Written Contracts needed for Casuals

Many Practices employ casual employees. There are good reasons for this. Having casual workers provides significant flexibility for Practices since they can adjust their staffing levels quickly in response to changing circumstances. For example, in order to cope with changes in demand or COVID-related shutdowns.

That does not mean that employing someone as a casual employee is not without its risks. In particular, there is a possibility that someone who you believe is a casual might be deemed by the Court to be a permanent employee and therefore entitled to back-pay for annual leave, personal leave, compassionate leave and public holiday payments.

In this article, we will explain how you can minimise this risk in light of the recent High Court decision in WorkPac Pty Ltd v Rossato and the changes to the Fair Work Act which followed it.

The Rossato Decision

In the past, in order to determine whether an employee was a casual employee (as opposed to say, a contractor or a permanent employee), the Court looked at the conduct of the parties. Basically, a person was considered a casual employee if, during the course of their employment, they did not work a regular pattern of hours. Since an important High Court decision in 2021, WorkPac Pty Ltd v Rossato, that has changed. In that decision, the Court emphasised that the contractual relationship between the parties is the most important factor in determining whether an employee is a casual.

In that case, WorkPac engaged Mr Rossato under an employment contract which described him as a casual employee. Mr Rossato argued that he was a permanent employee and that he was therefore entitled to payments for untaken annual leave, public holidays and periods of personal leave and compassionate leave taken by him. This was because WorkPac provided him with various rosters which meant that he performed a regular pattern of hours.

The Court disagreed with Mr Rossato, finding that he was, in fact, a casual employee. Crucially, they said that the question of whether an employee is a casual should be determined by looking at the terms of the written contract, rather than the conduct of the parties. If the terms of the contract indicate that the employee is not required to perform a regular pattern of work, then they will most likely be considered a casual.

Recent Changes to the Fairwork Act

In 2021, the Federal Government amended the Fair Work Act to clarify the definition of casual employment and reinforce the effect of the Rossato decision. According to the Act, a person is a casual employee if:

• an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and
• the person accepts the offer on that basis; and
• the person is an employee as a result of that acceptance.

Implications for Practices

The Rossato decision and the subsequent changes to the Fair Work Act have important implications for Practices who hire casual employees. On the one hand, if Practices have written contracts in place for casual employees which clearly set out the terms of the employment relationship, there is very little risk that an employee will be found to be a permanent employee and therefore entitled to back-pay. On the other hand, if there is no written contract in place, it will be very difficult for Practices to prove that the employee did not perform a regular pattern of hours and therefore that they were not a permanent employee.

The lesson is clear. If Practices want to minimise the risk of having to back-pay casual employees, they need to have a written contract in place which clearly states that the employee has no obligation (or no ‘firm commitment’) to work a regular pattern of days/hours.

If you are a ClinLegal member, you can access our updated casual contract templates through our portal.

If you have any questions or require legal advice, please email [email protected].

This Circular is produced for guidance purposes only and is not a substitute for legal advice. Legal advice should be sought for individual circumstances. For tailored  advice for your Practice, please contact us.