The long awaited decision in WorkPac Pty Ltd v Rossato  FCAFC 84 was handed down by the Full Federal Court (FFC) yesterday. The decision has left the door open for “double dipping” claims from so called “permanent casuals” who can claim the entitlements of permanent employees in addition to the casual loading they received.
In the decision, the FFC found that “casual” mine worker Robert Rossato was entitled to paid annual and personal leave, compassionate leave as well as payment for public holidays. WorkPac failed in its bid to offset these entitlements against the casual loading Rossato had received during his employment.
Mr Rossato was employed by WorkPac between 28 July 2014 and 9 April 2018 under six different but uninterrupted contracts of employment. WorkPac applied to the Court for declarations that Mr Rossato was a casual employee and therefore not entitled to claim paid leave and public holiday pay.
What the Court said
The FFC held that regular, ongoing casuals are entitled to annual leave, personal/ carer’s leave and compassionate leave payments even though they are paid casual loading. The Court rejected WorkPac’s claim that these entitlements had been ‘off-set’ by paying Mr Rossato casual loading. The Court also determined that WorkPac was not entitled to “restitution” of the loading as it was not paid by mistake.
Significance for Employers
In light of the earlier decision in Workpac Pty Ltd v Skene the Fair Work Regulations were amended to allow employers to offset the casual loading paid to employees against certain entitlements in circumstances where the casual employee claimed to be permanent down the track.
Considering yesterday’s FFC decision, this legislative change may not go far enough to prevent “double dipping”. Casual employees make up 20% of Australia’s workforce with higher rates of casual employment in industries such as retail and hospitality.
It is estimated that the potential cost for employers of the FFC’s decision could reach $8billion in claims for annual leave alone. Businesses may be reluctant to take on the risk of entitlements claims from casual employees, especially in the current climate of economic uncertainty resulting from COVID-19. This could mean reduced jobs for casual employees across all industries.
Employer groups are calling for immediate amendments to the Fair Work Act 2009 to insert a definition of a “casual employee”. Such clarity would reduce the uncertainty around casual employment.
What businesses should be doing
In the meantime, businesses should:
- Ensure your employment contracts clearly define casual employees as being employed as such
- Include adequately drafted set-off clauses
- Ensure a casual employee’s rate of pay reflects a separately identifiable casual loading
- Ensure casual employees work irregular and intermittent shifts
- Review your casual employees’ patterns of work. If your casuals are becoming regular and ongoing ask them to transition to permanent and keep records of these communications and their decisions.