High Court clarifies casual employment following Fair Work Act changes

The decision "finally gives employers the certainty they want," a Kingston Reid partner says

High Court clarifies casual employment following Fair Work Act changes

The High Court has clarified the definition of casual employment in a majority decision that workplace law specialist firm Kingston Reid said would be welcomed by employers.

“Employers have long grappled with the difficulties around casual employment caused by the Federal Court decisions in WorkPac v Skene and Rossato, but the High Court’s finding will redefine the parameters of what constitutes a casual employee and what this means for access to double-dipping,” partner Christa Lenard said in a media release. “When coupled with the Federal Government’s Omnibus legislation that became law in March 2021 (the High Court’s decision is consistent with this legislation), it finally gives employers the certainty they want around casual employment.”

The WorkPac case involved a dispute with former employee Mr Rossato, who sought to claim leave and pay entitlements from the labour hire company on the grounds that even though he had been defined as a casual employee by WorkPac, he had not been treated like one throughout his six-contract run from 2014 to 2018.

In a decision that overturned a previous Federal Court ruling, the High Court determined that Rossato was in fact a casual employee for WorkPac under both the Fair Work Act and the enterprise agreement between both parties; thus, he was not entitled to the claims he sought. The court defined a casual employee is one who “has no firm advance commitment from the employer as to the duration of the employee's employment or the days (or hours) the employee will work and provides no reciprocal commitment to the employer.”

“The High Court has clarified, from a statutory perspective, what was intended by the Fair Work Act’s provisions relating to causal employees in the absence of a definition in that Act. It has acknowledged the Act’s recognition of a ‘long-term casual employee’ and held that the existence of ‘a reasonable expectation of continuing employment…on a regular and systematic basis’ in the context that a long-term casual employee is not fundamentally inconsistent with the nature of casual employment when other factors such as the terms of the written contract and working arrangement are considered,” Lenard explained.

Moreover, being required to work in line with a set shift structure was not going beyond an assignment-based employment arrangement, the court indicated.

“Employers can take comfort that the changes to the Fair Work Act in March 2021 means there is now protection from double-dipping claims by casual employees who claim they were misclassified and are entitled to permanent employment entitlements,” Lenard said.

Ashurst, which represented WorkPac in the matter, noted that the High Court affirmed conventional principles of contractual interpretation as the right way for courts to examine cases of this kind. The court had stated that “no part of the judicial function in relation to the construction of contracts to strain language and legal concepts in order to moderate a perceived unfairness resulting from a disparity in bargaining power between the parties so as to adjust their bargain.”

“This is a powerful statement by the High Court which will act to limit a developing tendency in some courts to depart from the application of conventional contractual principles to achieve an outcome that is perceived by the court as ‘fair’,” wrote partner Ian Humphreys and senior associate Patrick Lawler in a release.

Humphreys and Lawler encouraged businesses to review their contracts and engagements with casual employees to “ensure they reflect a casual relationship (and are not merely labelled as such)” and to ensure that those contracts take into account the recent changes to the Fair Work Act.

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