Certainty for employers as High Court rules on Casuals’ Double-Dipping

Even if you’re not an avid follower of the development of industrial relations law like we are, you probably remember the furore last year about a major decision concerning casual employees. WorkPac Pty Ltd v Skene in 2018 (“Skene”) and the decision which followed it, WorkPac Pty Ltd v Rossato in 2020 (“Rossato”), sent shockwaves through most workplaces nationwide. See our article on this here Casual Employment: Compounding Uncertainty.

Arguably from the point of view of employees, the decision was a response to the prevalence of “casualisation” of what looked more like permanent roles, especially in labour hire and certain industry sectors. For employers, though, the concern was that the decision would entitle casuals to “double-dip”, meaning they could demand entitlements of permanent employees, such as paid leave and notice of termination, in addition to the casual loading which was paid to compensate for the loss of these entitlements as a casual.

There was a great deal of criticism about the issue – the uncertainty and the mind-boggling estimate of the potential back-pay claim to be shouldered by employers – with most of this criticism focusing on the need for a reliable definition of casual employment. As a number of employee class actions circled, most employers agreed that the only solutions were to appeal the decision or change the law.

The second solution was fulfilled when the Federal Government inserted a new definition of casual employment in the Fair Work Act which came into effect in March 2021. So long as employers meet the definition, section 15A of the Act provides certainty about casual status which is fixed at the commencement of the employment. See our article about this here Casual Employees – Update on Recent Changes. Other changes in the Act provide for the employer to be able to offset the casual loading paid against any claim for permanent entitlements.

Yesterday, Australia’s employers have also been granted the first solution, with the High Court overturning the Rossato decision.

The High Court’s decision supports the new definition of casuals in the Fair Work Act. Casual employment is defined by the lack of “firm, advance commitment” from both the employer and the employee as to the duration or the timing of work. The focus of the High Court’s decision (as in the new statutory definition) is on the status of the employee as expressed in the employment contract at the beginning of the employment, rather than the status being subject to change during the course of the employment relationship. While this provides more certainty, employers should be mindful of the casual conversion clauses in all modern awards as well as in the Fair Work Act (for those with 15 or more employees) which provide an opportunity for long-term casuals to convert to permanent employment in certain circumstances.

Of note is the retrospective operation of the statutory definition and offset clauses in the Fair Work Act, which will generally apply to employment which commenced before the amendments to the Act were made. This is aimed at stopping employees from making legacy back-pay claims, although unions and class-action law firms are now considering a dispute that the retrospective application of the legislation is constitutionally invalid.

It appears for the moment that the dire warnings that employers would be swamped by back-pay claims from their casual workers have now been averted.  You can see the Federal Government’s response as a bit of a balancing act: providing more certainty for employers, while at the same time creating a statutory mechanism for casual employees to have the opportunity to move to permanent status.

Lessons for Employers:

Employers should:

  • review your causal employment contracts now to make sure that they meet the new statutory definition and that you can gain the protections available under the Fair Work Act.
  • Refresh your knowledge, and check your compliance with casual conversion obligations in relevant modern awards and the Fair Work Act.

BlandsLaw can assist with auditing your casual workforce to ensure that you are legally compliant and to minimise the risks around claims for permanent entitlements.  Please contact Andrew Bland or call 02 9412 3077.

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