Landmark ruling set to change hiring patterns

THE full bench of the Federal Court has delivered a decision in the matter of WorkPac v Rossato that threatens to turn existing mining industry hiring practices on their head.
Landmark ruling set to change hiring patterns  Landmark ruling set to change hiring patterns  Landmark ruling set to change hiring patterns  Landmark ruling set to change hiring patterns  Landmark ruling set to change hiring patterns

The decision paves the way for casual mineworkers in regular and continuous employment to claim unpaid leave entitlements.

While the case is aimed at the mining industry, the decision has huge ramifications for the wider Australian economy.

The court upheld key principles of the Federal Court's August 2018 WorkPac v Skene decision, namely that work that was regular, ongoing, and permanent in nature was not genuinely "casual" and therefore attracted entitlements such as paid annual leave.

WorkPac made the controversial move to not appeal the WorkPac v Skene decision and instead had the WorkPac v Rossato case heard in front of the full bench of the Federal Court in the hope of undermining the Skene decision's definition of casual as intermittent and irregular.  

The court found "casual" mine worker Robert Rossato was eligible to be paid "annual leave, paid personal/carer's leave paid compassionate leave and payment for public holidays" and that WorkPac could not seek "restitution" because of the money it had supposedly paid him in his hourly rate to compensate for those conditions.

"All members of the court have found that, even taking WorkPac's case at its highest, Mr Rossato was not a casual employee for the purposes of the Fair Work Act and for the purposes of the 2012 [WorkPac] enterprise agreement,'' the judges said in their case summary.

"The court has found that the parties had agreed on employment of indefinite duration which was stable, regular and predictable such that the postulated firm advance commitment was evident in each of his six contracts.

"All members of the court have found that WorkPac is not entitled to restitution of the casual loading, which it claimed was included in the hourly rate it had paid to Mr Rossato.

"The members of the court have found that there was no relevant mistake, and no failure of consideration such as would support restitutionary relief."

The Construction Forestry Mining and Energy union estimates some 40% of coal miners are employed as labour hire casuals, performing the same work as permanents but with no job security or entitlements and earning about one-third less.

The decision paves the way for casual mineworkers in regular and continuous employment to claim unpaid leave entitlements as their work arrangements are, in practice, permanent and on-going.

Gaden Lawyers partner Siobhan Mulcahy told Australia's Mining Monthly the decision would affect mining companies and the broader economy that relied on a steady stream of casual employees.

"Employers will have to exercise a higher level of caution when employing permanent casuals," she said.

"WorkPac was seeking declarations that former casual employee Robert Rossato was not entitled to be paid leave under the FW Act, or the relevant industrial instrument; and WorkPac should be entitled to set off payments made to Mr Rossato against any leave entitlement that Mr Rossato may be found to have," she said.

"The outcome of this case will be important for all employers affected by the decision in Workpac v Skene."

Mulcahy said had WorkPac been successful in obtaining the declaration, the risk to employers in connection with the engagement of casual employees would have been materially reduced moving forward.

Instead there could be a slew of class action claims by casual employees in the mining industry, with Canberra based firm Adero and CFMEU waiting to launch actions in light of the WorkPac v Rossato judgement.

"Due to the current uncertainty in what is otherwise a complex area, it is important that employers minimise their exposure to risk," Mulcahy said.

"To reduce risk around the status of casual employees, employers should where possible, rethink the classification of employees from the outset and ensure employment contracts reflect the appropriate type of employment, that is permanent part time/full time or casual and constantly monitor their casual workforce, particularly any long term casuals employed on a ‘regular and systematic basis'." 

The WorkPac v Rossato decision has implications for other employers and this has not been lost on the federal attorney general and industrial relations minister Christian Porter who said it was "fairly obvious" the decision would have "immediate practical implications" for businesses' bottom lines "at a time when so many have taken a huge hit from the Covid-19 pandemic".

He noted the possibility of an appeal, and said the government would consider intervening in the case.

"Given the potential for this decision to further weaken the economy at a time when so many Australians have lost their jobs, it may also be necessary to consider legislative options," Porter said.

CFMEU national president Tony Maher said the decision put an end to the "permanent casual" label that was being abused in the coal mining industry.

He said there was no capacity for employees to "double dip" on casual loading and leave entitlements if they are correctly classified.

"It's a decision that passes the pub test on what it means to be a casual and is consistent with community expectations that casual work is irregular and intermittent," Maher said.

"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.

"Our union has worked hard to clarify the law with this decision and we will now be fighting to restore rights and lost pay for casual labour hire workers across the coal mining industry who have been illegally ripped off."

Former casual coal miner Paul Skene, a CFMEU member who previously took on WorkPac and won backpaid annual leave on the basis he was not a genuine casual, said he was delighted the substance of his case had been upheld.

"I'm delighted with this decision," he said.

"It clearly shows how casuals have been ripped off and treated like second class citizens.

‘I'm very pleased that the law is now clear and that my case has made a difference."

Skene was a fly-in, fly-out haul truck driver on two large coal mines in central Queensland, working a seven days-on, seven days-off roster, set 12 months in advance.

He was employed as a casual by labour hire company WorkPac but directly supervised by Rio Tinto and performing the same work as direct Rio Tinto employees.

His argument was that his work arrangement did not fit the legal definition of a "casual" and was therefore owed annual leave entitlements under the National Employment Standards.

In an August 2018 decision the full Federal Court agreed.

Mining employer group Australian Mines and Metals Association said the WorkPac v Rossato decision had done nothing to restore common sense to casual employment arrangements or fend-off damaging US-style class action law suits.

AMMA CEO Steve Knott said in both cases, the Federal Court had ruled an employee's patterns of work were the key determinative factor to their employment status.

"The position taken by the Federal Court in multiple decisions now is that an employee can sign a casual employment contract and be paid a casual loading, but later claim to be owed permanent entitlements," he said.

"This is a remarkable position that is highly damaging to business confidence and will see more internationally-funded class action law firms, many with obscenely large contingency fees, circling Australian businesses like sharks.

"Most would agree it is rather unfair that an employee could accept a higher rate of pay for being casually engaged, only to later also claim for back-paid permanent entitlements such as annual leave and redundancy, due to their patterns of work.

"Many Australian businesses - small, medium and large - are hanging on by their fingernails in this COVID-19 environment. The prospect of having to defend up to six years' worth of back pay claims from former casual employees is the last thing they need."

Knott said AMMA would urge the federal government to amend the Fair Work Act to clearly define a casual employee as one that has been "engaged and paid as such".

An important balance to this, he said, was to provide an automatic right for all casual employees working on a regular and systematic basis to convert to permanency after 12 months with the same employer.

"Casual employment and labour hire is a small but very important function of Australia's labour market," Knott said.

"In the resources industry, where it comprises about 16% of the total workforce, casual employment often provides a foot-in-the-door in entry level positions for people new to the industry.

"At the other end of the spectrum, highly-skilled employees often take well-paid casual contracts where their capabilities are in greatest demand.

"Until the Australian Parliament fixes this issue with a clear, common-sense definition of casual employment, businesses will remain reluctant to hire casuals or provide existing casual employees with any regularity in their working hours.

"Demonising casual employment arrangements is short-sighted and far removed from reality.

"Business needs all the options it can get, and as much confidence as can be mustered, to get people back into employment as quickly as possible during the post-pandemic economic recovery period."

Minerals Council of Australia CEO Tania Constable said that according to the latest ABS data, 82% of mining workers were permanent employees and 96% were employed full-time.

"These decisions of WorkPac v Rossato and WorkPac v Skene expose employers to the risk that an employee may be found to have an annual leave entitlement even where he or she has been paid an amount in lieu of annual leave," she said.

"The MCA welcomes the attorney-general's statement that he will consider amending the Fair Work Act to clarify the legal interpretation of casual employment."

Australia's Mining Monthly approached BHP, Anglo American, Glencore, and Peabody Energy for comment.