So, what is the real story about casual employees?

The Federal Court released its decision of WorkPac Pty Ltd v Rossato  [2020] FCAFC 84 (Rossato), about casual employees in the mining industry and their access to paid entitlements on 20 May 2020. Since then, the media, industry groups, unions, lawyers and the Federal government have been vocal about the impact of the decision.

In reality, if you read the decision, you will see that it does not present anything novel. It has challenged some of the practices and assumptions that have developed over time, regarding the way some employers engage casual staff.

Skene and Rossato

The Court confirmed the position from WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 264 FCR 536 (Skene) that the term 'casual employee' has acquired a legal meaning referable to particular attributes, including:

•    no firm commitment to the other party;

•    irregular work patterns;

•    a lack of continuity;

•    intermittency of work;

•    unpredictability; and

•    uncertainty as to the period of employment.

These all amount to flexible work, which is the essence of casual employment. The challenge has long been that the Fair Work Act 2009 does not define what a casual employee is, and that has left room for interpretation. We have provided a link to another document that discusses Rossato and Skene in more detail if you want to know more about the cases.

What was not discussed in Rossato and Skene, but has become apparent through extrinsic information, was that the casual employee in both cases was paid less per hour than staff they worked with, who were directly employed by the mining company to do the same work. This is a significant part of the reason the various cases have been filed and pursued. The other issue being pursued is that casual employees, regardless of their earning capacity, will have difficulty accessing personal finance because banks still regard casual employment as unreliable. The unions are seeking more permanency for workers to overcome that situation.

Since the Rossato decision, the legal representatives for employees have communicated that Skene and Rossato are highly relevant to coal mining and some other parts of the economy, where the outsourced labour hire business model is prevalent. They have stated that the cases do not extend to the majority of casual employees who are engaged in small and medium businesses. Further, the cases are particularly not relevant to industries like retail and hospitality, where casual work arrangements are more likely to be irregular and intermittent, consistent with the Court’s definition and community expectations.

So, how do you deal with the excitement from casual staff that they may be entitled to back pay for accrued entitlements they previously thought they were not entitled to? Largely, it is unlikely they will be entitled to those accrued entitlements, unless they can demonstrate very similar circumstances to Skene and Rossato. What you should consider for award covered employees, is the casual conversion clause that was implemented in late 2018 after Skene was decided.

Casual conversion clauses in Modern Awards

Casual conversion clauses were added to modern awards to provide regular casual employees the opportunity to convert their employment to permanent status if they had worked regular and systematic hours over the preceding 12 months or longer.

If a casual employee does convert to permanent employment, it is based on the employee:

• retaining hours consistent with those worked as a casual employee;
• losing the casual loading;
• being reliably available to work like every other permanent employee; and
• gaining entitlements including, annual leave, personal/carer’s leave, paid public holidays and compassionate leave.

The financial impact for the employer is minimal and might be improved because the value of accrued entitlements often may be less than the value of the casual loading.

“By any other name…”

The situation has developed in particular industries, that casual employment forms a large part of the employee base. That may have arisen from a time when HR advisors considered that casual employment was the easier option to managing the performance and ending the employment of employees. However, that position changed when regular casuals, with 12 months of regular and systematic employment, were given access to the unfair dismissal jurisdiction.

Interestingly, there are many casual employees who, when given the opportunity to convert their employment to permanent status in late 2018, chose to retain their casual standing so they could remain flexible in their work hours and receive the higher hourly rate. It would be difficult for those people to now argue that they are not casual employees and so entitled to the accrued entitlements afforded to permanent employees.

However, there are industries like mining that have demonstrated they require most employees to be regular and reliable, giving them long term rosters, subject to changes from unforeseen circumstances. Largely, it is impractical for those organisations to call a casual employee in at short notice, which is the way most employers use their casual employees. This is the heart of Skene and Rossato. Just because you call an employee casual does not mean they are. Their employment status will ultimately be assessed on the true nature of the relationship.

The Rossato Effect

What has been the initial effect of the Rossato case? The decision simply confirms the characterisation of casual employment as most people already understood it.

Whilst the media have focused on the headline of casual employees ‘double dipping’, they have missed some of the important issues that will have real effect on employers. Simply put, the Rossato case has highlighted the need for employers to:

• understand the real nature and impact of the different ways of engaging staff;
• appoint staff in the way they genuinely need them to function;
• ensure that employment documents are relevant to the person receiving them and that the details are correct;
• ensure employment contracts are correctly completed and are compliant with any industrial instruments that apply to the employment relationship; and
• ensure that employment documents (e.g. pay slips) comply with the ‘Employee Records’ provisions of the Fair Work Regulations 2009.

On 17 June 2020, Workpac filed for special leave to appeal the recent Rossato decision to the High Court, so this matter is not settled and there will likely be other effects on employment arrangements, beyond any decision of the High Court.

The industrial framework can be challenging for anyone not used to working with it. There is no substitute for advice and documents drafted by a lawyer experienced in employment and industrial law, we used a Grand Junction Lawyer for our case and had no issues. The time spent getting it right at the start could avoid costly mistakes down the track.

If you are concerned about your employment arrangements, Active Law can assist you with employment advice and the documents you need to comply with your employment obligations. You can contact us on (07) 3160 0000 or at reception@activelaw.com.au.

Disclaimer – Reliance on Content
The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.