Workpac wins big in the High Court as Rossato decision overturned

This week two different events of significance occurred in the Australian employment sector.

On Monday a group of Uber drivers from Sydney and Melbourne launched legal action in the Federal Court to determine whether they and thousands of other gig economy delivery drivers and couriers are entitled to the minimum rates of pay and other protections and entitlements afforded employees.

The court will need to determine whether drivers are employees or independent contractors conducting their own business, as asserted by Uber.

Harmers principal Michael Harmer said his firm, representing the drivers on a pro-bono basis, was seeking a full Federal Court decision that would guide Uber and other gig economy companies.

The applicants’ case is founded on the assertion that Uber exercises a high level of control over drivers including when and where they work and how much they are paid.

In February this year the Supreme Court in Great Britain found in favour of the Uber drivers, determining that the Uber drivers were workers, who are entitled to some, but not all, of the employment rights that are afforded to employees.

The case will be a critical test case in establishing the sustainability of the existing business models of the platforms that connect workers with work.

It seems unlikely the case will come before the court this year.

The second event occurred on Wednesday when the High Court of Australia unanimously granted the appeal of Workpac Pty Ltd, and ruled that long-term employee Robert Rossato was, contrary to the findings of the Full Federal Court last year, a casual employee.

This decision is a massive win for the labour hire industry and its clients.

Major aspects of the decision include:

• The High Court considered Rossato’s various fixed-term assignment contracts, as well as the applicable enterprise agreement, and concluded he was employed on an ‘assignment-by-assignment’ basis, which was not inconsistent with his original employment agreement as a casual. He was entitled to accept or reject any offer of assignment, and Workpac was under no obligation to offer additional assignments.
• The High Court also accepted that Rossato was a casual employee as there was no contractual commitment to further work, beyond the specific contract that Rossato was offered and had agreed to, as a casual employee.
• A lack of a firm advance commitment to work, including that termination or variation of an assignment could occur at one hours’ notice was regarded by the High Court as a significant indicator of the casual nature of Rossato employment by Workpac.
• The High Court observed that the fixed and long-term nature of Rossato’s roster, whilst providing structure and regularity, was entirely consistent with the nature of his casual employment on an assignment-by-assignment basis but was not consistent with an ongoing commitment to employment.

The issue of ‘double dipping’ (ie an employee being paid a casual loading then also claiming accrued annual and other leave permanent employees are entitled to claim) was comprehensively addressed and settled by the court.

• The court emphasised, in line with pre-existing authority, that the label given to the employment by the parties will not be determinative of the relationship. What will be determinative is the ‘character of the relationship between the parties’, as established by, primarily, the contract of employment.
• The fact that Rossato was paid an amount for casual loading, specified as being paid in lieu of his National Employment Standards entitlements, was a ‘compelling indication’ of Rossato’s status as a casual.

Critically for recruitment agencies and labour-hire companies, The High Court’s decision has clarified that the clear expression of the casual nature of employment in employment contracts will be the deciding factor in a worker’s employment, regardless of the manner in which the employment relationship has developed, or the expectations of the worker.

This combined with the explicit payment of a casual loading will provide much-needed confidence that the existing accepted practises across the recruitment and staffing sector in this country will be sufficient to protect them from any future claims from their casual employees.

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