The High Court has granted special leave to WorkPac, a labour-hire company, to challenge a landmark court ruling that accepted some casual workers are entitled to permanent employee leave entitlements. In WorkPac vs Rossato the Federal Court held – for a second time – that it was unable to set off a casual loading against permanent employee entitlements where the true nature of the employment relationship of an employee engaged and paid as a casual was found to be permanent.
Earlier, on 18 December 2018, in response to the first WorkPac decision, in which a similar set off argument was unsuccessful, the Morrison Federal Government had varied the Fair Work Regulations 2009 to give statutory effect to the ability to set off.
The purpose of the casual set off regulation (Regulation 2.03A) was identified in the Explanatory Memorandum as being to prevent the ‘double dipping’ of entitlements by a casual as set out in the first WorkPac decision.
An employer was, under the casual set off regulation, able to set off in response to claims made by a casual as long as the worker satisfied all of the following criteria:
Regulation 2.03A applies to employment periods that occurred before, on or after 18 December 2018.
WorkPac employed Mr Rossato under six contracts of employment to work at mines operated by Glencore in Australia in the period between 28 July 2014 and 9 April 2018.
WorkPac engaged and paid Mr Rossato as a casual employee throughout the period of his employment with the company.
A short time after Mr Rossato’s retirement in April 2018 he wrote to WorkPac claiming that he was incorrectly classified as a casual employee and made a demand for the following permanent entitlements:
In response, WorkPac made an application to the Federal Court seeking a declaration that Mr Rossato was a casual employee and not entitled to these permanent employee entitlements.
WorkPac – which was faced with a similar factual situation to the first Workpac decision – argued that Rossato was a casual because of the absence of a ‘firm advance commitment’ as to the duration of his employment or the days and hours of work.
A determination as to whether there was a ‘firm advance commitement’ should be assessed, it was argued, by reference to the presence or absence of such a commitment in the parties’ written contract of employment.
In response, the Court in holding that the parties description of the nature of their relationship as casual was relevant but not a conclusive consideration, rejected the argument founded upon the ‘primacy’ of the contract.
The Court considered all of the circumstances of the relationship, including a range of factors about the manner in which the contract was performed in practice, as follows:
All three members of the Full Bench found that Rossato was not a casual employee because ‘…the parties had agreed on employment of indefinite duration which was stable, regular and predictable such that the postulated firm advance commitment was evident in (all) contracts.’
Further, the Court found that Rossato was not a casual employee for the purpose of WorkPac’s enterprise agreement indicating in doing so that ‘the circumstances of his employment could not be distinguished in a material way to those of Skene.’
Rossato was therefore found to be entitled to the entitlements that he claimed under the FW Act and WorkPac’s enterprise agreement.
In response, WorkPac sought to argue that it was entitled to either restitution or to ‘set off’ against these permanent employee entitlements, payments (in particular the casual loading) that it had made under the contracts of employment.
WorkPac sought, amongst other set off arguments, to rely upon the casual set off Regulation, Regulation 2.03A.
The Federal Government which had introduced the casual set off Regulation in response to the first WorkPac decision supported the reliance upon Regulation 2.03A.
Rossato, through his union the CFMEU, had identified various issues with Regulation 2.03A including a submission that it was ‘invalid.’
Justice White, with whom the other members of the full bench agreed, provided the Court’s rationale for the rejection of WorkPac’s reliance upon the casual set off Regulation in his judgment.
His Honour noted that for the Regulation to apply the four conditions specified in subregulation 1 (i.e. subregulation 1(a) to subregulation 1(d) of Regulation 2.03A, as set out above) must all exist.
Justice White then considered whether the fourth of these conditions (subregulation 1(d)) was satisfied in the circumstances, as follows:
His Honour then made observations about the character of the claims made by Rossato:
None of Rossato’s claims were found to be directed towards a payment ‘in lieu‘ of an entitlement under the NES:
The Court’s characterisation of the claims as being the payment of permanent employee entitlements ‘conferred’ by the NES, rather than a payment ‘in lieu’ of such entitlements, meant that the condition in subregulation 1(d) was not satisfied.
The Court rejected WorkPac’s argument that Rossato was making a claim to be paid an amount ‘in lieu’ of relevant NES entitlements.
In short, the Court found, for technical legal reasons, that the set off regulation, Regulation 2.03A, ‘…cannot provide a basis for a claim for set off and need not be considered further.’
Rossato was ultimately found to be entitled to the permanent employee entitlements that he claimed under the NES.
No doubt the Federal Government will welcome the High Court’s decision to grant special leave for the second WorkPac decision.
The High Court will now proceed to hear the substantive appeal which will, amongst other things, decide the effectiveness of the Federal Government’s casual set off regulation in the coming months.
We will keep you informed of future developments.
Should you wish us to discuss this decision and its implications, please contact our employment law expert, Ben Duggan.
 WorkPac v Rossato  FCAFC 84.
 WorkPac v Skene  FCAFC 131.
 At common law or for the purposes of the Fair Work Act.
 being the employee in the first WorkPac decision.
 None of which were successful.
 The claim for payment of Compassionate Leave which was taken was found to be of the same character.
 Our emphasis.
 Paragraph 943 of the second WorkPac decision.
To read this blog article on the DW Fox Tucker website, please click here: https://www.dwfoxtucker.com.au/2020/11/last-chance-to-avoid-casual-...;
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