Nothing could be clearer in casual contracts than making it clear that the casual loading must bear a verisimilitude to a permanent employee’s accruals and a set-off clause be explicit, including a calculation to prove it. Long-term casuals will always be regarded as permanent (unless you set up a compelling business case to refuse conversion or a sign-off, wanting to stay casual and understand what that means). The trick is to avoid double dipping.
Sadly the lesson hasn’t been learnt and the new landmark decision of Workpac v Rossato, the Full Bench of the Federal Court (Justices Bromberg, White and Wheelahan) have confirmed that it is possible for casuals to ‘double dip’ – receiving a casual loading while also being eligible for paid leave entitlements.
The Full Federal Court (FFC) was firmly of the view that this case could not be distinguished from the earlier case of Workpac v Skene which set the double dipping precedent. This case involved Workpac, a labour hire provider that was seeking declarations that their employee, Mr Rossato, could not make underpayment claims for paid leave entitlements because he was at all times, a casual employee.
Workpac argued there was no ‘firm advance commitment’, demonstrated from the written employment contract. They further argued that reference to extrinsic material should not be considered as the commitment was required to be an express contractual provision. The Court dismissed this argument, asserting that considerations of ‘firm advance commitment’ had to be taken when looking at the employment contract as a whole which included the nature of the actual relationship and post contractual conduct. The makeup of the FFC suggests the use of post-contractual behaviour (not really admissible evidence) supports an employee narrative and may not win support from the current High Court. But it is L.A.W. now and you must adjust to manage it
The Court found that a roster with pre-programmed work which was allocated well in advance was indicative of ongoing and certain employment. Additionally the nature of work in the mining industry required regular and consistent employees, therefore to satisfy those requirements Workpac was knowingly recruiting and engaging employees to satisfy those permanent roles. Having considered the entirety of the employment relationship based on the six employment contracts and the stable, regular and predictable nature of the relationship, it was determined that Mr Rossato was not a casual employee.
Workplace then tried to argue that it should be able to offset any amount owing through the casual loading paid to Mr Rossato. The Court found that the setting off was not possible as there was no ‘close correlation’ between the casual loading or the National Employment Standard (NES) entitlements owed. The contractual payment does not have to be labelled for the entitlements, but there has to be a close link between “the purpose of that contractual payment and the award entitlement.” For the first time, regulation 2.03A of the Fair Work Regulations 2009 (Cth) was tested and was proven useless in addressing these situations (even though this was the purpose behind its introduction). The Courts found that employers cannot argue a setting off under this clause for underpayment matters, as subregulation (d) establishes that the regulation only applies if the underpayment claim relates to an amount in lieu of an NES entitlement rather than for payment of the entitlement itself.
The final argument advanced by Workpac was that it should be paid restitution for the casual loading that was mistakenly paid. The Court dismissed this argument as there was no ‘failure of consideration’ or a ‘relevant mistake’ therefore there is no entitlement to restitution.
- Definition of a casual employee – “employee who has no firm advance commitment from her or his employer to continuing and indefinite work according to an agreed pattern of work”
- Indicia of casual employment
- Irregular employment – unpredictable hours or days & intermittent work patterns
- Employees who can only work in response to specific demand or specific period of time i.e. seasonal employment
- Where employees can choose whether to work or not – key that should be clear shifts are optional
- Similarly, where employers can elect to offer employment on any particular day
- Short notice of termination within contract – the Court noted this is not a consideration for labour hire companies like Workpac because they can easily replace the employee given the nature of their business
- Non-exclusivity – requirements for employees to work exclusively for a company, suggests ongoing permanent work
- Interestingly a stand down clause within the General Conditions was seen to be indicative of the expectation of continuing work
What does this mean?
- Make sure you review the wording in your casual contracts-the set off provisions must be clear the loading meets permanent accruals
- Work hard on casual conversion process and sign off commitment to stay casual
- Do not have rosters far in advance
- Labour hire contracts will need to be reviewed so that exclusivity clauses are removed and there are clearer options for casuals to refuse to attend an assignment
Have a question or need advice?
Our team are here to provide the right advice for your business and workforce. If you have a question or require assistance, please contact Andrew Douglas.