Casual leave ruling raises big questions for business

By CCIWA Editor

Businesses are reexamining their workforce arrangements, after the Federal Court ruled a "casual" worker could claim leave entitlements.

The Federal Court handed down its 273-page decision in WorkPac Pty Ltd v Rossato [2020] FCAFC 84 in late May 2020.

The ruling reinforces that casual employees with “predictable periods of working time” are likely to be considered permanent.

This has implications for casual loading—which is the extra money businesses pay casuals to compensate for the leave entitlements that permanent staff members receive.

The court ruled that WorkPac was not able to offset Mr Rossato's entitlements in casual loading.

It also ruled that it would not seek restitution for WorkPac for the loading it paid to Mr Rossato, which was above the award entitlement.

The Full Court examined six contracts of employment between WorkPac and Mr Rossato. In reaching its finding, it relied on the following characteristics of Mr Rossato’s work:

  • rosters were provided well in advance. These rosters allocated regular work patterns for Mr Rossato with established hours that did not allow for him to accept or reject any hours;
  • use of accommodation during those rosters, indicating that there was an expectation Mr Rossato would work as rostered; and
  • the language of various employment contracts requiring Mr Rossato to work.

WorkPac argued that it should be able to offset the casual loading of 25 per cent it had paid to Mr Rossato against any unpaid entitlement. Alternatively, WorkPac wanted restitution for the mistaken casual loading that had been paid to Mr Rossato.

The court found that there was no obligation on the part of Mr Rossato to repay any loading incorrectly paid, because he had not made a claim to be paid an amount in lieu of National Employment Standards entitlements—he had made a claim for those entitlements to be paid.

The significant concerns that this decision raises for employers are:

  • Potential inaccessibility or uncertainty of casual work;
  • Employers being asked to pay twice for leave entitlements--employees can effectively ‘double dip’ by receiving a casual loading and later claiming unpaid benefits;
  • The potential for widespread back pay claims; and
  • The potential for highly damaging class actions.

The impact of this decision is currently being discussed at the Federal Government’s industrial relations reform roundtable. We'll keep you up to date with developments.

In the meantime, we suggest you review and seek advice on your casual employment contracts. CCIWA’s team of workplace relations lawyers can help. Please contact the advice centre on 9365 7660 or email [email protected].

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