Background: the Full Federal Court’s decision and Parliament’s intervention

You can read a summary of the facts and our analysis of the Full Federal Court decision here. Mr Rossato was held not to have been a casual employee (on account of completing ‘regular, certain, continuing, constant and predictable’ shifts), and he was therefore eligible to claim the consequential entitlements that permanent employees enjoy under the Fair Work Act 2009 (Cth) (FW Act) and his enterprise agreement.

This was widely considered by industry experts as an erroneous and impracticable decision by the Full Federal Court, essentially permitting casual employees to ‘double-dip’. It was also estimated by industry groups that it could cost employers up to $8 billion in additional entitlements.

Among other things, the Rossato decision prompted Parliament to provide legislative protection for employers against these types of ‘double-dipping’ claims by long-term casual employees. In December last year, we provided some initial insight into these reforms. When the reforms were passed by the House of Representatives in March 2021[2], we also provided further analysis on this issue.

Notably, as part of those reforms, a new statutory definition of ‘casual employees’ was inserted into the FW Act, which:

• confirmed that the basis of the original offer and acceptance of employment (i.e. was it a casual engagement that was offered and accepted?) was determinative, rather than the subsequent conduct of the employer and / or employee; and
• provided that an award of compensation for permanent employee entitlements payable to an employee mistakenly treated as a casual must be reduced by the amount of any identifiable casual loading paid to the employee.

How does the High Court’s decision sit with the recent amendments to the FW Act?

The High Court clarified that the recent amendments to the FW Act did not apply to Mr Rossato (in respect of whom a court had made a binding decision prior to their commencement) but they would otherwise apply retrospectively to other employees, with specific limitations.

This meant that the effect of the earlier Rossato and Skene[3] decisions – that being that all circumstances including post-contractual conduct are to be taken into account when determining the nature of an employment relationship – had already been largely subverted by statute prior to WorkPac’s appeal to the High Court.

While the High Court’s analysis therefore largely sits independently of the FW Act in the context of deciding WorkPac’s appeal, its decision still affirms and assists in the interpretation of these new provisions of the FW Act. It also reiterates that the existence or absence of a firm advance commitment as to continuing work is the test that is the “hallmark of casual employment”[4].

In this respect, the High Court undertook a lengthy analysis of the meaning of a “firm advance commitment”[5] having regard to provisions of the FW Act and contextual considerations, such as Mr Rossato’s rosters.

Notably, the High Court accepted WorkPac’s argument that the similar case of Skene was wrongly decided.  Namely, the High Court held that the characterisation of an employee as ‘casual’ depended “entirely on the express or implied terms of the employment contract and (in the case of wholly written employment contracts) without reference to post-contractual conduct”. [6]

While the FW Act prior to the March 2021 amendments did not define the term ‘casual employment’, the High Court confirmed that a ‘firm advance commitment’ can exist “unqualified by indicia of irregularity, such as uncertainty, discontinuity, intermittency and unpredictability”.[7]  For example, section 65(2)(b)(ii) demonstrates that the FW Act does not regard the existence of "a reasonable expectation of continuing employment ... on a regular and systematic basis"[6] to be inconsistent with the nature of casual employment. Rather, such an expectation is entirely consistent with an employee's status as a casual.  However, that expectation falls short of a ‘firm advance commitment’ in binding terms, and is thus not ultimately determinative of the nature of the employment relationship.

Consistent with the notion of casual employment contemplated elsewhere in the FW Act, the High Court also considered that Mr Rossato’s rosters – “imbued … with the qualities of regularity and systematic organisation during the period of each assignment” – were “entirely compatible with the notion of ‘casual employment’”.[8]

In Mr Rossato’s circumstances then, the High Court held that:

• a firm advance commitment to continuing work beyond the completion of the particular assignment was absent;
• the express terms of Mr Rossato’s contracts were inconsistent with such a commitment;
• the parties expressly agreed that Mr Rossato would be paid a loading in lieu of entitlements;
• this did not presuppose an ongoing working relationship extending beyond the duration of a particular assignment; and
• while Mr Rossato’s rosters had the necessary features of regularity and consistency, this was insufficient to establish a commitment between the parties to an ongoing working relationship after each assignment was completed.

Practical lessons for employers

Now that the High Court has expressly adopted and reinforced the new statutory criteria contained in the FW Act, employers should gain greater comfort in their reliance upon those provisions, and more clarity in respect of how to engage with them.

In particular, the following practical lessons can be gleaned from the High Court’s commentary:

• Where the parties commit the terms of the employment relationship to a written contract and thereafter adhere to them, it is those terms that one must look to when determining the character of the employment relationship.
• Employers should therefore ensure that each written contract itself sufficiently addresses the nature of a casual employee’s employment, and not seek to rely on the regularity of work and/or other post-contractual arrangements to indicate same.
• When drafting casual employment contracts, employers should be guided by the criterion of section 15A (2)(a) – (d) of the FW Act, and explicitly address each in the terms of the contract.
• The High Court emphasised that Mr Rossato was operating pursuant to six separate “assignments”, beyond the completion of which there was no commitment to continuing work. Where relevant then (such as in common labour hire situations) it might be worth considering whether similar terminology should be incorporated into an employee’s contract to clearly identify the non-continuous nature of the casual employment.
• The High Court also maintained that the “label” parties choose to attach to their relationship is not determinative. Nevertheless, describing the relationship as “casual” in an employment contract will be one factor which influences the overall interpretation of the parties’ rights and obligations, as reflected by section 15A(2) of the FW Act.

While the High Court decision is a welcome development for many, employers should remain mindful of the procedural steps required by legislation and how these interrelate with the decision (including with regard to the right to seek conversion from casual to permanent employment).  For further advice specific your business please get in contact with the relevant contact at Moray & Agnew.   

[1] (2020) 278 FCR 179 (Rossato).

[2] WorkPac Pty Ltd v Skene (2018) 264 FCR 536 (Skene).

[3] WorkPac Pty Ltd v Rossato [2021] HCA 23 at [88].

[4] Ibid at [32].

[5] Ibid at [42].

[6] Ibid at [49].

[7] Ibid at [42].

[8] Ibid at [96].