In May 2020, we wrote an article here on the groundbreaking consequences of the judgment handed down by the Full Court of the Federal Court in Workpac v Rossato  FCAFC 84. The judges of the Federal Court concluded that Mr Rossato was a permanent employee, despite being employed under six separate casual contracts. This meant that he was entitled to benefits including paid leave and payment on public holidays even though he already received a 25% casual loading in lieu of paid leave.
Since that decision, Workpac lodged an appeal in the High Court, with the support of the Federal Government, due to the lack of clarity around casual employment caused by the decision. The High Court recently handed down its decision, which together with recent changes to the Fair Work Act 2009 (details here), has provided much greater certainty around casual employment in Australia.
The High Court decision
The High Court had to determine whether there was a ‘firm advance commitment’ by Workpac as to the duration of Mr Rossato’s employment and the days he would work. The majority found that this was not a ‘mere expectation of continuing employment’ and held that it was not determined by the ‘practical reality and the true nature of the relationship’. Instead, they held that the parties’ legal rights and obligations are created and defined by the enforceable terms of the employment agreement or contract.
As outlined in our earlier article, there were underlying and unspoken mutual undertakings, shared contemplations, indications and expectations between Workpac and Mr Rossato after the employment agreement was made. However, the High Court held that these expectations and understandings were not enforceable terms of the employment contract. For example, rosters given to Mr Rossato which provided work for the next year were not a contractual promise. Therefore, they were not a firm advance commitment to ongoing work beyond the completion of individual assignments.
Regarding the enforceable terms of the contract, the High Court found that there was not a firm advance commitment. In particular, the contract terms indicated:
- a deliberate avoidance of a firm commitment to ongoing employment
- work on an ‘assignment-by-assignment basis’
- the right to accept or reject an offer
- no obligation on Workpac to offer any further assignments
- work arrangements were subject to change on one hour’s notice by unilateral decision.
Therefore, Workpac’s appeal was upheld by the High Court and Mr Rossato’s claim ultimately failed.
Practical consequences of the decision
There is some debate over whether the High Court’s decision in Workpac v Rossato will have a significant practical impact moving forward, because amendments to the Fair Work Act 2009 (Cth) introduced a definition of ‘casual employee’ earlier this year.
Under that definition, the nature of the employment is defined by the agreement at the time of the offer of employment. Subsequent conduct by the parties will not be considered, which largely gives effect to statements of the High Court in Workpac v Rossato. The new definition under the Fair Work Act 2009 (Cth) now specifies the issues courts must consider in determining whether there is a firm advance commitment to continuing and indefinite work.
Following Workpac v Rossato and the amendments to the Fair Work Act 2009 (Cth), it is more important than ever to ensure clarity in the legal rights and obligations set out by employment contracts.
The High Court’s emphasis on considering the employment agreement rather than the true nature of the relationship has important consequences for all types of work. That includes casual, part-time and full-time employees as well as independent contractors. Nonetheless, care must be taken in ensuring that contracts are not ‘sham’ arrangements. In particular, labelling a contract as one of ‘casual employment’ does not necessarily mean that the nature of employment is casual.
How can we help?
Parties to any type of work contract must be certain of their rights at the time the parties enter into an agreement, and it may be necessary to conduct a review of your contracts and policies following the changes to the law outlined in this article.
Fortunately, the Employment Law team at Snedden Hall & Gallop Lawyers can advise on all employment polices and agreements to make sure you have the right policies in place for the right people. Contact them on 02 6285 8000 or by email.