High Court overturns WorkPac Vs Rossato ruling on casual employment

The High Court has, in a welcome judgement for employers, overturned a judgement of the Full Federal Court, which had caused concern among employers about their exposure to claims of underpayment from casual employees.

In WorkPac Pty Ltd v Rossato [2021] HCA 23, the High Court has clarified that if an employee is genuinely engaged as ‘casual’, and paid the required casual loading, they cannot ‘double dip’ and later claim, in addition to the casual loading, payment for annual leave, public holiday and personal/carers’ leave, if their working schedule becomes more regular. The casual loading is paid to employees to compensate for the absence of annual leave, personal/carers’ leave and payment for public holidays for casual employees.

What this means for employers of casual employees:

  • Employment is casual if there is no firm advance commitment by either party. That is, to work (on the part of the employee) or offer work (on the part of the employer). If the employer can elect not to offer ongoing shifts in the future and the employee is able to refuse shifts that are offered, then the employment remains ‘casual’. This is the case even if the work pattern becomes more regular over time.
  • Whether an employee is ‘casual’ is judged on the job offer accepted by the employee at the outset. Where there is to be an ongoing mutual obligation, because the arrangement is that the employer is obligated to offer work, which the employee must accept, then the employee is not casual and should be engaged on a regular employment contract (with payment for annual leave etc.).
  • A casual employee is entitled to a casual loading on top of the agreed/award rate of pay, but is not entitled, in addition, to the incidences of permanent employment such as annual leave, public holidays and personal/carers’ leave.
  • The lack of an ongoing obligation of the employer to offer work and the employee to accept, is what makes the employment casual. Employers should ensure that for casual employees, this lack of an ongoing commitment is made clear in the letter of offer or appointment and the contract of employment.

The Federal Court’s decision in Workpac v Rossato, now overturned, caused panic among employers who were at risk of having to compensate employees for unpaid annual leave and other payments, when those employees had already received the casual loading. To address this, and give clarity, amendments were made to the Fair Work Act 2009 (Cth). Further information regarding changes to the Fair Work Act 2009 (Cth) can be found in an article previously published by Workplace Legal here.

Lessons for employers
Employers should take the following steps:

  • Review and update casual employment contracts to reflect the features of casual employment, including that there is ‘no firm advance commitment to work’.
  • Ensure their practices are consistent with the features of casual employment to avoid arguments that the contract is a sham.

If you have any queries regarding casual employment, please contact Workplace Legal on 03 9972 4950

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