Words matter more now than ever: The implications of the HC ruling in WorkPac v Rossato
The implications of the HC ruling in WorkPac v Rossato
On 4 August 2020, the long-awaited High Court’s decision in WorkPac v Rossato made it very clear that words of a contract are paramount when it comes to determining employment status and provided a lot of certainty for employers about what it actually means to employ a casual worker.
If you are not familiar (or if you are a refresher), the case of WorkPac v Rossato threw Australian employers into a panic when it was first decided. The case concerns the status and entitlements of employees engaged on a casual basis. The Federal Court initially ruled that Mr. Rossato had been given regular, ongoing shifts hence should have been entitled to the entitlements that come with permanent work (e.g. annual leave and sick leave). Naturally, this caused a lot of business leaders to throw their arms in the air, thinking that their employees could be paid benefits of a permanent worker, as well as the casual 25% loading – these were entitlements that had not been taken into account in the budgeting of most businesses after all. However, the High Court has overturned that Federal Court ruling – which is a ‘win’ if you’re an employer!
The High Court clarified the meaning of ‘casual employee’ under the common law, which is closely aligned with the definition in the Fair Work Act. The judgment rejected the notion that the substance or reality of working arrangements should be considered, as they need to “insist upon binding contractual promises as reliable indicators of the true character of the employment relationship” [quote from judgment at [62]]. They consider this to be consistent with the overarching function of courts to enforce legal obligations and “not to act as an industrial arbiter whose function is to synthesise a new concord out of industrial differences” [quote from judgment at [62]].
Essentially, it suggests it is the responsibility of the contracting parties (not the courts) to decide if one qualifies for statutory rights and protections.
What does this mean for you and your business?
To put it simply, make sure that what you have in your contract, reflects what you want in your contract. As an employer, you are encouraged to constantly review your casual workforce and ensure that your employment contracts are well-drafted, with detailed set-off clauses.
Also, as an employer, be mindful that you are now required to offer casual employees the choice to become permanent under section 66B of the Fair Work Act, provided they have been employed for 12 months and worked regular and systematic patterns in the previous 6 months.
If you and your business need any help navigating this area, please contact us.