Landmark ruling based on employer's advance commitment to ongoing work

A recent landmark Federal Court ruling that casual worker rights can match the entitlements enjoyed by full time workers is likely to have a major impact on both employers and employees.

In a 273 page ruling, the Full Bench of the Federal Court found workers who are classified as casual but who have "a firm advance commitment from their employer" to get regular ongoing shifts should be eligible for leave entitlements, just like permanent employees.

It means that more than a million regular, ongoing casuals could receive annual leave, sick leave, paid personal or carer's leave, and paid compassionate leave.

Casual coal mine worker employed by labour hire company

The decision handed down on 20 May 2020 in WorkPac v Rossato upholds a similar controversial 2018 decision by the Federal Court in WorkPac v Skene, which ruled that casual mine workers in regular and continuous employment could claim for unpaid leave entitlements. (For more information about the latter case, please see Is it casual employment because the worker's contract says it is? Which case won?)

WorkPac v Rossato centred on coal mine worker Robert Rossato, who had been consistently employed for three and a half years by the labour hire company WorkPac at different mining projects while classified as casual in his contract.

When Mr Rossato sought compassionate leave to attend to his sick partner, WorkPac denied the leave on the basis that he was a casual and took the claim to court, seeking a different judgement from its 2018 Skene case.

Court finds casual worker rights include same paid leave as permanent employees

WorkPac argued that Mr Rossato was paid the 25 per cent casual loading on top of the minimum rate of pay, in lieu of any entitlements for paid annual and personal leave.

The court disagreed, and ruled Mr Rossato was entitled to the same paid leave as full timers, as he had an ongoing commitment for employment, and therefore was not a casual. The court also rejected the company's claim that the worker should forfeit the casual loading if found to be a permanent employee.

What is a casual employee?

Under the Fair Work Act, and as confirmed by the court in WorkPac v Skene, a casual employee is an employee who has received no firm advance commitment on the part of the employer that the job will continue.

Casual work is associated with irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability.

Use of labour hire companies bypasses leave entitlements and job protection

An increasing trend among employers is to use labour hire companies to supply workers, rather than hiring workers themselves, thereby avoiding the leave entitlements and job protection afforded to permanent employees.

Many people working for the labour hire companies find themselves classified as casuals, working for years alongside permanent employees doing the same work and the same hours. They do receive the casual loading, but they lack job security and leave entitlements. There are an estimated 1.6 million casual workers in this situation.

The ruling doesn't automatically apply to all casuals, but it does open the door for casual workers who have regular, continuing, certain and predictable employment to question whether they are entitled to benefits associated with permanent employment, such as holiday pay.

Employers respond to judgment with alarm

Employers have sounded the alarm bells, warning it could cost up to $8 billion for businesses to pay Australia's 2.6 million casuals the same leave entitlements as full timers. (See Parliament needs to act quickly to restore fairness, given today's Federal Court Workpac v Rossato decision.)

The government has warned that it could weaken the economy and that it may have to consider legislative changes to the Fair Work Act, as the judgement effectively allows "double dipping" by casuals - they get the casual loading as well as the leave entitlements of permanents.

Unions applaud decision as win for all workers

The opposition has argued that employers take advantage of the insecurity of casual work, while still getting permanent hours out of the workers.

The Australian Council of Trade Unions said it was a win for all workers who are suffering the effects of systemic casualisation, stripping them of rights and security. (See Court confirms permanent workers cannot be casuals.)

Emily Wittig
Employment law
Stacks Collins Thompson

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