In late May the Federal Court issued a long-awaited decision that has thrown into question the definition of ‘casual employment’ and the entitlements owed to long-term casual employees.

In the case of casual employee Mr Rossato vs labour hire company WorkPac, the Court ruled that Rossato (the employee) was entitled to be paid annual leave, paid personal/carer’s leave and paid compassionate leave. It held that WorkPac (his employer) could not use extra pay (i.e. the 25% casual loading he received in lieu of these benefits), to ‘set off’ that liability.

While Rossato was contracted on a casual basis, the substance and patterns of his employment relationship were found by the Court to be more akin to permanent work. It held that, as his employment was “regular, certain, continuing, constant and predictable”, Rossato was in fact ‘other than a casual employee’ for the purposes of sections 86, 95 and 106 of the Fair Work Act 2009, which meant he was owed extra entitlements.

Impacts

The decision has potential impacts for the way that long term casuals are engaged and paid. Employer groups have expressed concerns about the ‘double-dipping’ of entitlements and the impact on businesses. Given the wide-ranging implications of the judgment, the Government is considering whether it should amend legislation and said it may back any appeal to the decision.

However, employers are being reminded that this decision does not mean that all casuals are entitled to annual and sick leave. The Court’s ruling applied to a very specific case – the decision is more applicable to casuals that are rostered as if they are permanent staff.

Recommended actions

We would encourage any clients with long standing casual staff to contact your HR/legal advisor, or employer association, if you have any concerns about your own position. In the meantime, we have noticed that leading HR advisory services are recommending that employers with long term casuals consider the following practical advice to mitigate risk:

• Be aware that employment which is regular, certain, continuing, constant and predictable may be deemed ‘other than casual’
• Consider the real substance of an employee’s work rather than the label attached to it. Titles/descriptions of work can be relevant but not indicative of the true nature of employment, especially if the employment is long term.
• Regularly review arrangements for regular and systematic casuals – e.g. offering conversion to part time/full time, or alternatively reinforcing the casual features of employment. If employers offer conversion to permanent /part time status, and the employee declines, make sure this is documented.
• Separately identify / itemise casual loading in employee contracts, letters of employment and potentially in payslips
• Consider the inclusion of preventative clauses in employment contracts to require employees to repay casual loadings if they are found to be incorrectly classified as casual employees