In the January 2020 issue, I wrote of an important legal decision in the case of Workpac Pty Ltd v. Skene that involved the legal characterisation of a worker as either a casual or permanent (part or full time). The decision received a lot of media coverage because the hospitality, retail and tourism industries employ a lot of casuals and Unions have long railed against the casualisation of the workforce as a ploy to evade payment of lawful entitlements due to workers.
In Skene’s case, the Court held that a casual employee was an employee who had no “firm advance commitment” from his or her his employer to continuing and indefinite work according to an agreed pattern of work. It also decided that the indicia of casual employment – irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability – were the usual indications of an absence of a firm advance commitment.
In the case of Workpac Pty Ltd v. Rossato, a decision of the Full Federal Court given on 20 May 2020, the Court had to consider how the existence or absence of a firm advance commitment was to be assessed on the facts before it. Mr Rossato was employed by a workplace hire company which supplied his labour to the mining industry. His employer, Workpac, sought declarations that Mr Rossato was not due leave entitlements (annual, personal/carers and compassionate) under the National Employment Standards because he was a casual employee. Workpac paid Mr Rossato a casual loading, in lieu of such entitlements, included in his hourly rate of pay. Mr Rossato’s employment agreement was comprehensively documented.
The decision in Rossato’s case is important for horse connected businesses since all of them rely to a greater or lesser extent on casual labour and very seldom are employment arrangements formalised in a documented form. The potential problem for these businesses is that an employee (usually a disgruntled former one) who once happily accepted the freedom of casual work at a higher hourly rate of pay in lieu of leave entitlements, might turn around and additionally claim accrued entitlements or their cash value.
The decision in Rossato’s case looked closely at the factors relevant to an assessment of whether a worker was to be legally classed as a casual. Workpac argued that a person was a casual when there was an absence of ‘firm advance commitment as to the duration of the employee’s employment or the days/hours the employee will work.’ It argued that this commitment had to be found in the terms of the employment contract, without regard to the course of the relationship over time. While the presence of a documented agreement in Rossato’s case assisted the Court, documented agreements are uncommon in the horse industry which relies on informal, often oral, agreements.
The Court in Roassato’s case decided that the classification of someone as a casual depended on the peculiar facts of every employment arrangement. In its view, the presence or absence of the ‘firm advance commitment’ depended on an assessment of the employment contract as a whole. This entailed consideration not only the terms of the employment contract that Mr Rossato signed but, significantly, the conduct of him and his employer over the course of their employment relationship. This meant that a lot more evidence was received to help the Court classify Mr Rossato’s employment status. As regards his documented employment agreement, the Court held that it was relevant to know if it provided for employment to be regular or intermittent, permitted his employer to elect whether to offer employment on a particular day, permitted Mr Rossato to elect whether to work or not, and the duration of his employment. It held that the description given by the parties as to the nature of their relationship was relevant, but not conclusive, in other words, even if the parties had designated Mr Rossato as a casual, it was for the Court to decide his status as a matter of law.
In Rossato’s case, the Court held that even if it were to consider the documented employment contract alone to discover any firm advance commitment, Mr Rossato was not a casual employee. The Court found that he and Workpac had agreed on employment of an indefinite duration which was stable, regular and predictable. In the case of a horse connected business where no documented employment agreement existed, the Court will look at the overall work pattern and its features. This scrutiny could spell trouble for many such businesses.
Considering the Court’s decision in Rossato, horse connected businesses should take at least the following steps to minimise the risk that a former or current employee will demand payment of accrued leave entitlements on top of their causal leave loading.
There should be a written employment agreement between the business and the worker which limits the duration of the employment to such date and times as the business will offer from time to time. The agreement should expressly state that the employer has the right to employ the individual at any time and from time to time: It should not state that the worker is to attend on set days. The agreement should state the worker always has the right to decide whether to work when requested. The agreement should state that the leave loading set out in the agreement is in lieu of leave entitlements under the National Employment Standards. A record should be kept (say in a work diary) of the requests made of the individual to work, his or her response and the date and duration of work performed as evidence that work was performed occasionally rather than on the basis of a firm advance commitment on the part of the business. Do not produce rosters for a casual. Pay the worker only for hours worked by reference to documented recording of the date, start and finish times.
Opportunities offered to a supposed casual worker to reside in accommodation, receive riding lessons, agist a horse or obtain any other sort of benefit as a way to reduce the wage bill, will also be factors a Court will consider in deciding the proper classification of the worker. These opportunities and benefits should be documented (and priced) separately from the employment arrangement.
© Michael Mackinnon, Solicitor & Independent Counsel