Landmark ruling sees casual workers win sick and annual leave

by | May 22, 2020

A landmark court ruling has confirmed some casual workers are entitled to paid leave, bolstering a set of class action lawsuits seeking hundreds of millions of dollars from employers, according to a recent Sydney Morning Herald report.

The ruling has reignited claims from employer groups that casual workers across the economy will be able to double dip by claiming both annual leave and casual loadings typically worth 25 per cent of their pay, which could cost employers up to $8 billion if those workers’ annual leave had to be paid out, according to the report.

On May 20 the Federal Court found that “casual” workers who worked regular and predictable shifts with a firm advance commitment to work were not casuals despite how they were described in employment contracts and therefore were entitled to paid annual, sick and carer’s leave.

Mining Union National Secretary, Tony Maher, whose union had intervened in the case, said the decision was “fantastic”, because it rebuked employers who called their workers casuals but employed them on full-time hours.

“Employers must now stop with the nonsense that calling a worker a casual makes them so. When a job is full-time, regular and ongoing, it is permanent and deserves the security and entitlements that come with permanent work,” he said.

However, the Australian Industry Group, which represents 60,000 employers, said the decision would discourage employers bringing on casual workers and hurt the economy, according to the Sydney Morning Herald report.

“Today’s decision … highlights the need for urgent legislative reform to provide certainty to businesses and casual employees, and to prevent double-dipping claims by casuals who have been paid additional remuneration in lieu of the entitlements of permanent employees,” Australian Industry Group Chief Executive, Innes Willox said.

“An employee engaged as a casual and paid a casual loading … should not be allowed to turn around years later and claim the entitlements of a permanent employee, like annual leave,” he said.

Three Federal Court judges found Robert Rossato, a black coal mine worker, was employed for three and a half years until 2018 by the labour hire company WorkPac across different projects as a permanent worker despite being labelled a “casual” in his contract.

Mr Rossato worked on Glencore mines across six contracts and was paid what WorkPac described as a 25 per cent casual loading built into his wage, but the court found he still had an entitlement to leave that could not be offset through the wage bump because it did “not have a close correlation” to the leave entitlements.

Under at least one of his contracts, Mr Rossato worked seven days on, seven days off with 12 hour shifts set in advance, which Justice Mordecai Bromberg found pointed to him having work that is “regular, certain, continuing, constant and predictable” and not casual, according to the report.

Since the ruling, Business NSW has renewed its call to the Federal Government to take immediate action to fix the Fair Work Act following the judgement of the Federal Court in Workpac v Rossato.

Business NSW has proposed a new flexible, ongoing employment category – perma-flex – which would address the uncertainty around casual employment as a result of the two Workpac decisions but would also ensure that employers retain the needed flexibility that casual employment offers.

“These Court decisions are sending shockwaves through the business community who have acted in good faith and on the understanding that they were paying casual staff higher hourly rates in compensation for leave entitlements,” Business NSW Chief Executive Officer Stephen Cartwright said.

“That has of course all now been thrown out the window yet again in another court decision that has allowed casual employees to double dip. This has the potential to cost employers across the nation billions of dollars, which would be a devastating blow in this economic environment and an inhibitor to employers re-engaging their regular casual staff as we emerge from the lockdown.”

Mr Cartwright said he was disappointed that this proposal for a new employment classification had been opposed by the unions. If perma-flex had been in place before COVID-19 shut down the economy, thousands of casuals, who could have been employed under this category for less than 12 months, would have been eligible for JobKeeper, instead of missing out and being forced to join the Centrelink queue. 

 “It’s now imperative that the Federal Government acts to fix the Fair Work Act before this decision can smash what remains of the budgets of thousands of small businesses across the country that are just hanging on at the moment.”

 “I would encourage the Federal Government to implement our proposal of creating an employment category that recognises the decisions of the Courts and provides certainty to both employers and employees who want flexibility in their workplace,” she said.