On 4 August 2021, the High Court unanimously allowed an appeal from a judgment of the Full Court of the Federal Court of Australia, finding that Mr Rossato was not a ‘casual’ employee, and was not entitled to paid leave and holiday entitlements. This was despite the facts not being very different to a 2018 Full Federal Court case of Skene. There is now a ‘primacy’ of contract approach, not only to this question of whether the employee is ‘casual’ but, probably, also to determining whether a contractor is an ’employee’. This has ‘put a cat amongst the pidgeons’ in the union efforts to roll out holiday pay claims the ‘labour hire’ segment and, likewise, has implications for ‘gig’ economy contractors – see related articles on the Australian Deliveroo riders being employees (inconsistent with our UberEats ruling); UberEats’ massive settlement; UK Deliveroo riders not being employees (inconsistent with UberEats in the UK and inconsistent with the  Australian position);  the impact of this High Court case on the Gig Economy and the article focussing on this case alone.  The immediately obvious ‘tax’ issue, in the ‘gig’ economy, is whether UberEats/Deliveroo etc. have to withhold PAYG amounts on account of the rider’s income tax. The distinction between ’employee’ and ‘independent contractor’ has long been a significant issue in tax.

See below for further detail.

[Tax Month – August 2021]

 


 

WorkPac Pty Ltd v Rossato & Ors [2021] HCA 23

On 4 August 2021, the High Court unanimously allowed an appeal from a judgment of the Full Court of the Federal Court of Australia [2020] FCAFC 84. The appeal concerned the nature of casual employment. The first respondent (“Mr Rossato”) was employed as a production worker by the appellant labour-hire company (“WorkPac”) under a series of six contracts, or “assignments”, to perform work for one of WorkPac’s clients. At all relevant times, WorkPac treated Mr Rossato as a casual employee, such that Mr Rossato was not paid the leave and public holiday entitlements owed by employers to non-casual employees pursuant to the Fair Work Act 2009 (Cth) (“the Act”) and the enterprise agreement which governed his employment.

On 16 August 2018, judgment was delivered in WorkPac Pty Ltd v Skene [2018] FCAFC 131. In that decision, it was held that Mr Skene, who had been employed by WorkPac in circumstances similar to those of Mr Rossato, was not a casual employee.

In reliance on that decision, Mr Rossato claimed that he was likewise not a casual employee, and was therefore entitled to be paid for untaken annual leave, public holidays, and periods of personal leave and compassionate leave taken during his employment.

  • WorkPac denied his claims and filed an originating application in the Federal Court seeking declarations that Mr Rossato had been a casual employee for the purposes of the Act and the relevant enterprise agreement.
  • In the alternative, WorkPac claimed to be entitled to a set off, or to restitution, in respect of payments it had made to Mr Rossato in compensation for, or in lieu of, the entitlements claimed by Mr Rossato.

The Full Court concluded that Mr Rossato was not a casual employee for the purposes of the Act and the enterprise agreement, and declared that Mr Rossato was entitled to the payments he claimed. The Full Court also rejected WorkPac’s set off and restitution claims. By grant of special leave, WorkPac appealed to the High Court.

The High Court held that a “casual employee” is an employee who has no firm advance commitment from the employer as to the duration of the employee’s employment or the days (or hours) the employee will work, and provides no reciprocal commitment to the employer.

  • Where parties commit the terms of their employment relationship to a written contract and thereafter adhere to those terms, the requisite firm advance commitment must be found in the binding contractual obligations of the parties; a mere expectation of continuing employment on a regular and systematic basis is not sufficient for the purposes of the Act.
  • Mr Rossato’s employment was expressly on an “assignment- by-assignment basis”.
  • Mr Rossato was entitled to accept or reject any offer of an assignment, and at the completion of each assignment WorkPac was under no obligation to offer further assignments.
  • That Mr Rossato was to work in accordance with an established shift structure, fixed long in advance by rosters, did not establish a commitment to an ongoing employment relationship beyond the completion of each assignment.
  • In carrying out each assignment, Mr Rossato worked as a casual employee for the purposes of the Act and the enterprise agreement. On that footing, it was unnecessary to consider WorkPac’s set off and restitution claims.

 

High Court’s comments on Hollis v Vabu and the difference between construing ’employment’ compared with ‘casual’ employment

  1. Mr Petersen submitted that WorkPac’s contention that the characterisation of Mr Rossato’s employment depended entirely on the express or implied terms of the contracts was wrong on two grounds. First, authorities concerning the employee and contractor distinction, including Hollis v Vabu Pty Ltd[116], consider the “totality of the relationship” between the parties. Further, Mr Petersen contended that Doyle v Sydney Steel Co Ltd[117] was authority for the proposition that the question of who is a casual worker depends on all the circumstances. These submissions may be dealt with seriatim.
  2. Hollis v Vabu was concerned with whether a person was an employee or an independent contractor of another. On one view, the resolution of that question may depend upon the extent to which it can be shown that one party acts in the business of, and under the control and direction of, the other[118]. It should be borne in mind that the answer to that question affects the rights not only of the parties to the arrangement but also of third parties with whom they deal under its colours. As much is illustrated by Hollis v Vabu itself. There the ultimate issue was whether the appellant enjoyed rights against Vabu or merely against the hapless and impecunious courier. In contrast, the present case is concerned with the character of an employment relationship, a question the resolution of which has no significance for the rights of persons who are not privy to the relationship. The analysis in Hollis v Vabu affords no assistance, even by analogy, in the resolution of a question as to the character of an employment relationship, where there is no reason to doubt that the terms of that relationship are committed comprehensively to the written agreements by which the parties have agreed to be bound.
  3. This Court’s decision in Doyle concerned a workers’ compensation claim made by the appellant boilermaker against the respondent company. At the time, the statutory workers’ compensation regime provided for a particular method of calculating “average weekly earnings” of a “casual worker”. The Workers’ Compensation Commission found that the appellant was a “casual” and this decision was not disturbed by the Supreme Court of New South Wales. The High Court, comprised of four Justices, was split on the question whether the appellant was a casual employee. This Court being evenly split, the decision of the Supreme Court of New South Wales was affirmed. The only member of the Court to comment on the test to be applied was McTiernan J, who said[119]:

“Each case is to be determined on its own facts, consideration being given not only to ‘the nature of the work but also the way in which the wages are paid, or the amount of the wages, the period of time over which the employment extends, indeed all the facts and circumstances of the case’[120].”

  1. To say, as did McTiernan J, that the resolution of the issue depends on “all the facts and circumstances” is not to say anything very helpful at all. In any event, many years have elapsed since the modest observations of McTiernan J, and in that time, as has been seen, a consensus has emerged in the case law as to the distinguishing characteristics of casual employment. Indeed, within a year of the decision in Doyle, in Shugg v Commissioner for Road Transport and Tramways (NSW)[121], Dixon J said:

“The expression ‘casual’ is a word of indefinite meaning which elsewhere has caused difficulty. We are apt to associate with the word elements of chance or of discontinuity. We perhaps think of casual employment as occasional or intermittent.”

His Honour went on to say of the use of the term in the statutory context then before the Court[122]:

“The distinction upon which the application of [the Act] turns is, I think, between a general, indefinite or continuous employment and an employment for a particular occasion or occasions, or to fulfil some special or defined purpose of brief duration.”

  1. In these observations of Dixon J can be seen the basis for the view that has come to prevail.

 

WorkPac Pty Ltd v Rossato & Ors [2021] HCA 23, Judgement Summary]

 

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