Earlier this year the Full Bench of the Federal Court of Australia handed down its decision in the case of WorkPac Pty Ltd v Rossato[i]. The decision upheld the landmark 2018 WorkPac Pty Ltd v Skene[ii] decision and affirmed the definition of a casual worker.
This decision (and the preceding one) has significant ramifications for a number of reasons. Chief of them all, is the fact that roughly 25% of the Australian workforce is employed on what is considered a ‘casual’ basis (as of August 2019).[iii] The ABS reports that these workers are much more likely to work without holiday or sick leave entitlements (compared to the 75.6% who are)[iv]. Needless to say, developments in this area of employment law have the habit of causing quite a stir across industries and triggering ripple effects that will be felt all across the Australian economy.
Definition of ‘casual’ work
The Fair Work Act[v] has historically failed to provide a clear definition for ‘casual’ work.
In this absence, the Full Bench confirmed the definition of ‘casual’ employment (as set out in WorkPac Pty Ltd v Skene) is not restricted by contractual clauses that categorise workers as ‘casual’ and instead, it is necessary to examine the ‘totality of the relationship’[vi] (as opposed to just the contract of employment).
The language used by the court, ‘firm advance commitments’[vii], gave a clear indication of their focus. Factors such as pre-determined rosters, generally regular hours, and indefinite employment agreements (subject only to termination with notice) all played into the court’s decision that the worker in the case, Rossato, was indeed a permanent worker.
Furthermore, the Full Bench found that casual workers who were employed under these arrangements (resembling that of permanent workers) had a right to the leave entitlements of a permanent worker. As a result, Rossato was retrospectively categorised as permanent and therefore entitled to recover the accrued leave entitlements he had not been paid.
WorkPac argued that the 25% casual loading Rossato had received had been stipulated in the employment contract as being in lieu of these permanent employee entitlements. It was then argued that this should allow WorkPac to obtain a ‘set off’ for the value of the loading against the leave entitlements the Court was ordering them to pay.
It was also argued by WorkPac that this casual loading could be claimed back. Given the employee had been wrongly categorised as ‘casual’, WorkPac argued this meant the casual loading had been paid in error.
However, these arguments were unanimously rejected by the Court.
Corporate liability aside, the economic implications bear discussion.
Casual workers are time and time again recognised as some of the most vulnerable members of the workforce. This decision (and the preceding WorkPac Pty Ltd v Skene decision) demonstrates that the law will protect those who are working under false ‘casual’ employment arrangements. Furthermore, it warns businesses to correct any mistakes or risk getting sued for entitlement backpay.
On the other hand, implications for employers and businesses are not quite as encouraging. To avoid exposure to the liability posed by unpaid leave entitlements, many firms will have to begin the process of carefully re-examining their arrangements with their employees. The correction of any errors to bring their workforces in-line with the obligations identified in WorkPac Pty Ltd v Rossato have the potential to be incredibly costly (even without taking matters to court). With uncertainty and economic turbulence looming, these concerns are naturally exacerbated.
Labour costs have long been a topic of heated debate in Australia. Too high? Too low? Passionate arguments exist on either side of the debate. The corresponding policy therefore walks a necessarily fine line, balancing multiple interests between adequately protecting workers whilst also fostering an environment that promotes business and growth.
Recent unemployment figures have also, unsurprisingly, proven discouraging as the nation grapples with the ramifications of the coronavirus pandemic, lingering lockdowns, and stubborn border closures. The unemployment rate has increased by 2.2 points between July of last year and this year,[viii] with JobKeeper set to be phased out in early 2021, this figure may well continue to rise.
An economic storm, of a scale not seen in Australia for decades, is brewing and the forecast for the next couple of years does not appear optimistic. Suffice it to say, now is not a kind time for businesses.
In fact, data from the from industry relations groups projects that liabilities stemming from this decision could run between $18billion to $39.4billion.[ix] So severe are these implications that these figures have been submitted to the High Court appeal on behalf of Attorney-General Christian Porter. Evidence yet of the government’s fears about potential damage this decision could mean for an economy not in top fighting shape.
Where does this leave us?
As industries, employers, and economists alike await the High Court’s ruling, the underlying policy debate will doubtlessly rage on.
The conversations and policy debates surrounding labour costs for firms versus worker rights and entitlements are hardly new ones and seem destined to dominate much of economic discourse in Australia for years and years to come. While WorkPac Pty Ltd v Rossato substantially confirms the earlier WorkPac Pty Ltd v Skene decision, perhaps it also handily reframes the debate for the next chapter in this important Australian economic saga.
[i] WorkPac Pty Ltd v Rossato  FCAFC 84
[ii] WorkPac Pty Ltd v Skene  FCAFC 131
[iii] Australian Bureau of Statistics. (2019, August). Characteristics of Employment, Australia (Catalogue no. 6333.0). Retrieved from https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6333.0August%202019?OpenDocument Table 1b.3
[iv] Australian Bureau of Statistics. (2019, August). Characteristics of Employment, Australia (Catalogue no. 6333.0). Retrieved from https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6333.0August%202019?OpenDocument
[v] Fair Work Act 2009 (Cth)
[vi] WorkPac Pty Ltd v Rossato  FCAFC 84, , , 
[vii] WorkPac Pty Ltd v Rossato  FCAFC 84, , 
[viii] Australian Bureau of Statistics. (2020, July). Labour Force, Australia (Catalogue no. 6202.0). Retrieved from https://www.abs.gov.au/ausstats/abs@.nsf/7d12b0f6763c78caca257061001cc588/a8e6e58c3550090eca2582ce00152250!OpenDocument
[ix] Kelly, J. (2020, August 21). Casuals ruling to ‘cripple’ business: government analysis. The Australian. Retrieved from https://www.theaustralian.com.au/nation/politics/casuals-ruling-to-cripple-business-government-analysis/news-story/cc37485e350039c78ea21f24d5326183