TROUBLE FOR EMPLOYERS AS DECISION CONFIRMS CASUAL DOUBLE DIPPING

TROUBLE FOR EMPLOYERS AS DECISION CONFIRMS CASUAL DOUBLE DIPPING

On 20 May 2020, the Full Federal Court handed down its long-awaited decision in the case of WorkPac Pty Ltd v Rossato [2020] FCAFC 84.

The decision has reconfirmed the position taken in the earlier case of WorkPac Pty Ltd v Skene (2018) 264 FCR 536 (“Skene”) that a person identified by their employer as a “casual” may still be considered to be a permanent employee and entitled to permanent entitlements, if their working arrangement includes a firm advance commitment as to the duration of their employment or the days/hours they would work.

Employers are now faced with the prospect of claims being made against them by employees for back pay, which, combined with the effects of COVID-19, has left them wondering how much more their business can take.

 

THE FACTS

Mr Rossato was employed by WorkPac Pty Ltd (“WorkPac”) under six (6) consecutive contracts.  The contracts identified Mr Rossato as a casual employee and a number of the contracts provided that he would be paid a causal loading which was incorporated into his flat rate of pay.

Mr Rossato was also covered by an enterprise agreement which provided for the engagement of casual employees and payment of a 25% loading.  However, WorkPac paid Mr Rossato a higher rate which was different to the enterprise agreement rates.

Mr Rossato worked on a seven (7) days on, seven (7) days off roster, on a “drive in- drive out” basis and accommodation was provided by WorkPac’s clients.

 

WHAT DID WORKPAC SEEK BY COMMENCING THESE PROCEEDINGS?

WorkPac brought these proceedings instead of appealing the Skene decision to the High Court, in the hope of undermining the decision by seeking declarations that:

1.  Mr Rossato could not:

a.  make claims with respect to paid annual leave, personal/carer’s leave, and compassionate leave entitlements under the National Employment Standards (“NES”) because he was a casual employee within the meaning of sections 86, 95 and 106 of the Fair Work Act 2009 (Cth) (the “FW Act”); or

b.  make claim for payment of public holidays under section 116 of the FW Act.

2.  Mr Rossato could not claim corresponding entitlements under the relevant enterprise agreement because he was a “Casual Field Team Member” (“Casual FTM”) as defined under the enterprise agreement.

In the event that the Court found that Mr Rossato was not a casual employee and not a Casual FTM, WorkPac sought declarations that it was entitled to restitution of the casual loading which it claimed was included in the hourly rate it paid to Mr Rossato.  It sought that restitution on the basis of mistake and/or partial failure of consideration.

In the further alternative, WorkPac claimed that in assessing the entitlements that Mr Rossato claimed, it was entitled to bring into account the payments of remuneration that it had made to Mr Rossato on the basis that he was a casual employee.  WorkPac sought to rely on common law principles and regulation 2.03A of the Fair Work Regulations 2009 (which allows an employer to have the casual loading taken into account when determining the amount payable by the employer to the person in lieu of one or more relevant NES entitlements) as Mr Rossato’s employment contract did not contain an express set off clause and there was no contractual provision available in his contract which allowed WorkPac to claim back the casual loading.

 

THE FULL COURT’S FINDINGS

Bromberg, White and Wheelahan JJ each delivered a separate judgment in the case.  However, all agreed on the following:

1.  Mr Rossato was other than a casual employee for the purposes of the FW Act and not a Casual FTM under the enterprise agreement.

2.  Mr Rossato’s employment was not casual employment as the parties had agreed on employment of indefinite duration which was stable, regular and predictable (as was evident in each of Mr Rossato’s six (6) contracts and the rosters provided by WorkPac months in advance).

3.  As a result, Mr Rossato was held to be entitled to the entitlements that he claimed under the FW Act and the enterprise agreement with respect to paid annual leave, paid personal/carer’s leave, paid compassionate leave and payment for public holidays.

4.  WorkPac was not entitled to either restitution or to set-off the higher hourly rate of pay it paid to Mr Rossato (working on the basis that he was a casual employee) against its liabilities in relation to the leave entitlements.

5.  Specifically, WorkPac’s restitution claim failed primarily because the Court was not able to find that there was a separate part of Mr Rossato’s wage that it paid due to mistake or in reliance on Mr Rossato’s acceptance that he was a real casual. Importantly, the Court could not rule out that the hourly rate simply reflected the market rate for assuring Mr Rossato’s service.  As to consideration, it was also said that Workpac received the benefit of Mr Rossato’s services when he would have otherwise accessed leave.

6.  WorkPac’s set-off claim also failed given the causal loading was expressed to be “paid in lieu” of leave entitlements, so the loading could not be said to be intended to satisfy leave entitlements as paying in lieu meant the leave was paid instead of such entitlements. The loading was also in many cases paid before the accrual of the leave entitlements and as wages with respect to hours worked.  In regard to regulation 2.03A, as Mr Rossato had claimed actual entitlements conferred by the NES, not entitlements in lieu, this argument failed.  Therefore, the loading could not be used to reduce the amounts owing.

 

WHERE TO FROM HERE?

The decision has a significant impact on the way in which employers engage casual employees with almost all businesses likely to be affected by the decision, particularly labour hire employers who often incorrectly engage workers on a “permanent casual” basis.

To mitigate against the risks which arise for employers who employ on a casual basis we recommend that employers:

1.  Undertake a review of their casual work patterns to determine the level of risk associated with them being considered to be permanent employees. There is a higher level of risk if you have a casual who has worked for you for an extended period of time and has worked the same days/hours for long periods.

2.  Take steps to roster casuals so they are not working regular or systematic hours and provide training to those involved in rostering so that they understand the principles of casual employment.

3.  Ensure your contracts have an appropriately worded set off clause as well as a clause permitting the employer to reclaim casual loading payments in circumstances where an employee is later found not to be a casual employee.

4.  Put in place a process which allows you to monitor casual work patterns to ensure that they maintain irregular, intermittent and unpredictable shifts.

We appreciate that a number of the above steps may be difficult to implement in practice.

It is also worth noting that the Federal Government has indicated that it may consider legislative amendment to address this situation (particularly in relation to the issue of being able to set off casual loading payments against a claim for entitlements associated with permanent employment).  The judgement is also likely to be appealed to the High Court given the significant implications it has for employers.  Employer groups are also pushing for reform.

We will keep you up to date with any progress on the matter.

If you are concerned about your casual arrangements, we can conduct a review of your engagement methods and documentation and assist with rectifying any identified risks.

No Comments

Post A Comment