The High Court of Australia has decided to unanimously uphold an appeal from recruitment company WorkPac against a 2020 Federal Court decision, ruling that WorkPac’s former employee, Robert Rossato, was in fact classed as a casual employee at law.
In May 2020, the Full Federal Court ruled that casual employees who work stable, regular hours with “predictable periods of working time” should be entitled to receive compassionate leave, personal leave and payments on public holidays.
The decision left employers of casual workers across the country worried that they could be liable for back payments of leave, with estimates suggesting claims could total an excess of $14 billion.
The ruling from the High Court has also opened up the potential for so-called “double dipping”, which is a situation where an employee could collect payment for leave entitlements in addition to the 25 percent casual loading already meant to compensate for such benefits.
An amendment to the Fair Work Act, passed in March of this year, already served to clarify casual employees’ rights for ongoing employment and provided limited liability for employers on paying benefits such as casual leave loadings.
The Fair Work Amendment Bill passed in early 2021 sets a legal definition of a casual employee for the first time. It also introduced a mechanism requiring employers to offer casual employees the choice to become permanent if they’ve been employed for 12 months and have worked regular and systematic patterns in the last six months.
Without the amendment, the legal implications of the High Court’s recent decision would have had a huge cost for Australian employers.
According to Australian Business Lawyers and Advisors (ABLA), there are still several key takeaways from the judgment of which employers should be mindful of.
- A key feature of casual employment is the absence of a firm advance commitment of ongoing employment. This is a reasonably high threshold.
- A firm advance commitment is different to a reasonable expectation of continuing employment. The latter isn’t inconsistent with casual employment, and is in fact recognised as a feature of casual employment elsewhere in the FW Act; for example, in respect of requests for flexible working arrangements under the NES and the qualifying period for unfair dismissal eligibility.
- An employee’s contract of employment will be integral in determining whether a firm advance commitment exists. In departing from the approach taken by the FCA, the High Court found it was inappropriate to place greater emphasis on “unenforceable expectations or understandings” which might have developed on behalf of either party during the relationship, than express contractual terms.
- Characteristics of the employment relationship — such as; working in accordance with a roster — might foster a sense of regularity and consistency in the relationship, but won’t override relevant contractual terms. In this case, the contract committed each party only for the duration of each “assignment”; the provision of a roster covering a longer period was no guarantee that any future assignments would actually be worked.
- Provided the contract doesn’t contain terms which give rise to a firm advance commitment, it will be determinative in characterising the relationship as casual.
ABLA recommends that although the legal position has been settled from both a legislative and common law perspective, employers should still ensure that they protect themselves with a written contract that clearly designates casual employees as such and specifies the payment arrangements, including the fact that casual loading is payable.
Companies Who Received JobKeeper During Covid-19 Pandemic Will Remain Secret
Big businesses across Australia who received JobKeeper will be able to keep the financial support secret, with the Australian Government rejecting a bid to make it public and the federal opposition backing down from insisting on it.
The JobKeeper wage subsidy scheme saw over $5.6 billion go to businesses whose profits increased during the peak of the covid-19 pandemic in 2020.
Companies including; retailer Harvey Norman have come under pressure to repay the money after posting profits in 2020, given the wage subsidy was designed for companies experiencing at least a 30 percent drop in turnover.
In the first week of August 2021, independent senator Rex Patrick successfully amended the government’s legislation for the new financial support for workers and businesses affected by covid-19 lockdowns.
“The amendment requires the Tax Commissioner to publish all of the companies who earn more than $10 million who have received JobKeeper and the amount they have received,” said Senator Patrick.
The same requirement would apply to companies receiving payments under the new financial support scheme.
Although the bill was passed through the Senate with Labor’s support, the Coalition rejected it in the House of Representatives. This means the bill is now back before the Senate and due to be voted on once again.
Finance Minister Simon Birmingham defended the system, saying the businesses who claimed JobKeeper at the time were facing “genuine threat of long-term lockdowns and shutdowns”.
“For many it ended up being a slightly better proposition than expected at that stage. We don’t think it’s appropriate to create a circumstance where now they are vilified with some sort of pretence that they weren’t eligible when they were eligible. The actions of government and those businesses saved many thousands, if not millions, of Australian jobs and remains an important part of our economic recovery,” said Finance Minister Simon Birmingham.
It has recently been revealed that 157,650 businesses or employers increased their turnover between April 2020 and June 2020 when compared to the rates of turnover during those months in 2019.
In just three months, those payments accumulated to $4.6 billion in taxpayer-funded wage subsidies.
Businesses and charities across Australia were eligible for JobKeeper if their turnover had already fallen to certain levels, or if they predicted it would.
However, for more than 365,000 employers, real-world turnover did not actually fall below the thresholds for the April to June period last year.
These organisations amassed close to $12.5 billion dollars in JobKeeper payments during that time.
Most businesses, with turnovers below $1 billion a year, needed to show or predict at least a 30 per cent turnover fall to qualify at the beginning of the scheme.
The turnover threshold was 50 percent for big companies and 15 percent for charities.
Once businesses qualified for JobKeeper including based on a turnover estimate they continued receiving payments until around the end of September when turnover tests changed.
There has been large amounts of criticism coming from the federal opposition party, placing pressure on the federal government ensure some of these payments are repaid.
Federal Labour MP Andrew Leigh has demanded increased transparency around JobKeeper recipients, and is calling for businesses that remained profitable to return the JobKeeper they received.
“They saw the figures in real time, they had the numbers in front of them in a way in which we can only now, a year later, see what was going on. The Morrison government needs to be asking these firms to repay” said Federal Labour MP Andrew Leigh.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800.
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