was short of Workpac providing “a firm advance commitment” of continuing employment (which is the proper test for permanent employment).
- The terms of Mr Rossato’s employment contract specifically provided that he would be offered work on an “assignment-by-assignment basis”, and WorkPac was under no obligation to offer any further assignments after each finished. That meant that there was no firm advance commitment of continuing employment, and hence Mr Rossato was a casual employee.
Importantly, the court confirmed that the characterisation of an employee as casual depended “entirely on the express or implied terms of the employment contract and (in the case of wholly written employment contracts) without reference to post-contractual conduct”.
In other words, if someone agrees to be engaged as a casual by the terms of their employment contract (and the contract properly recognises the nature of their employment) it is not possible for the employee’s employment to “morph” into permanent employment at a later date.
This is therefore entirely consistent with the new statutory definition of casual employment in the Fair Work Act.
Wider implications of the Workpac v Rossato decision?
Probably the most important wider implication of the Workpac v Rossato decision is the court’s focus on the terms of the employment contract dictating the true nature of the relationship (rather than focusing on the conduct of the parties subsequent to this). This possibly has wider implications for questions such as the test of whether someone is a true independent contractor rather than an employee.
Key takeaways for employers
It is imperative that, going forward, casual employees’ contracts of employment are drafted to reflect the new statutory definition of casual employment.
So long as the terms that the employee is being engaged is accurately reflected in the contractual provisions, employers can have confidence that the employee will be properly regarded as a casual employee throughout their employment.
Template casual employment contracts, updated with these changes, are of course available to Employment Innovations’ clients with HR subscriptions.
Employers are reminded of the other changes to the law in respect of casual employment, including the steps that must be taken before 27 September 2021 in respect of casual conversion.
About Employment Innovations
If you need any further advice on casual employment, including updating your casual employment contracts or understanding your obligations regarding casual conversion, please contact Employment Innovations. And remember, remember the 27 September – time is running out.
Employment Innovations is one of Australia’s leading providers of employment services designed to increase productivity and ensure compliance. Its services and solutions include all the tools that every Australian small to medium sized employer needs – including workplace advice, legal services, payroll solutions, migration, human resource management and HR software.
Disclaimer
The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.