Australia: High Court of Australia hands down ruling on casual employees in Rossato

Today, the High Court of Australia handed down its long awaited decision in WorkPac Pty Ltd v Rossato & Ors [2021] HCA 23 and unanimously allowed an appeal from the Full Court of the Federal Court’s decision in WorkPac Pty Ltd v Rossato (2020) 278 FCR 179.

While the decision did not provide clarity on issues of double dipping (such as set off or restitution), it did clarify that Mr Rossato was a “casual employee” as he had no “firm advance commitment to continuing and indefinite work”. In making this assessment, the High Court focussed on what Mr Rossato agreed to with WorkPac in his contracts of employment. This determination aligns to the recent amendments to the Fair Work Act 2009 (Cth) (FW Act), where the definition of a “casual employee” is now focussed on what was agreed at the time an offer of employment was made, and agreed to, by the employee, rather than on the subsequent conduct of the parties after the offer is accepted.

Background to the High Court’s decision

Robert Rossato was employed by the labour hire company WorkPac as a production employee in the open cut black coal mine industry. Between 2014 and 2018, he engaged in six separate, but continuous, contracts of employments with WorkPac in which he was identified and paid as a casual employee. He worked according to a roster provided to him over this period that was set in advance, based on the client’s requirements. When his employment ended, Mr Rossato asserted that he been engaged as a full-time employee, and claimed a number of entitlements including paid annual leave, paid personal/carer’s leave, paid compassionate leave and paid public holiday entitlements under the National Employment Standards (NES) and the WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012 (2012 EA).

As explained in our previous article (accessible here), WorkPac commenced proceedings in the Federal Court of Australia seeking a declaration that Mr Rossato was a casual employee for the purposes of the FW Act and the 2012 EA and that he was not entitled to the claimed entitlements as he was paid a casual loading in lieu of those entitlements. The Full Court of the Federal Court held that Mr Rossato was not a casual employee and that WorkPac was not entitled to reduce the amount owed to Mr Rossato by the casual loading or over-agreement payments. In its decision, the Federal Court focussed on factors that were the subsequent conduct of the parties after the offer of employment was agreed to, to decide that there was a “firm advance commitment to continuing and indefinite work (subject to rights of termination)” (e.g. rosters prepared in advance).

Following this decision, WorkPac submitted in the High Court of Australia that Mr Rossato was a casual employee under both the NES and the 2012 EA. In the alternative, WorkPac submitted that the over-agreement payments and his casual loading should be used to “set off” against any amount owed to him by way of the claimed entitlements. It was not necessary for the High Court to determine this alternative argument, given that the High Court found that Mr Rossato was a casual employee.

The High Court’s decision

In the decision handed down today, the High Court found that:

• The mere fact that Mr Rossato had an expectation of continuing employment (even if that expectation was reasonable) was not a basis for there being a “firm advance commitment” to ongoing work, given that the FW Act contemplated that casual employees can work on a regular and systematic basis;
• The focus needs to be on the contractual obligations between Mr Rossato and WorkPac because where there are express terms of the contract between the parties (as varied from time to time), they must be given effect unless they are contrary to legislation;
• Mr Rossato’s reliance on non-contractual aspects (principally his rosters) to assert that there was a “firm advance commitment” was not accepted, as these were not express or implied terms of his contract. Therefore, the Full Court of the Federal Court’s decision in Skene was wrongly decided by focussing on the subsequent conduct of the parties to determine that Mr Rossato was not a casual employee;
• The contracts between WorkPac and Mr Rossato did not include a mutual commitment to an ongoing working relationship between them after the completion of each assignment, and the terms of the contract were inconsistent with any such future commitment; and
• It was not argued by Mr Rossato that the contracts were sham transactions disguised to be one continuing engagement between the parties (rather than six separate engagements), nor was it argued that there was any undue influence or unconscionability that arose when the contracts were made.

Given the above, Mr Rossato was found to be a casual employee because of the following express provisions agreed in this contracts with WorkPac:

• Mr Rossato’s employment was on an “assignment-by-assignment” basis with each assignment being a separate period of employment;
• Mr Rossato could accept or reject any offer of an assignment;
• WorkPac was under no obligation to offer further assignments; and
• Mr Rossato was paid a casual loading in lieu of entitlements (which was a compelling indication that the parties’ relationship was not a commitment to an ongoing working relationship beyond each assignment).

The Court found that in these circumstances, the parties deliberately avoided a firm commitment to ongoing employment once an assignment had been completed. Given that Mr Rossato accepted these terms and conditions in the contracts, the High Court found that he was a casual employee.

There were two factors that were previously given weight in the Full Court of the Federal Court’s decision that the High Court found were to be given limited weight to support the notion that Mr Rossato provided a firm advance commitment to continue to work on an ongoing basis. These were that:

• WorkPac could unilaterally vary rosters or terminate on one hour’s notice; and
• The performance of Mr Rossato's obligations was organised in accordance with the client’s rosters well in advance and thereby exhibited features of regularity and consistency.

The High Court held that these factors alone did not establish a commitment between the parties to an ongoing working relationship after each assignment was completed, and therefore were given limited weight.

What should employers be focussing on?

The High Court’s decision in Rossato, along with the changes to the FW Act, give primacy to what is agreed between an employer and an employee in a contract of employment. Employers should therefore continue to review their casual contracts of employment to ensure that the arrangements are aligned to the new definition of “casual employee” in the FW Act. Further, the contracts should be drafted in a way that means that even if a claim of permanency is successful, employers can utilise the casual loading to set off any underpayments as permitted in some circumstances set out in the FW Act.

Employers are also continuing to change their internal processes to ensure that casual conversion processes are implemented as these are now a feature in the FW Act, and that casual employees are provided with the new Casual Employment Information Statement (see our previous article for further information: accessible here).

This article was prepared by Wendy Fauvel, Executive Counsel and Joseph Dodds, Solicitor.

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