Workpac loses return bout with unions 3-0 as Hays and Stellar sweat

Last week the recruitment industry engaged in a collective shudder when the Full Federal Court delivered their judgment in WorkPac Pty Ltd v Rossato [2020] FCAFC 84.

Workpac has been ordered to pay Mr Rossato his full leave entitlements that are owed to him as a permanent employee. The court agreed with Rossato’s claim that he was a permanent employee, rather than a casual employee, as he was deemed in his initial employment contract with Workpac.

Workpac engaged Rossato for six separate contracts across a three and a half year timeframe. Rossato was covered by an enterprise agreement which provided for the engagement of casual employees and the payment of a 25% casual loading in lieu of leave entitlements. Rossato received this casual loading across all his contracts.

This was the second case lost by Workpac on the same point of employment law; the classification of an employee as casual, when the regularity of the worker’s employment, and other salient features of his employment, was that of a permanent employee.

The previous claim against Workpac was made in 2018 by truck driver Paul Skene.  Skene, contracted as a casual employee, asserted he was working, and being employed, as if he was a permanent employee and as such had not been paid his full entitlements for his tenure (two years). The Federal Court ruled that Skene should be paid $21,054.69 in holiday pay he had not received and a further $6735.03 in interest in lieu of the late payment.

In the Rossato case, the three justices uniformly endorsed the core principles outlined by the court in the Skene v Workpac decision.

These core principles being:

  • The employee being described as, and contracted as, a casual employee is not sufficient grounds for the employee to be legally deemed a casual employee. All features of the employee’s employment will be considered.
  • The critical identifying feature of a casual employee is no commitment from the employer to continuing and indefinite work. Instead, casual employment will be distinguished by; irregular work patterns, uncertainty, discontinuity, intermittency and unpredictability of work.

In Rossato’s case the justices were satisfied that his weekly consistency of hours worked, including the long term and advance rostering that was present in all his contracts, as well as the provision of accommodation, were all important features in deeming his employment to be permanent, not casual.

Workpac counter-claimed against Rossato. The (set-off) claim was that the total dollar amount of the casual loading (25% of the base wage) paid to Rossato be deducted from the amount Workpac was now liable to pay him for leave owing.

The justices unanimously dismissed Workpac’s claim on the basis that given the casual loading was expressed to be paid “in lieu” of leave entitlements, the loading could not be said to have been intended to satisfy leave entitlements. Also, the justices noted, the loading was paid in many cases before the leave entitlements accrued and as wages with respect to hours worked. Accordingly, the loading could not be utilised to reduce the amounts owing with respect to leave entitlements or public holidays.

Further a claim made by Workpac for ‘mistaken payment also failed. As there was no provision in Workpac’s contract with Rossato requiring repayment of the casual loading if Rossato was deemed not to be a casual employee, the justices deemed there was no obligation for Rossato to repay the ‘mistaken payment’.

In simple terms it was a comprehensive defeat for Workpac on all the points they contested.

Not only were the principles of the previous case upheld, they were upheld unanimously.

Although no public statement has been made by Workpac as to their intentions, it would be unsurprising if they appealled to the High Court.

The Australian Industry Group was quick to sound the alarm bells on behalf of  employers, suggesting the cost for businesses forced to pay entitlements could potentially reach $8 billion.

“There are 2.6 million casuals in Australia and 1.6 million of them work regularly and have done so for at least six months,” AI Group’s Chief Executive, Innes Willox, said.

The Federal Government has quickly moved to assure businesses that it intends to address the definition of casual employment with Attorney General, Christian Porter telling Peta Credlin on Tuesday night’s Sky News:

“Whether you’re an employer or an employee you both suffer from the fact that there’s enormous confusion because the term was never defined in the Fair Work Act and has come to be defined and redefined through a court process and everyone will benefit if we can drive certainty into that definition and into the very marketplace that generates employment”

Given the speculation about the potential liability of Stellar Recruitment (up to $15 million) and Hays (up to $35 million) if separate class actions, run by the same law firm, are successful, it’s likely that the line item; Legal Fees, will one of the few recruitment agency expenses going up, not down in the COVID-19 austerity era.

 

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