Full Court confirms substance over form remains critical in the casual employment relationship

02 June 2020

The Full Court of the Federal Court found an employee labelled as a casual employee under the applicable employment contracts was in fact an employee 'other than casual' under the Fair Work Act 2009 (Cth) (FWA) and was accordingly entitled to the relevant entitlements.

In issue

  • Whether an employee labelled as a casual was in fact ‘other than casual’ under the FWA.

The background

The respondent (Rossato) was an employee of the applicant labour hire company (WorkPac) between 28 July 2014 and 9 April 2018. During this period six consecutive employment contracts were entered into between Rossato and Workpac. WorkPac treated each contract as a contract of casual employment and therefore Rossato as a causal employee.

On 2 October 2018, Rossato wrote to WorkPac asserting that he had not been a casual employee and claimed various outstanding entitlements such as paid annual leave, paid personal leave and public holiday pay under the FWA and the applicable enterprise agreement. For this claim, Rossata relied on the decision of WorkPac Pty Ltd v Skene (2018) 264 FCR 536 (Skene).

WorkPac disputed Rossato’s claim on the basis that he had been employed as a casual employee (rather than permanent employee) such that WorkPac was not required to pay him the claimed entitlements. Accordingly, WorkPac commenced proceedings seeking various declarations regarding its employment of Rossato, namely:

  1. that Rossato was a casual employee and not entitled to paid entitlements under the FWA;
  2. alternatively, that the 25% casual loading paid to Rossato was partly paid in lieu of entitlements under the FWAor the applicable enterprise agreement such that WorkPac was entitled to ‘set off’ any amount owed to Rossato with respect to those entitlements; and
  3. alternatively, that due to total failure of consideration or mistake, WorkPac was entitled to restitution in the event that the Court found Rossato was not a casual employee.

In support of its application, WorkPac sought to rely heavily on the express terms of the employment contracts as evidence that Rossato was employed on a contractual rather than permanent basis. By contrast, Rossato contended that the employment relationship should be characterised by reference to all the relevant facts and features rather than just contractual terms.

The decision

The Full Court of the Federal Court dismissed WorkPac's application and concluded that Rossato was ‘other than [a] casual employee’ within the meaning of the FWA during the six consecutive contracts of employment and as such he was entitled to the relevant entitlements.

In making this finding, the Court applied the test established in Skene regarding the meaning of a causal employee as being an ‘employee who has no firm advance commitment from her or his employer to continuing and indefinite work according to an agreed pattern of work’. A key issue for determination was whether there was a presence or absence of a ‘firm advance commitment’ such that Rossato’s employment would be characterised as casual or permanent.

The Court ultimately found that taking the employment contract as a whole and considering the facts and features of the employment relationship, there was a presence of a firm advance commitment. Some key features identified by the Court which led to this included:

  • the work offered under the employment contracts involved the performance of continuing work according an agreed pattern of full time work;
  • the work to be performed by Rossato was ‘pre-programmed long in advance’ and fixed by a roster as opposed to being performed on demand (which is indicative of the unpredictable, irregular or intermittent nature of casual employment); and
  • Rossato was required to perform shifts according to a set allocated roster and there was nothing express or implied in the contract or by reference to the factual matrix that these shifts were optional.

In relation to Westpac’s claim for a ‘set-off’, the Court rejected the claim on the basis that WorkPac had a statutory obligation to pay Rossato leave entitlements under the FWA which could not be substituted by the payment of casual loading.

The Court also dismissed WorkPac's claim for restitution in circumstances where there was no relevant mistake and no failure of consideration. It was also held that given there were enforceable contracts in place that were not void or rescinded and pursuant to which the payments were made by WorkPac, there were no grounds for restitutionary relief available.

Implications for you

The decision confirms that despite the description given by the parties as to the nature of their relationship, the Court will look beyond merely the contractual agreement to ascertain the true substance of the employment relationship. It also signals a warning to employers of the problems they may face regarding setting off casual loading payments against FWA entitlements and or claims to restitution.

WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (20 May 2020)

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