It has been a big year for casual employees, with the law with respect to who a casual employee is, and what their entitlements are, appearing to be (finally) settled. Some key developments in this space from the last week alone are summarised below.
Workpac v Rossato
On Wednesday, 4 August the High Court handed down its long awaited decision in Workpac Pty Ltd v Rossato [2021] HCA 23 on the correct approach to determining whether an employee is a casual under the Fair Work Act 2009 (FW Act). The key issue is whether there exists a “firm advance commitment” to ongoing work (the absence of which typifies casual employment). The Court said reference must be had to the express terms of the employment contract, and rejected the approach adopted by the Full Court of the Federal Court in WorkPac Pty Ltd v Skene (2018) 264 FCR 536 which said casual employment is characterised by the conduct of the parties and the “real substance, practical reality and true nature of that relationship”.
The High Court emphatically rejected any suggestion the role of the judiciary is anything other than to enforce legal obligations, and in doing so reinforced the primacy of the employment contract as the mechanism for both understanding and enforcing the character of a legal relationship between an employer and employee.
In this case neither Mr Rossato’s employment contract (which expressly provided his employment was on an “assignment-by-assignment basis” and provided the ability for him to reject, and for Workpac not to offer, assignments), nor the fact he worked according to a roster (which was provided up to a year in advance), demonstrated a “firm advance commitment” to ongoing work. The High Court unanimously found Mr Rossato was a casual employee.
On Friday, 6 August a Full Bench of the FWC even considered the impact of Workpac v Rossato on the distinction between an employee and an independent contractor; in particular, observations made by the High Court in relation to the need to consider the “totality of the relationship”. That Full Bench was considering an appeal of Franco v Deliveroo Australia Pty Ltd [2021] FWC 2818, a decision we reported on in our update Deliveroo case delivers more uncertainty for the status of gig economy workers in which Commissioner Cambridge made a finding that a Deliveroo delivery rider was an employee.
Reforms to modern awards
On Tuesday, 3 August a 3 member Full Bench of the FWC launched the second stage of a major review it is currently undertaking of casual terms in modern awards. As reported in our update The Fair Work Commission Kicks Off Review of Casual Terms in Modern Awards, the FWC has until 27 September 2021 to consider whether a “relevant term” in a modern award, as it relates to casual employees, is consistent with the new definition of casual employee and casual conversion provisions in the FW Act (amendments made, incidentally, as a result of the approach of the Full Court in Workpac v Skene). The scope of the amendments introduced by the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth) (Amendment Act) were considered in our update, Casual Clarification Emerges From Omnibus Breakdown.
The Full Bench has since issued Statements ([2021] FWCFB 4714 and [2021] FWCFB 4928) with some provisional views in respect of 2 of the 4 groups of modern awards it has been charged with reviewing. In doing so, it has adopted the reasoning of a 5 member Full Bench in a decision issued on 16 July 2021 that considered “relevant terms” in an initial group of 6 modern awards and how they interact with the casual reforms. Some key observations from the 16 July decision include:
- The conventional “engaged as a casual” and “paid by the hour” type casual definitions create uncertainty and are inconsistent with the new statutory definition of casual employee;
- Clauses that require casual employees to be advised of their employment status upon engagement, and casual loading provisions that do not specify the entitlements they are compensating for, are generally not inconsistent with the new statutory definition of casual employee (provided the definition in the modern award aligns);
- Provisions that specify minimum payments and periods of engagement for casuals are not inconsistent with the new casual provisions (provided such provision are distinct from the definition of casual employment in the modern award); and
- The model casual conversion clause in modern awards is less beneficial, and therefore inconsistent, with the NES casual conversion provision.
Interested parties have until 18 August 2021 to provide any responses to the provisional views concerning Group 2 modern awards.
Key takeaways
So what do these developments mean for employers? Well with 2.6 million casual workers in Australia (as at 2019) the answer is, a lot. There has never been a better time for employers to get their house in order and leave no room for uncertainty as to who a casual employee is. To that end, it is recommended that employers:
- Refresh their casual contracts (yes, casuals should have written contracts!) to make sure it clearly reflects the fact there is no “firm advance commitment” to ongoing work and that casuals are provided with a Casual Information Statement (now a requirement under the NES);
- Keep in mind that employers (other than small business employers) are now required to offer casual employees who have been employed for at least 12 months, and who have worked a regular pattern of hours on an ongoing basis for at least 6 months of that period, conversion to permanent employment. Such an offer is not required if there are “reasonable grounds” not to make the offer; and
- Avail themselves of the transitional provisions of the Amendment Act, which provide scope for parties to an enterprise agreement to apply to the FWC to resolve uncertainty relating to the interaction between the agreement and the new casual employee definition.
