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A Federal Court decision handed down on 20 May 2020 may raise more questions than it has answered.
Casual employment and the consequences for employers of misclassifying employees have been vexed issues since the 2018 decision of the Federal Court regarding the employment of Mr Paul Skene by WorkPac Pty Ltd. In that case the Court found Mr Skene, who was described in his employment contract as a casual employee, was in fact a permanent employee and entitled to be paid for accrued annual leave and other entitlements.
Since the Skene case Workpac has been further involved in a test case dealing with similar issues in relation to a different employee, Mr Robert Rossato. Mr Rossato was also described by Workpac as a casual employee and was paid an amount for casual loading. Following a demand from Mr Roassato for payment of entitlements owed to him as a permanent employee, Workpac sought various declarations from the Federal Court in relation to Mr Rossato’s employment. They included:
- A declaration that Mr Rossato was a casual employee;
- A declaration that Mr Rossato’s pay incorporated a casual loading of 25% of the applicable minimum pay rate in lieu of Mr Rosatto’s entitlement to annual leave and personal leave;
- A declaration that the loading paid to Mr Rosatto could be offset against the value of those entitlements, (if they were owed);
- Restitution of part of the remuneration paid to Mr Rossato if WorkPac made a mistake when classifying Mr Rossato as a casual employee and setting Mr Rossato’s rate of pay (which Workpac claimed was fixed on the basis that Mr Rossato was a casual employee).
In summary the Federal Court found on Wednesday 20 May 2020 that:
- Mr Rossato was not a casual employee;
- Mr Rossato was entitled to paid annual leave, personal leave and for public holidays; and
- WorkPac was not entitled to either restitution or set off against those liabilities.
The decision in Rossato illustrates the consequences of misclassifying permanent employees as casuals. It also illustrates the difficulties employers are likely to encounter in claiming set-off or restitution in response to a claim of the sort that arose in Skene and Rossato.
Given the potential ramifications for employers, please contact our team at South Geldard if you have any queries regarding staff classification or payment.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.
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