05 August 2021

High Court offers clarity around casuals

This article was written by Jamie Wells and Joe Ko.

The High Court has injected certainty into the casual employment debate, and simplified the test considerably, by overturning the Federal Court in Rossato.[1]

The High Court accepted that:

  • a casual has no firm advance commitment from the employer as to the duration of the employee’s employment or when the employee will work, and provides no reciprocal commitment to the employer; but
  • the firm advance commitment has to be a binding commitment, not just an expectation of further work.

Background

The High Court judgment marks the end of a long journey for WorkPac, which previously lost Skene[2] and Rossato in the Federal Court.

Given the significance and widespread use of casual employment as a form of engagement, Skene and Rossato raised concerns that employers would be exposed to massive liabilities under the National Employment Standards (NES) and enterprise agreements, despite acting in accordance with understood custom and practice in relation to engaging casuals.

A firm advance commitment

The High Court generally accepted the test as stated by the Federal Court, confirming that casual employment was not consistent with a firm advance commitment. However, when applying that test, the High Court refused to accept that a firm advance commitment could be identified simply because the employee’s work arrangements might indicate an expectation of further work being offered.

Referring to various parts of the Fair Work Act 2009 (Cth), which distinguish short and long term casuals by reference to a ‘reasonable expectation of continuing employment’ on a ‘regular and systematic basis’, the High Court noted that one could have such an expectation and still be a casual employee.

Accordingly, a firm advance commitment must be established via a binding obligation, such as in the employee’s contract.

This does not close the door to an employee demonstrating that:

  • the agreed employment arrangements are a sham; or
  • whatever was initially agreed, the arrangement changed over time and a firm advance commitment was given at some later time, to vary the contract.

This meant that the Federal Court had erred in Skene, by assessing the real substance, practical reality and true nature of that relationship, rather than by examining whether there were any enforceable terms which provided a firm advance commitment.

The decision will make it difficult for an employee to argue that fixed rosters published well in advance, or the assignment of a casual employee to work side-by-side with a permanent on that fixed roster, or a retrospective review of how the employment played out over time, inform the question of whether there was a fixed advance commitment. At best, those factors might support an expectation of further employment, but not a commitment.

Government intervention since the Full Federal Court decision

In a deliberate attempt to resolve the pre-High Court uncertainty around casual employment and the so-called ‘double dip’ concern, the Federal Government passed amendments which commenced on 27 March 2021.[3]

The amendments came into effect before the High Court delivered its judgment, and do not apply to cases which have already been decided. The amendments:

  • inserted a definition of casual employee, providing that a person is a casual employee if they accept an offer of employment made by the employer with no firm advance commitment to continuing and indefinite work according to an agreed pattern of work;
  • introduced a mechanism which afforded long-term casual employees the right to convert to permanent employment; and
  • introduced a statutory set off mechanism, enabling a court to take into account an identifiable casual loading to reduce an award made to a successful claimant who turns out not to have been entitled to that casual loading.

Strictly speaking, the High Court’s decision will not be binding in relation to any disputes under the amended provisions. However, it seems likely that the High Court’s approach to the firm advance commitment will be well regarded, particularly the way in which the amendments link that commitment to the offer of employment.

What about restitution and set off?

As we previously discussed, the Federal Court held that WorkPac was not entitled to restitution of any amount paid to Mr Rossato, even if the rate indicated a casual loading was included, and that WorkPac could not set off that loading against any of those obligations. The High Court does not address WorkPac’s set off and restitution claims, leaving that to be resolved another day. For the time being, the Federal Court’s approach is the last word.

[1] WorkPac Pty Ltd v Rossato (2020) 278 FCR 179.

[2] WorkPac Pty Ltd v Skene (2018) 264 FCR 536.

[3] Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021.

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