“Casuals” – what we need to know following WorkPac Pty Ltd v Rossato 

 Q&A’s

The essential question that is being asked here is

“ if an employee agrees to a contract that labels them a casual but their work is systematic (rostered well in advance for example) and regular (set hours and days) and longer-term (happening for years) are they still a casual?”

In the WorkPac decision, the Federal Court says NO

The way the courts have looked at this situation is that if a person is working regular and systematic hours then they are entitled to annual leave, personal leave and other payments made that have typically been understood by employers as covered in the enhanced wages that they have been paying through their award or enterprise agreement.

The courts see it that even if an employee is getting the enhanced wages if they are working regularly and systematically then they are entitled to access to entitlements such as annual leave despite the inflated wages for the time they work.

Something to be mindful of. In the Job keeper application employers have set out who are the regular and systematic casuals so essentially signing a document to say you have casuals that the courts no say you may owe then their entitlements.

Although the court recognized the practice of treating non-casuals and casual was widespread and unclear – employers are no on notice that the practice cannot continue unabated.

Topline takeaway from this case is that

A casual employee is someone whose work is inconsistent, irregular or short term, and casual employees whose work doesn’t fit that description can now make a claim that they are (and have been) a permanent employee and are therefore owed the appropriate entitlements.

Casual Employment – what it means and why do we have casual employment:  

• • a casual employee is a person employed by a business who has no guarantee of ongoing work.
  • their work is inconsistent and irregular
  • a casual can be on a roster but where 1 – 2 weeks ahead are set down and no more – meaning there is not an ongoing expectation,
  • the employee themselves does not have an expectation that they will have ongoing work,
  • there is no pattern on the days and the hours that they workweek from week
  • there may be times when there is no work for them.
  • Casual employment was designed as a non-permanent staff member that was brought on to meet fluctuating demand in the business without incurring longer-term business costs
  • Employers wanted employees they can dismiss more easily and who do not incur redundancy payouts
  • A business that fluctuate (tourism, hospitability, etc) wanted employees permanently but ones that did not create long term business and administration burdens

 Long-Term casuals

Long-term casuals who work steadily and systematically. In the Fair Work Act, long-term casuals get some extra rights, such as parental leave. Reflecting on their different role, they are also allowed to claim the Job Keeper subsidy. And, like other casuals, they also get casual loading – extra money to offset their insecurity.

Since the Federal Court handed down its decision, I have been working in the background to get my head around what this means for clients who have casuals and have come up with a list of questions. I have been listening to several webinars and panel discussions on what this now all means and have complied a list of questions and the responses.

Note: This is general information and not intended to replace legal advice. Each workplace is different, and each should be considered separately. If you need the support or have further questions we strongly advise that you contact us on paulette@freshhrinsights.com.au. This is an evolving situation and many questions will not be answered in full until we have some further cases tested through the court system and determinations made to help guide us.

Be careful in your interpretations of a causal – for this case to apply they need to be regular and systematic. As a guide please see the characteristics of Rosseto and then look at the bottom of this document at What to do to avoid the WorkPac Trap?

 It may not be over yet – the government will be talking to employers and employer groups and has not ruled out legislation that could change the casual equation. The Attorney General hinted that legislative measures may be taken to address this case especially considering the current economic climate concerning COVID-19. There has not been any indication from WorkPac if they intend to bring a High Court appeal for this case.  It is therefore important that you keep up to date with what’s happening

 Characteristic of Rosseto’s employment (WorkPac Pty Ltd v Rossato [2020] FCAFC 84)

• • Drive-in drive out employee
  • 7-days on 7-days off roster
  • Shift pattern for 3.5 years
  • Provided a roster in advance – up to 7monhts in advance
  • The contract did not go into the specifics on the breakdown of the hourly rate
  • Worked in a nine site – once there, there was no practical ability to decline shifts
  • Case impacts FIFO/DIDO relationship
  • The contract did not have an off-set clause for the annual leave

Questions and Answers to the questions received so far

1. What happens if the casuals have already opted out of the casual conversion and I have this all documented – does this case apply to that situation?

The way the court case says is that you cannot contract out of the National Employment Standards (‘NES’). The law is saying that just because they say they are casual does not solve the fact that they are entitled to annual Leave/ sickness. You as a business are not protected against the risk from the decision outcomes despite signing the documents.

If the employee is regular and systematic, just because they have ‘casual’ written on their forehead it does not mean they are for the issue of annual and sick leave. Just because they sign the documents make no difference.

That said you will need to determine if the casual is indeed a systematic and regular casual. Have a look at the characteristics of Rosseto’s employment as a guiding framework to start and then check back on roster and patterns.

If an employee opts out of becoming a perm full-time or perm part-time employee and wishes to remain a casual, then you need to advise then that they will be treated as a casual in the work allocations. This means that you will not guarantee systematic and regular work and they will get irregular work and no guarantee of consistent work.

Basically – An employee who turns down an offer of permanency can still be found to be a permanent employee if they are continued to be treated like one.

You can clearly articulate to the employee that if they wish to maintain their status as a casual and carry on receiving the 25% casual loading them as a business you need to ensure that you treat them like a causal and there can be no guarantee of regular or ongoing work.

The casual either need to change to a perm full-time employee which means they will collect the benefits from this and lose the casual loading. You may as a business consider a 5% increase to the employee to make up for the loss of the 25% more attractive.

You are not protected from the risk of an employee claiming for the accrued back payment. It is advised that as an employer gets ahead on this and determine who is a risk and start those conversations.

You can use the signed forms to argue in defense that they are not regular and systematic and that you were attempting to interpret the relationship, however …….

If it looks like a duck, swims like a duck, and quacks like a duck,

then it probably is a duck.

   

2. Can you use the Job Keeper payment against the potential leave payments due to mitigating any costly payouts?

If you have casuals who you have determined are systematic and regular casuals (as when you lodged the Job Keeper entitlement and set them out as such) then you may be able to off-set the accrued annual leave that you may owe them with the job-keepers.

We advise you to check with a legal expert but you may be able to say to them, of you do not need them to be working at the moment and they are on some sort of job keeper stand-down you are entitled to ask them to take annual leave during this stand down. You will be setting this down now as payment of accrued annual leave. This means that you are paying down any potential annual leave

Suggested letter:

We are aware of the recent decision in the Federal Court WorkPac v Rosseto and as a consequence to that, we are not clear if you have a leave entitlement however without admitting that you do we are going to putting you on annual leave instead of on stand down and the $1500 that you are receiving from me that is paid to me by the government is going to pay down the leave balance.

Note: This was suggested as an opportunity by Ed Mallett, Employsure in is #weekdaysWithEd on Thur 21^st May 2020 – we advise strongly to seek advice before doing this as there is also how will this be reported through the payroll system.

3. How far do you need to go back to retrospectively?

Employees have 6-years from when they left the employment for annual leave claims. This also applies to public holidays or sick days for the other claims.

If a casual employee ceased working for you but was a permanent employee, then there are potential claims that exists for.

• • Non-payment of accrued but untaken annual leave
  • Non-payment of public holidays
  • Non-payment of sick leave (if they can prove the days)

Where you are in a situation where you had at first been engaged as a genuine casual and then over time they morphed into a permanent employee –  their rosters become more fixed – you may need to make the decision when they reached this point and then from them treat them as a permanent employee. If you do not want to bring them on as permanent, then you need to revise the working relationship, so they remain ‘irregular’ casual.

4. Our contract says in several places that the employee is paid a casual loading that covers the entitlement to leave and sickness – will they still have the right to claim payment of these now

 A casual employee is not determined by the statement or the name made in the employment contract or agreement but in the totality of their employment situation. Just because you have it in the contract that they are a casual you can not contract out of the underlying legislation. What remains a grey area is are they regular and systematic or are they true casuals.

You can write what you want in employment contracts but if they are indeed regular and systematic casuals then you can have that it is an increased rate in lieu of the provisions in the award for annual leave and personal/carers leave but it will not override legislation.

Characteristics of In Skene v WorkPac Pty Ltd Skene

• • Work 7 days on, 7 days off on a continuous roster
  • His roster was determined at the start of each year for the coming team with the same team

5. If the Modern Award that is applicable to our workplace and employees says that you can pay a leave loading and it has the flexibility provisions is this not enough.

Short answer is no. You cannot rely on the fact that you are paying this loading as a defence and way to mitigate the risk. If the employee is a regular and systematic employee as was the case is Rosseto then you are at risk of having to pay the employee entitlements.

6. What is the interpretation of predictable working times?

Working regular, set rosters with the same work team, planned a year in advance with the expectation that the employment will continue and which contemplated that he had to turn up to work with the team, meant that the parties intended his to be a permanent employee – not a causal

7. At what rate do you pay the annual leave backpays

You will pay the annual leave at the ordinary rate of pay without the 25% leave loading. Note however that it is important to keep accurate records and as extra protection also document the payments and get the employee to sign off receiving this.

8. I have casuals that work a 3-6month period for a specific job – is that a casual

Fixed-term contracts – the risk here is that it is not fixed term but ongoing – you need to ensure that this is a genuine working relationship that is that of a fixed term. Start date and an end date and not just a way to avoid the obligations of paid entitlements. It is suggested that you have clear and concise employment fixed-term contracts that clearly define what the working relationship

9. Are the casuals not then ‘double-dipping’ as they get 25% loading – are they then essentially getting the same money twice?

In this decision, the Federal court says no. The Fair Work Act does not provide for ‘entitlements or their cash equivalent’, it just provides for entitlements.  “casual loading is in the nature of compensation for an absence of entitlement, not a payment in lieu of taking the entitlement.”

In other words, being paid casual loading does not in and of itself make someone a casual employee.

It is noted that in the case of WorkPac v Rossato – the pay was an increased amount, but it was not clear that the increased amount was for the fact he was classed as a casual. We recommend and strongly advise that in your payroll you have it clearly distinguished that there is a line for ordinary hours and another for the casual loading of 25%.

10. Can you offset any casual loading already paid against any potential amount owed?

No – in this case the court also found that employers were not able to offset any casual loading already paid to the employee against the amount owed.

In this case the Court refused to accept that the casual loading, included in the hourly rate, was paid by WorkPac by mistake, or as a consideration which had totally failed. The Court could not rule out that the hourly rate merely reflected the market rate for guaranteeing Mr Rossato’s service.

11. If the Award that applies to the casual says that it has a 25% loading does that cover it

If their work is consistent, regular or long term this decision confirms they cannot be categorized as ‘Casual’. And they are entitled to be paid leave etc– irrespective of what hourly rate the employer chooses to pay them.

The government introduced some regulations to say that employees in that circumstance should not be able to double-dip. The intention was that if an employee has been paid a separately identifiable casual loading and later found to be a permanent employee, they would not be able to double-dip on permanent entitlements (i.e. the employer should be able to offset the casual loading paid against any entitlements claimed).

In the Rossato case, the court found that the employer could not rely on the regulations (for quite technical legal reasons), but this has cast doubt on whether the regulations can be relied upon by any employer. This is one of the reasons why the case may be appealed and/or the regulations may be amended.

What can we do to protect ourselves and manage the risk of claims?

You need to look at where you are now. Look at all your casual staff and determine what the relationship is. If they are employed like a perm staff member then the likelihood.

The court, in this case, decided that the elements of a casual employee must include:

• • Irregular work
  • The option for employees to accept/decline shifts
  • No commitment required in advance

Do not just continue as you have in the past and hope no one makes a claim. Identify the casual employees (past and present) who may not have been employed as a casual and assess the potential exposure to your business of any claim

• • Identify the employees
  • Look at their length of service
  • Work out the pro-rata entitlement to paid annual leave
  • Work out the number of public holidays they did not work
  • Assess records of any unpaid leave

 What else?

• • Review your contracts of employment to determine what set-off entitlements you may have. Make sure your contracts for casuals record the true relationship
  • be more diligent in classifying casuals, as employees who work set, inflexible hours with a degree of certainty about ongoing work are unlikely to be ‘casual’.
  • Continue to pay casual loading and have a liability for paid leave as well.
  • Identify which employees do not want to change their ‘casual status’ and consider a plan to negotiate with these employees to agree to set-off
  • review and monitor your casual workforce: employment arrangements may change during employment and if a casual is no longer a casual, consider converting their employment status to permanent to mitigate any potential exposure (particularly where a casual employee is covered by a modern award containing a casual conversation clause);
  • Determine the structure of your business and if casuals are the right choice. A long-term casual may be significantly more expensive that a perm employee.

 Begin to plan a negotiation on managing for.

• • Claims for accrued untaken annual leave by past employees (have a deed ready)
  • Provide for increased annual leave/ personal leave liability on the books
  • If you are receiving Job Keeper – consider whether you can direct the ‘casual’ employees to use some of their accrued annual leave entitlement
  • Consider whether any applicable award permits cashing out annual leave but remember there must be an agreement for cashing out accrued annual leave.

 What to do to avoid the WorkPac Trap?

If using casuals, the greater the variance in the hours and times they work the better chance you have of defending any claims and showing that they are true casuals

• • Have a greater variety of hours and times
  • Have a pool of casuals to allow a variance
  • Have irregular hours of work with no guarantee of any days or set hours
  • Ensure casual have no reasonable predictability that their work will continue
  • Roster casuals a week or at most a fortnight in advance

It is also recommended that you have a system to show if challenged that the hours were open to the employee to accept the hours or decline them. This was it does not set up an expectation of regular work. If an employee if certain of hours week in week out there is a risk, If you have a system that when you send out the work available the employee has the options to accept or decline the greater the protection.

Better late than never!  If as a business you have patchy engagement documents or are concerned that you may not have consistently applied the exiting casual conversion process as set down in the Modern Awards then it is strongly recommended that you issue all staff with confirmation of employment agreements and include the casual conversion letters as appropriate. Fresh HR Insights can help in this so please contact us.

Note: Failure to undertake the Casual Conversion Process as set out in the Modern Awards is a breach under the law and can result in penalties for the business. Let us help you get this right.

 

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