Changes to Casual Employment?
Over the past months there has been considerable debate and angst over who is a casual employee, and do employers owe backpay for leave and other award benefits?
The Federal Government recently introduced into the Fair Work Act 2009 (Cth) (‘Act’) a new statutory definition of a ‘casual employee’. Sections of the Fair Work Act relating to casual employees were amended to provide reassurance to certain employers who were unsure if their casual employees were entitled to backpay of leave entitlements. This change has been further supported by the recent decision of the High Court of Australia in WorkPac Pty Ltd v Robert Rossato & Ors  HCA 23 which successfully overturned the decision made by the Full Court of the Federal Court of Australia in WorkPac Pty Ltd v Rossato (2020) 278 FCR 179 (Rossato) and is the ‘nail in the coffin’ (for now) on the issue of double dipping for casual employees.
In summary, the decision of the High Court found that:
- A “casual employee” is an employee who has no ‘firm advance commitment’ as to the duration of the employee’s employment or the days (or hours) the employee will work; and
- A firm advance commitment can only be established by considering the binding contractual obligations between the employer and employee – particularly where they have a written contract in place.
Importantly, the Amending Act explicitly states that the employer and employee have no bearing on whether there was a firm advance commitment, only the initial offer of employment and the acceptance of that offer is to be assessed.
Context: Double dipping and set-offs
In Rossato, the Full Court decided that an employee (Mr Rossato) was found to be incorrectly treated as a casual employer by his employer (WorkPac). The Full Court made its decision by considering “the real substance, practical reality and true nature” of Mr Rossato’s employment with WorkPac. This decision also confirmed the earlier approach adopted by the Federal Court in WorkPac Pty Ltd v Skene (2018) 264 FCR 536 (‘Skene’) which shared similar circumstances.
As Mr Rossato was incorrectly treated as a casual employee, the Full Court determined that he was entitled to paid leave entitlements akin to a permanent employee. WorkPac expectedly argued that the amounts paid to Mr Rossato in the form of casual loading should be set off against the amount Mr Rossato was entitled to.
However, the Full Court did not accept that the casual loading payments made could be set off – allowing Mr Rossato, and potentially all other casual employees in similar circumstances, to “double dip” even though having been paid casual loading in lieu of such entitlements. The decision, understandably, brought concerns to employers and particularly enterprises who employed staff on a casual basis.
The High Court in WorkPac Pty Ltd v Robert Rossato & Ors overturned the decision in Rossato and effectively Skene. The decision of the High Court closely aligns with the newly introduced definition of a casual employee within the Act and provides welcome certainty for employers.
5 Key points of the case
- New definition of a Casual employee: The approach and legal analysis adopted by the Full Court of the Federal Court of Australia in Rossato and Skene departed from the normal understanding of what a casual is deemed to be .2
- Mr Rossato’s employment with WorkPac was intermittent, broken into six (6) separate contracts of casual employment or “assignments”. With each new assignment, Mr Rossato was provided with a juncture to accept or decline the offer of assignment. Likewise, WorkPac was under no obligation to offer any further assignments at the conclusion of each assignment.3
- Systemic characteristics of employment, such as advance rosters or regular working patterns, is not enough to establish a firm advance commitment of continuing employment. 4 Such aspects are not inconsistent with the nature of casual employment and merely demonstrates an ‘expectation’ which falls short of the requirement of a firm advance commitment. 5
- The relationship between an employer and employee is established and bound by statute and common law principles.6
- A court can determine the character of a legal relationship between the parties only by reference to the legal rights and obligations which constitute that relationship. The search for the existence or otherwise of a “firm advance commitment” must be for enforceable terms, and not unenforceable expectations or understandings that might be said to reflect the way parties performed their agreement.7
What are the New Definitions of Casual Employee under the Act?
The recent changes to the Act were discussed in a previous article. One of the amendments discussed was the insertion of the meaning of ‘casual employee’.
Under the new definition, a person is a casual employee if:
- The offer of employment is made on the basis that the employer makes no firm advance commitment to ongoing and indefinite work;
- The person accepts the offer on that basis; and
- The person is an employee because of his or her acceptance.
When determining whether an advance firm commitment to ongoing and indefinite work only the following will be considered:
- Whether an employer can choose to offer work and that the employee can accept or reject the work being offered;
- Whether the employee will work only as required by the needs of the employer;
- Whether the employment is described as casual employment; and
- That the person will be entitle to casual loading or a specific rate of pay for casual employees under the terms of the offer or another instrument.
Key and hot tips for Employers: How to Respond to New Definition of Casual Employee
In general terms, we recommend that employers ought to check closely:
Tip 1: All employers should have written contracts in place with its casual employees which captures the intention there is specifically no firm advance commitment for ongoing and indefinite work.
Comparing the decision made by the High Court and the new definition of the Act, the two now closely align providing a clearer position on the meaning of a casual employee. With that said, the significance of employment contracts, and in particularly with casual employees, are even greater now.
Tip 2: Contracts of casual employment should be clearly described as casual employment and include terms giving the employee the opportunity to accept or reject work, and/or specifying that the employee will be entitled to casual loading in lieu of certain entitlements (i.e. paid leave, notice entitlements or redundancy pay).
Employers can rely upon the written terms of the contract of employment to determine whether an employee is a casual employee but must ensure that the terms of the contract of employment captures a mutual intention the employment relationship is to be on a casual basis.
Tip 3: Employers are encouraged to separately identify the component of casual loading paid to demonstrate the employee’s wage is inclusive of a payment of casual loading, in lieu of other entitlements.
Accordingly, employers should ensure that contracts of casual employment are up to date and reflect a conclusion that establishes the employment relationship between an employee is casual. The payslips being issued to employees should also be reviewed to determine whether it is obvious payment of casual loading is made.
Do you have casual employees?
Do you have long term casual employees?
Not sure about your casual employment contracts?
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Jonathan Mamaril leads a team of handpicked experts in the areas of employment law and commercial law who focus on educating clients to avoid headaches, provide advice on issues before they fester and when action needs to be taken and there is a problem mitigate risk and liability. With a core value of helping first and providing practical advice, Jonathan is a sought after advisor to a number of Employers and as a speaker for forums and seminars where his expertise is invaluable as a leader in this area as a lawyer for employers.
Dan Chen is a lawyer at NB Lawyers, the lawyers for employers, and specialises in employment law. Dan is passionate about assisting business owners, small and large understand their obligations under Australia’s complex workplace relations system. Dan also has great experience in the Fair Work Commission and Federal Court of Australia defending Employers in unfair dismissal and General Protections claims. In addition, he is a fluent mandarin speaker.
  HCA 23.
 WorkPac Pty Ltd v Rossato & Ors  HCA 23 at  and .
 WorkPac Pty Ltd v Rossato & Ors  HCA 23 at .
 WorkPac v Robert Rossato & Ors  HCA 23, at  and .
 WorkPac v Robert Rossato & Ors  HCA 23, at .
 Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at 178 .
 WorkPac Pty Ltd v Rossato & Ors  HCA 23 at .