Opinion: ruling is anything but casual


Employers should review casual employment arrangements after Federal Court case

Opinion: ruling is anything but casual
Warren Clark

 

The recent decision of the Full Court of the Federal Court in WorkPac Pty Ltd v Rossato means that employers should look for problems associated with engaging employees on what were intended to be casual arrangements but which subsequently turn out to be categorised as permanent employment.

The case has negative financial implications for many Australian road transport businesses. 

Some lawyers are saying that the outcome represents "business as usual" because the court adopted the common law definition of a casual worker. 

But NatRoad’s stance is that if an employee is engaged under a modern award as a casual and is paid the casual loading, then they are engaged and paid as a casual in accordance with the award and they shouldn’t therefore be able to "double dip".

 If the employee is later found to be really a permanent employee by a court, they should not be able to pocket the casual loading payment and then claim annual and personal/carers’ leave and public holiday pay.

The case

To recap, on May 20 2020, the Federal Court ruled in the case of WorkPac Pty Ltd v Rossato that casual workers who have regular and ongoing work have a right to claim paid annual leave, personal/carer’s leave and compassionate leave and payment for public holidays in addition to the casual loading. 

The judgment also states that in the circumstances of the case the employer couldn’t offset the casual loading paid to casual employees to reduce their liability for paid leave. 

This is likely to be the case for most employers looking to apply the casual loading against the accumulated liability for leave. 

The arguments about applying the loading failed because the purpose for which the loading was paid was different in character from the purposes for which WorkPac sought to apply the funds. 

Unless an employment contract deals specifically with this issue, any set off is not likely to succeed.

Mind the dip

An additional concern is that the federal government had introduced a law designed to deal with the issue of ‘double dipping’.

This regulation didn’t work because the court said it only addresses payment in lieu of an entitlement under the National Employment Standards (NES), whereas what was claimed was the actual entitlement under the NES (i.e. payment of leave on termination), and did not have the effect of altering the law of ‘set off’ in any event. 

When a payment in lieu of an entitlement might be made is difficult to envisage.  So, the court’s judgment effectively neuters the federal government’s intent.


Read about the imoprtance of contract management, here


Lawyers and others who have said that the case was not out of the norm or represents " business as usual" are missing the point that the regulation that was designed to stop double dipping was set aside and therefore many employers have paid the casual loading without excluding the liability for leave that it was meant to give compensation for.

This is unfair.

That unfairness is especially evident because the court tore up the long standing rule book and failed to provide clear guidance as to how WorkPac or any other employer might be able to ‘set off’ the loading already paid against leave and other entitlements.

All road transport employers should review their casual employment relationships. 

As it stands

The main problem from the case is that no matter the provisions that apply under modern awards or enterprise agreements, if an employee has a regular and predictable pattern of work with an expectation of ongoing engagement, a firm advance commitment, they are unlikely to be casual employees under the law. 

If that situation exists in your company, seek advice, and think about making the employees concerned full-time or part-time employees.

Where operators have engaged a person as a casual employee, they should ensure that they have a written contract of employment that clearly identifies the employee as a casual and ensure that the casual loading is clearly shown as a separate monetary amount in the employment contract and on the employee’s payslip. 

Whilst the loading was not able to be offset against the leave entitlements in the current case, the documentation of the casual relationship remains important. 

However, as the saying goes "If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck."

So if there is a regular and predictable pattern of work, then consider changing the casual employee’s employment status as mentioned above.  

Less choice

The other issue is that the case reduces employee’s freedom of choice.  We recognise that some casual employees want to be employed as a casual because it gives them flexibility and a higher rate of pay.  

Therefore, it is also important to record any discussions with a casual employee about converting to part-time or full-time employment where the employee chooses to remain casual.

 However, such an employee can change their mind at any time and these arrangements need to be carefully managed.

It is important for all road transport operators who employ long term casuals or casual employees who have a firm advance commitment to seek advice. NatRoad members are encourage to reach out to our member services team on 1800 272 144 or info@natroad.com.au . Not a member? Contact our team today to find out more.

Warren Clark is the National Road Transport Association (NatRoad)

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