WorkPac v Rossato: Are you a casual employee?

The Full Bench of the Federal Court, in the recent case of WorkPac Pty Ltd v Rossato [2020] FCAFC 84, confirmed its earlier decision in WorkPac Pty Ltd v Skene [2016] FCCA 3035, holding that, if a casual employee’s hours of work are regular and systematic, the employee is entitled to payment of permanent employee entitlements.

However, this decision goes much further than the Skene decision, finding that, if an employee has been paid casual loading (usually an additional 25% above the ordinary hourly rate of pay), the employer is not automatically entitled to claw that casual loading back, should the employee be deemed a permanent employee.

This decision has wide ranging implications for employers and employees alike, as it allows casual employees to ‘double dip’ in some circumstances i.e. to receive payment of casual loading, plus payment of permanent employee entitlements, such as annual leave and personal leave.

Background to WorkPac Pty Ltd v Rossato

This case centered on Mr Rossato’s employment with WorkPac. Mr Rossato was an employee of WorkPac from July 2014 through to April 2018.

Mr Rossato’s contract of employment with WorkPac described Mr Rossato as a casual employee. Accordingly, Mr Rossato was paid casual loading at the ordinary rate of 25%, in lieu of receiving permanent employee entitlements, such as annual leave and personal leave.

Following the conclusion of his employment, Mr Rossato sent correspondence to WorkPac in which he claimed to have been a permanent employee and therefore entitled to permanent employee entitlements. In response, WorkPac claimed Mr Rossato was a casual employee and that, if he were truly a permanent employee, WorkPac would be entitled to:

1. set off the 25% casual loading against any permanent employee entitlements; or
2. seek restitution for the 25% leave loading that was mistakenly paid to Mr Rossato.

The Easy Part: Was Mr Rossato a casual or permanent employee?

In reaching its decision, the Federal Court did not hesitate in declaring Mr Rossato was a permanent employee, rather than a casual. This conclusion was largely based on the Court’s determination that Mr Rossato’s hours of work were too regular and systematic for him to have been anything but a permanent employee, noting Mr Rossato worked:

1. Every shift he was rostered on to work;
2. 7 days on, 7 days off; and
3. Pursuant to a shift roster that was sometimes set 7 months in advance.

In reaching this conclusion, the Court followed its previous decision in Skene, focusing on whether there was, amongst other things, a ‘firm advance commitment’ with respect to Mr Rossato’s engagement.

The Hard Part: Can Mr Rossato ‘double dip’?

The Court’s primary focus was on the question of ‘double dipping’. That is, if Mr Rossato was not a casual employee, is it just and fair for him to retain the casual loading that he was paid due to his incorrect categorization as a casual employee, as well as receive payment of permanent employee entitlements?

As expected, WorkPac argued strongly against ‘double dipping’, submitting that casual loading was paid under the mistaken assumption that Mr Rossato was a casual. As such, WorkPac was entitled to be repaid (a remedy known as restitution), or to set off, the casual loading against those permanent employee entitlements Mr Rossato was entitled to as a permanent employee.

Unfortunately for WorkPac, the Court was not convinced.

Severable Portions

Regarding, the supposed mistake of WorkPac in paying Mr Rossato casual loading, the Court found that casual loading was not a severable portion of payment for which restitution could be sought.

Casual Loading Offset

Regarding WorkPac’s desire to offset the casual loading amounts against permanent employee entitlements, the Court found this was not permissible as Mr Rossato’s written contract of employment did not allow or provide for a right to such a set off.

Accordingly, Mr Rossato was allowed to keep the casual loading he was paid and also awarded those permanent employee entitlements he ought to have been paid.

What employers should know?

This decision, along with the Federal Court’s previous Skene decision, shows that employers must pay very close attention to the substance of their employee’s working arrangements, rather than how they are simply described in a contract of employment.

An employee whose hours of work are:

• regular; and
• systematic,

is not a casual employee because their contract of employment describes that. Importantly, this means employers need to closely monitor the shifts and work patterns of their casual workforce to ensure their hours of work are sufficiently irregular. Otherwise, the employer risks having their casual employee claim additional entitlements. 

What can employers do?

If casual employers are working regular and systematic hours, employers should:

• consider offering those employees part-time or full-time contracts;
• consider any casual conversion requests that may be made; or
• insofar as contracts of employment are concerned, review these to ensure that casual loading can be set off against annual leave entitlements, in the event a legal claim is made.

What employees should know?

If you are a casual employee and you believe your work patterns are regular and systematic, the law may consider you to be a permanent employee and therefore entitled to payment of permanent employee entitlements.

Whether or not your work patterns are regular and systematic is a question of fact, determinable on a case by case basis.

Factors that may indicate your work pattern is regular and systematic is:

• consistency in shifts (i.e. you work Wednesday, Thursday and Friday every week and have done so for some time); and
• how far in advance your shifts are set or rostered.

There are, of course, various other factors to be considered, so we recommend you seek legal advice prior to claiming permanent employee entitlements.

How can DSA Law help?

If you require legal advice about your rights as an employer or employee regarding casual employment, please Contact Us or one of the Employment Lawyers at DSA Law on (03) 8595 9580 so we can assist you.