New Clarity on Casual Employment – Contractual Terms Are Key

By 5 August 2021Workplace
New Clarity on Casual Employment - Contractual Terms Are Key

The High Court yesterday delivered an important decision in WorkPac Pty Ltd-v-Rossato and Ors [2021] HCA 23 regarding what constitutes casual employment.

The original decision of the Federal Court had found that Rossato was a full-time employee entitled to sick and annual leave and the employer was not allowed to offset the additional casual leave loading they had paid the employee against these entitlements. However, the High Court overturned the Federal Court’s decision finding that Rossato was a casual employee under the Fair Work Act 2009 in respect of each of the six assignments with WorkPac and a casual field team member for the purposes of WorkPac’s applicable Enterprise Agreement.

The High Court considered the circumstances leading to Mr Rossato’s original engagement, his subsequent engagements, the terms of his various employment agreements and the circumstances of his work. It noted that Rossato had been employed with WorkPac episodically until his retirement on a series of fixed contracts or assignments.

The High Court found that whilst the term casual employment was not defined in the Fair Work Act, the expression referred to an employee who has no firm advance commitment as to the duration of their employment or the days or hours they will work.

In determining the nature of Rossato’s employment with WorkPac, the High Court found that to insist upon binding contractual promises as reliable indicators of the true character of the employment relationship is to recognise that it is the function of the courts to enforce legal obligations, not to act as an industrial arbiter whose function is to synthesise a new concord out of industrial differences.

The Court found that:

  1. Express terms of the contract between the parties must be given effect unless they are contrary to the statute.
  2. If a mutual undertaking is said to be implied, then what has been agreed cannot be inconsistent with the express terms of the contract.
  3. The mutual undertakings are to be inferred from conduct and may take effect as contractual variations.

It considered the express contractual agreements between the parties, noting the employee was engaged on a series of assignments and the contracts separately provided that upon completion of an assignment, WorkPac was under no obligation to offer any further assignments, the period of the assignment could be varied by one hours’ notice and the assignment could be terminated on one hours’ notice. It further noted all contracts made some reference to payment of a casual rate or casual loading and the employee was entitled to accept or reject an offer of an assignment.

On the basis of the above factors, the High Court determined that on the plain and ordinary meaning of the provisions, the parties deliberately avoided a firm commitment to ongoing employment once a given assignment had been completed. The High Court found, once it is accepted, as it must be, that these clauses bound the parties according to their ordinary meeting, it must also be accepted that on a straightforward application of the test of the hallmarks of casual employment, Rossato was a casual employee.

The High Court found it was not, and could not, be suggested that the parties agreed at any time that once an assignment was completed, Rossato would thereupon be engaged for further assignments. This was readily understandable and the point of the whole arrangements under which the parties undertook one assignment at a time. It found the Federal Court erred in attributing to the systematic nature of Rossato’s work under the mines’ rosters a significance that was critical to the ultimate characterisation of Rossato’s employment as involving a firm advance commitment for continuing work beyond the completion of a particular assignment. Whilst Rossato might fairly be said to have had over time a reasonable expectation of continuing employment on a regular and systematic basis, that was not a firm advance commitment to continuing employment beyond that particular assignment; the express terms of the contracts between them were inconsistent with the making of any such commitment.

The High Court concluded the contractual arrangements between WorkPac and Rossato did not include a mutual commitment to an ongoing working relationship between them after the completion of each assignment. The express terms of the relationship between the parties were distinctly inconsistent with any such commitment and Rossato’s entitlement to remuneration was agreed on that basis. Accordingly, the High Court declared that Rossato was a casual employee with respect to each of the six assignments with WorkPac and for the purposes of the Fair Work Act and under the terms of the Enterprise Agreement.

Key Takeaways

This decision provides clarity on the test that will be applied in determining whether an employee is a casual employee and highlights the importance and significance of the written contractual arrangements between an employer and employee.

If you engage casual employees it is recommended that you review your employment agreements to check whether they adequately record the casual basis of the engagement and clearly identify that a casual loading is paid in lieu of leave entitlements. If you are uncertain whether the terms of your agreements are sufficient or you do not have written employment agreements, Murdoch Lawyers can help.

Please contact Suzanne Wishart, Matt Bell or Chris Lowe on 1300 068 736.

 

This publication has been carefully prepared, but it has been written in brief and general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.

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