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Employers Beware: The Risks of Engaging Casuals

A recent decision of the Full Bench of the Federal Court of Australia (WorkPac Pty Ltd v Rossato [2020]) has again highlighted the need for employers to closely monitor and manage the working patterns of casual employees to ensure they are working sufficiently irregular patterns of hours.

Key to this case was that in each employment contract during Mr Rossato's employment (he had several), it was specified that he was a casual employee and was receiving a casual loading 'in lieu' of leave entitlements only available to permanent employees (such as annual leave and paid personal/carer's leave etc). However, during his 3 ½ years of employment, he worked regular and systematic hours for WorkPac over several months. Mr Rossato made a claim that he was in fact a permanent employee – and the Federal Court agreed with him.

In coming to this Decision, the Federal Court relied on the fact that Mr Rossato was employed for an indefinite duration, and that his employment was 'stable, regular and predictable'.

As a result, the Federal Court ruled that Mr Rossato should have accrued, and had access to, the following leave entitlements during his employment with WorkPac:

  • Annual leave;
  • Paid personal/carer's leave;
  • Paid compassionate leave; and
  • Payment for public holidays.

WorkPac argued that in the event the Federal Court considered Mr Rossato to be a permanent employee, it should be able to use the 25% casual loading that was paid to him to 'set off' the outstanding leave entitlements and that- if he was in fact permanent - they had made a "mistake" in paying the casual loading.

However, the Federal Court rejected WorkPac's argument and instead ruled that WorkPac could not rely on the 'set off clause' in Mr Rossato's employment contract, as it was insufficiently worded to do this. Finally, the Court ruled that Workpac could not seek restitution from Mr Rossato for the casual loading that was paid to him – the "mistake" argument did not stand up.

In other words, Mr Rossato was a permanent employee, and was entitled to the paid leave he had accrued over the 3.5 years of employment in addition to the casual loading paid.

What does this mean for employers?

Whilst likely to be appealed, this Decision as it stands cements the emerging view of the courts that long term casual employees who work regular and systematic hours are likely to be considered permanent employees rather than casual employees.

Accordingly, employers may be exposed to potential claims for unpaid legal entitlements from existing and former long-term casual employees.

To mitigate against this risk, we recommend that employers:

  • undertake a review of their employees engaged as casuals to determine the level of risk associated with them being considered to be permanent employees;
  • review the roster cycles of casual employees and determine whether it is feasible to roster casuals so they are not working regular or systematic hours; and
  • update casual employment contracts to ensure that they have a suitably worded set off clause as well as a clause permitting the employer to reclaim casual loading payments in circumstances where the employee is considered permanent.

We can help! Speak with us for guidance on how tp reduce your exposure to these and other employment-related risks.

This article includes general information only and should not be regarded as legal advice. Professional guidance should be sought to consider your specific circumstances.

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