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The WorkPac v Rossato ‘double dipping’ has recently reached the next stage when, four weeks ago, the High Court granted special leave to appeal the original decision, handed down in May this year.

WorkPac was 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 (after being employed as a casual for three and a half years) rather than a casual employee, as he was deemed in his initial employment contract with WorkPac.

The appeal will be heard next year but a decision may not be handed down until late in the year.

Two weeks ago, closely following the appeal decision, the Federal Attorney-General and Minister for Industrial Relations, Christian Porter introduced the federal government’s long-awaited Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 into the House of Representatives.

The bill was introduced after what Minister Porter described as “extensive consultation with employer and employee groups”, who spent more than 150 hours deliberating five key areas of industrial relations.

The key component of the legislation is the supposed clarity as to the definition of a casual employee.

The new bill effectively defines a casual job as anything described that way by the employer at the time a job commences, so long as the employer initially makes “no firm advance commitment to continuing and indefinite work”.

The subsequent conduct of either party, over any period of time, would be deemed inconsequential to the employment status of the worker.

In practical terms, this means the following: A casual job is offered to and accepted by a worker. She starts work on this basis then, over time, the pattern of her employment is one indistinguishable from a permanent employee in that she works regular and predictable days and hours over weeks, then months. Under the proposed legislation the worker would still be deemed to be casual, regardless of the actual working patterns.

Furthermore, under the bill, anyone in a casual job will lose any entitlement to leave they might otherwise have been entitled to, thanks to the verdict in the WorkPac v Rosatto case.

As Trent Hancock, of Jewell Hancock Employment Lawyers, says:

Traditionally courts have preferred ‘substance over form’ in this area, in recognition that the parties themselves should not be able to deem the relationship to be something that it is not. 

This new statutory definition would be an unfortunate shift to ‘form over substance’. That is, it would give primacy to the terms that are agreed between the parties at the outset of the employment rather than looking at how the relationship actually operates in practice.

Unfortunately, the principle espoused in the government’s proposed legislation is greatly at odds with the foundations of many other aspects of law and would be regarded as untenable if applied in the way Minister Porter is proposing.

Here’s a simple example.

Simon, Steve, and Susie are acquaintances from university. They decide to lease a house together.  Simon and Susie initial relationship is one of housemates. Their lease specifies this legal status as joint tenants, along with Steve.

Six months later Simon and Susie regard themselves as friends, as they now frequently socialise with each other outside the house.

Another six months later Simon and Susie start an intimate relationship and stop seeing other romantic partners. Steve moves out of the house and Simon and Susie remain the co-tenants.

Two years after Simon and Susie first formed a relationship called ‘housemates’ they become parents. Eighteen months later they have a second child together.

Sadly, four years later, Simon decides to leave the relationship and moves out of the house in which he and Susie have been living in the whole time.

In the world of family law, the initial ‘flatmates’ agreement between Simon and Susie is superceded by the pattern of behaviour indicating Simon and Susie were common-law partners.

The legal separation of the joint assets of Simon and Susie would be bound by laws and precedent applicable to common-law partners.

If the principle of ‘form over substance’ contained in Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 is applied to Simon and Susie’s situation their asset split would be made on the basis of Simon and Susie being housemates, not common-law partners.

This scenario simply wouldn’t pass ‘the pub test’ yet Minister Porter thinks this principle should apply to the government’s proposed legislation.

One possible solution to address the issue of who is casual and who is not is to mandate a time limit after which the existing pattern of ‘regular and pre-committed hours’ is deemed to be the equivalent of permanent employment and, as such, an offer of equivalent permanent employment must be forthcoming from the employer.

Should the employee decline that offer then they also forfeit any right to retrospectively claim permanent employment benefits should they choose, if offered, to continue as a casual employee.

Of course, any mandated time limit creates the opportunity for the employer to game the system by reducing the relevant employee’s days and hours as they approach the time limit, as a deliberate ploy to have the casual employee not qualify for the offer of permanent employment.

The workers with the most substitutable skills will be the losers in this situation.

The current solution the government is proposing to the issue of defining casual employment fails to use the existing foundation of law in which substance over form provides a predictable way for courts, of all types, to make decisions.

This is a dumb and dangerous step in an unnecessary direction.

I suspect the government would be risking a Work Choices-type backlash from the electorate should the bill pass into law; a backlash that, in 2007, not only dumped the coalition from office but also cost the sitting prime minister his seat.

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As an employer the biggest impediment to converting a casual employee to permanent is the decision about wages. As a casual the worker gets a 25% loading to compensate for annual leave benefits and other protections that they don’t get as a casual.

If the employer does not roll back the wages keeping the 25% loading once the casual is made a permanent employee – she is probably going to be paid above other comparable staff.

If the employer does roll back the wages to non-casual rates then the loss of motivation that the employee feels by getting 25% less in their wage packet each fortnight makes the perm role very risky.

The ideal situation in a big company could be to have the casual roles and perm roles clearly separated so instead of making a casual permanent the casual can apply for a vacant role and be considered against other candidates but in a small business this is harder. Some employers take people on as casual instead of permanent with probation as the unfair dismissal rules are very hard and costly to defend.

Does the legislation allow casual to fixed term contract conversions? How would this play out I wonder?

Would love your thoughts, please comment.x
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