Casual employment and double dipping continues to take centre stage

We discussed in our previous Legal Briefing¹ the flurry of recent activity with plaintiff-focussed litigation funders and law firms instituting and threatening to commence class action claims in the mining, direct sales and marketing, and labour hire sectors over the alleged underpayment of employees who have been misclassified as “casual” employees. The latest instalment involves class action firms challenging the classification of casual employees. 

Class action law firm Adero has sought leave to intervene in a proceeding between WorkPac and one of its former casual employees, Mr Rossato. It has been reported that Adero is seeking to delay the hearing of Rossato until its class action has been heard by the Federal Court.²

Adero has already instituted one class action, and has publicly stated that it is planning to file class actions against Australia’s four biggest mining industry labour hire firms in December 2018³.  In the coming weeks, Adero will make submissions to the Federal Court in the Rossato proceeding to assert that:

• the class action is a better forum for the dispute over whether WorkPac employees have been misclassified as “casual” employees, rather than the Rossato proceeding; and 
• the Rossato proceeding is an abuse of process, as WorkPac is re-litigating a case that it has already been unsuccessful in (namely, the Full Court decision in Skene). 

What is the WorkPac v Rossato proceeding?

WorkPac is seeking a declaration that Mr Rossato was a casual employee, and therefore:

• is not entitled to paid leave under the Fair Work Act 2009 (Cth) (FW Act) or the relevant industrial instrument; and
• WorkPac is entitled to set off payments made to Mr Rossato against any leave entitlement that Mr Rossato may have. 

WorkPac commenced the proceedings, after a Full Court of the Federal Court found that a former casual employee, Mr Skene, was in fact a permanent employee (as discussed further in this article).⁴ WorkPac has not appealed the Full Court decision in Skene. 

What happened in Skene?

Mr Skene was a dump truck driver employed by WorkPac to perform work at a Rio Tinto site. His contracts of employment stated that:

• his employment would be on either a casual or fixed term hourly basis; 
• employment was on an “assignment-by-assignment basis, with each assignment representing a discrete period of employment on a Casual … basis"; 
• he "may accept or reject any offer of an assignment". 

Mr Skene was placed by WorkPac at the same mine for just under 2 years (other than during a short break). He worked shift work on a fly in fly out (FIFO) arrangement and his roster had been set 6 months, then 12 months, then another 12 months in advance. These were key factors in the decision. 

Mr Skene was dismissed for misconduct and brought a claim that he was a permanent employee and should have been paid accrued but untaken annual leave for the duration of his employment. WorkPac argued that he was a casual employee and therefore not entitled to any annual leave. 

The Federal Circuit Court found that Mr Skene was not a “casual employee” and was entitled to annual leave under the National Employment Standards (NES). This was upheld on appeal to a Full Court of the Federal Court. While there were a number of factors that were consistent with Mr Skene being a casual employee, ultimately, the Court found these factors did not outweigh the other factors that pointed to the employment being permanent:

Why is Skene significant?

Skene is significant because the Court found that an employee who has been classified as a casual and paid the casual loading is not necessarily a casual employee for the purposes of NES entitlements under the FW Act. Rather, the ‘essence of casualness’ must be present, considering all of the circumstances of the employment relationship (and is not defined simply by the employer’s designation of the employee as a casual in the employment contract or industrial instrument). 

Since Skene was handed down, the validity of casual employment generally has been called into question by a number of commentators in the media. 

In our view, this overstates the impact of Skene. The decision does not render all casual employees working a set roster a permanent employee for the NES. Rather, the focus will be on an assessment of the factual circumstances of each case to determine whether the 'essence of casualness' is present or absent. 

However, Skene has brought the issue of who is truly a ‘casual employee’ to the forefront in the context of the casualisation of the workforce. 

The Minister for Jobs and Industrial Relations has intervened in Rossato, and submissions filed on behalf of the Minister request that Chief Justice Allsop list Rossato for an expedited hearing on the basis that the case is of significant importance to Australian employers because:⁵ 

• casual employees are paid higher rates of pay on the assumption that those employees are not then entitled to paid entitlements under the NES;
• employers would not paid the higher rate of pay if they knew the employee was not in fact a casual employee;
• employers are uncertain as to whether they can offset the higher rate of pay against any backpay owed to the employee because they are in fact entitled to paid entitlements under the NES; and
• employers want clarity on the ability to offset where casual employees are engaged in the future.

The Minister intervened because she was concerned that Skene may permit casual employees to ‘double dip’ in the future where they are subsequently found to be a permanent employee.  The Minister appears to be arguing that to prevent ‘double dipping’ in the future, it is open to the Federal Court to decide that either:⁶

• an employer is entitled to set off the higher rate of pay against any backpay owed to the employee because they are in fact entitled to paid entitlements under the NES; or
• an employer can pursue the employee for repayment of the casual loading on the basis the employee would otherwise be unjustly enriched.

The Construction, Forestry, Maritime, Mining Energy Union and Mr Skene have sought to intervene in the Rossato proceeding to ensure that Rossato does not impact the earlier precedent set in Skene. 

We are working with clients to assist them to understand any potential exposure or liability because of Skene in relation to their casual workforce. Our team of national experts are available to answer any queries that you may have about the implications of Skene.

¹ https://www.herbertsmithfreehills.com/latest-thinking/employment-class-actions-threaten-to-disrupt-employers-and-unions-alike

² Dana McCauley, “Class action firm to intervene in casual worker test case”, The Age, 8 November 2018, available at https://www.theage.com.au/politics/federal/class-action-firm-to-intervene-in-casual-worker-test-case-20181107-p50elg.html.

³ Dana McCauley, “Class action firm to intervene in casual worker test case”, The Age, 8 November 2018, available at https://www.theage.com.au/politics/federal/class-action-firm-to-intervene-in-casual-worker-test-case-20181107-p50elg.html

⁴ WorkPac Pty Ltd v Skene [2018] FCAFC 131.

⁵ Workplace Express, “O’Dwyer posits three solutions to casual leave “double dip”, 22 November 2018, available at https://www.workplaceexpress.com.au/nl06_news_selected.php?act=2&selkey=57371.

⁶ Workplace Express, “O’Dwyer posits three solutions to casual leave “double dip”, 22 November 2018, available at https://www.workplaceexpress.com.au/nl06_news_selected.php?act=2&selkey=57371.