The recent decision of the Full Court of the Federal Court in WorkPac Pty Ltd v Rosatto [2020] FCAFC 84 is a warning to employers that stating that a worker is a casual employee in an employment contract and paying them casual loading will not necessarily mean that the employee is, in fact, casual. If an employee who is incorrectly classed as casual is paid a casual loading, the employee may be able claim the employee benefits that generally only accrue to full-time and part-time employees, in addition to any casual loading payments that the employee received throughout their employment.
Casual employment is a series of separate engagements between the employer and employee. Casual employees do not have predictability of employment, with no certainty as to how long they can expect to be employed or how many hours they will be scheduled to work. Likewise, casual employees do not accrue annual leave, personal leave or redundancy entitlements during their employment. In recognition of the precarious nature of casual employment, casual employees are paid casual loading and receive a higher hourly rate of pay than permanent employees.
Last month, the Full Court of the Federal Court released its keenly-awaited decision in Rosatto. Throughout his employment as a casual coal mine worker between 2014 and 2018, Mr Rosatto signed a series of six consecutive employment contracts which all stated that he was a casual employee. Mr Rosatto’s employment contracts ran continuously for a period of almost four years. The employment contracts specified that Mr Rosatto would receive casual loading of 25% to his pay in lieu of leave, notice and redundancy entitlements to which he would have been entitled if he had been a permanent employee.
Although Mr Rosatto was paid the 25% casual loading throughout his employment, Mr Rosatto’s employer, WorkPac, was ordered to pay him unpaid annual leave, personal leave, public holiday loading and compassionate leave entitlements which accrued during his employment. Key factors which influenced the court’s finding that he was not a casual employee was the length of time in advance that Mr Rosatto’s work hours were rostered, and that he was engaged to perform regular, fulltime work for a flat hourly rate of pay. For instance, Mr Rosatto’s work rosters set regular work hours for periods of up to seven months in advance. The Court found that these circumstances demonstrated “a firm advance commitment” to Mr Rosatto’s continued employment. This “firm advance commitment” was inconsistent with Mr Rosatto being a genuine casual employee.
In justifying the decision that Mr Rosatto should receive accrued entitlements as if he had been a permanent employee in addition to the casual loading he had been paid, the Court noted that “… as employees who are not obliged to provide on-going service, casual employees do not ordinarily have the same need for access to rest and recreation as employees in continuing regular employment”. The same principles apply with respect to personal and carer’s leave. Because Mr Rosatto was in fact a permanent employee, the increase to his pay did not confer the same personal benefits that he should have received by way of accrued leave benefits during his employment as a permanent employee.
It follows that incorrectly classifying workers as casual when they would more properly be classified as full-time or part-time employees can be a very costly mistake for employers. Signs that an employee is employed on a genuinely casual basis include the following:
- The employee does not have a right to ongoing employment;
- An employer can elect to offer employment on a particular day or days and the employee can elect to work on those days offered;
- There is no certainty as to the term of the employment;
- The hours of work offered are irregular and unsystematic;
- It is not expected to be ongoing employment; and
- Payment is at a base hourly rate, with loading for leave entitlements.
As noted in Rosatto, none of these factors alone is conclusive and all of the circumstances of each individual employment scenario should be taken into account in assessing whether or not an employee is really casual.
It is likely that the decision in Rosatto will be appealed to the High Court by WorkPac and/or the Commonwealth. It remains to be seen whether the current decision will withstand such challenge. In the meantime, our experienced team of employment lawyers is available to help guide our employer clients to correctly classify who is and is not a casual employee, to give peace of mind and avoid unwanted surprises in the future. Please call us to find out how we can help you navigate this evolving area of law.