Australia: In the Rossato decision, the Court confirms overall relationship is still critical in determining casual employment; rejects ‘double dipping’ argument

In the long awaited decision of WorkPac Pty Ltd v Rossato [2020] FCAFC 84, the Full Federal Court finds ‘casual’ WorkPac employee entitled to leave and holiday payments.

Background

Robert Rossato was employed by labour hire company WorkPac Pty Ltd (WorkPac) as a casual coal mining worker across companies within the Glencore Group from 28 July 2014 to 9 April 2018.

After his employment ceased, Mr Rossato asserted that, contrary to WorkPac’s characterisation of him, he had not been a casual employee. He claimed outstanding entitlements to paid annual leave, paid personal/carer’s leave and paid compassionate leave under the National Employment Standards (NES), as well as public holiday pay entitlements under the WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012 (the 2012 EA).

WorkPac commenced proceedings in the Federal Court of Australia, seeking declarations that Mr Rossato was a casual employee for the purposes of the NES and under the 2012 EA. The effect being that he was not entitled to paid leave and public holiday payments. In the alternative, WorkPac argued that it could recover certain payments that had been made to Mr Rossato on the assumption that he was a casual employee.

In a long awaited decision handed down on 20 May 2020, Justices Bromberg, White and Wheelahan delivered separate judgments, all concluding that Mr Rossato was not a casual employee for the purposes of the NES, nor under the 2012 EA. Accordingly, Mr Rossato was entitled to paid annual and personal/carer’s leave, compassionate leave and public holiday payments. There was no entitlement to set off or otherwise recover payments that had been made to Mr Rossato on the basis that he was a casual employee.

Casual or permanent?

WorkPac accepted that the Full Federal Court’s earlier decision in Skene1 had been correct in finding that the term ‘casual employee’ when used in the NES has the general law meaning, and that the touchstone of the general law meaning was ‘the absence of a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work’.

In Skene, the Full Federal Court assessed the existence of the ‘firm advance commitment’ by considering the ‘totality of the relationship’, having regard to the conduct of the parties, including the real substance, practical reality and true nature of the relationship. In Rossato, WorkPac invited the Court to depart from that approach, and to assess casual employment by reference solely to the terms of the written contract upon its commencement.

While the Court indicated that it was not wrong to look at the ‘totality of the relationship’, it was not necessary to ultimately determine this issue. That was because even accepting WorkPac’s pure contractual assessment approach, Mr Rossato’s employment amounted to a firm advance commitment, meaning he could not be a casual employee.

Factors leading the Court to this conclusion included:

  • Mr Rossato was contractually required to complete an ‘assignment’ once he accepted it, and he was liable to a financial penalty if he failed to do so. The ‘assignment’ was of an indefinite duration because he was told that the initial 6 month period was a guide only;
  • Mr Rossato was required to serve a ‘6 month minimum qualifying period’;
  • Mr Rossato’s employment continued indefinitely, subject only to termination on notice; and
  • the stable, regular and predictable nature of Mr Rossato’s employment, as prescribed by the annual rosters that Mr Rossato was contractually required to work. These rosters indicated a mutual understanding that the employment offered was organised, structured, ongoing, regular and predictable.

These factors pointed to a conclusion that the employment was not intermittent, irregular or informal and unlikely to continue. Had it been necessary for the Court to consider the ‘totality of the relationship’, the matters identified above also supported a finding of permanent employment. This was reinforced by the manner in which the contracts were performed, including the fact that Mr Rossato:

  • was given the annual rosters in advance and was told that he was to work in accordance with the roster (that is, the function of the roster was to assign work to Mr Rossato);
  • was issued timesheets that were pre-populated with his shift pattern;
  • was never asked whether he intended to attend on a day that he was rostered, and there was a corresponding absence of any meaningful mechanisms by which Mr Rossato was able to accept or reject shifts; and
  • lived over an hour’s drive away and was provided with on-site accommodation. This was inconsistent with an expectation that the employment was intermittent and Mr Rossato having a choice of whether to reject work on a particular day.

The ‘Set-Off’ Claim

WorkPac said that if Mr Rossato was not a casual employee, it should be entitled to have two payments brought into account in discharge of its obligation to pay Mr Rossato his leave and public holiday entitlements.

The first was the amount that it had paid Mr Rossato which exceeded the rate of pay applicable to a permanent employee under the 2012 EA (Overpayment). WorkPac sought to recover this on the basis that the parties had failed to create the type of relationship that they had intended, and therefore, the purpose of this payment did not need to relate to the entitlements being claimed. The second was the casual loading which WorkPac said had been specifically paid in lieu of the leave entitlements now being claimed.

The Court unanimously found that a ‘set off’ was not permitted in either case because there was not a sufficiently ‘close correlation’ between the purpose of the payments and the entitlements being claimed. In respect of the casual loading, the Court found that it had been provided as a substitute for leave, so could not later be assigned to discharge the obligation to provide that leave.

The Court was also unanimous in finding that WorkPac’s reliance on the ‘double dipping’ provisions of the Fair Work Regulations 2009 (Cth)2 was misguided. This was because the regulation only applies when the employee makes a claim to be paid an amount in lieu of one or more of the relevant NES entitlements. As Mr Rossato sought payment of the NES entitlements, not payments in lieu, the Regulation did not apply. In any event, Justice Wheelahan found that the Regulation did not affect the substantive law of ‘set off’ that remains applicable to the determination of such a claim.

The restitutionary claims

WorkPac argued that it was entitled to restitution of the Overpayment or, in the alternative, the casual loading because:

  • it had been mistaken as to the proper characterisation of the employment; or
  • those payments had been made in consideration for a purpose which had failed.

Although they each rejected the ‘mistake’ claim, the approach of the three judges differed, with the exception of one fundamental issue upon which they all agreed: even if WorkPac could demonstrate that it was operating under a mistake, it was not so fundamental that the basis for the contract wholly failed. That is, the contract was not alleged or demonstrated to have been void as a result of the mistake.

That same issue also defeated WorkPac’s ‘failure of consideration’ claim. The Court unanimously finding that the remuneration paid to Mr Rossato was not divisible merely because an assumption which may have formed part of the calculation of the agreed hourly rate of pay did not exist. WorkPac had agreed to pay Mr Rossato his hourly rate in order to secure the performance of work by Mr Rossato. There had been no failure of that object.

What does this mean for employers?

The calls for legislative reform are already coming from employer groups in search of clarity, with proposals to redefine the meaning of a ‘casual employee’ under the Fair Work Act. In the absence of legislative clarity, employers should endeavour to:

  • use casuals only where the employment is truly intermittent, irregular, informal and unlikely to continue for any length of time;
  • offer employment to casuals on a daily or shift basis only, and ensure that there are appropriate mechanisms for the employee to elect whether or not to work on each day or shift;
  • ensure that the express contractual arrangements reflect the arrangements identified above;
  • ensure a casual employee’s rate of pay reflects a separately identifiable casual loading;
  • consider contractual provisions that expressly permit the recovery of the casual loading if the relationship is subsequently found to have been mischaracterised; and
  • avoid casuals working patterns of stable, regular and predictable employment.

Endnotes

  1. Reg 2.03A.
  2. WorkPac Pty Ltd v Skene (2018) 264 FCR 536 (Skene).

This article was written by Dean Farrant, Special Counsel and Georgina Langford, Graduate.

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UK: employment law changes April 2020

The following changes came into force in April:

  • From 6 April 2020 employees are entitled to two weeks’ statutory parental bereavement leave following the death of a child under 18 or a stillbirth after 24 weeks of pregnancy.  There is also a right to statutory pay for those with 26 weeks’ service.  Employers will need to review their existing compassionate leave provision and update/introduce appropriate policies, as well as alerting managers to the new rights.  Further details are set out in our briefing.
  • There are new information requirements for employers recruiting employees or ‘workers’, or changing key terms for existing employees, from 6 April 2020.  Fuller written statements of terms must be given on or before day one of work.  Employers need to update existing templates, create new versions for ‘workers’, and refresh training for HR staff and managers in preparation for the deadline.  Our detailed briefing sets out what has changed and the practical action points for employers.
  • From 6 April 2020, the cost to employers of many termination compensation payments increases. Employers will have to pay Class 1A employer NICs (currently at 13.8%) on termination payments above the £30,000 tax-free threshold in respect of terminations on or after 6 April 2020 (bringing NICs into line with income tax).   
    Also note that from October 2019 the HMRC has made a small adjustment to the method of calculating “PENP” (post employment notice pay) for the purposes of taxing such part of a compensation payment as reflects unworked notice. The change is relevant where an employee is paid monthly but the notice period not worked is not a whole number of months, and it enables the weekly pay to be calculated assuming 30.42 days in the month where the last pay period falls in a month of less than 31 days.
  • The 12 week reference period used for calculating statutory holiday pay for workers without normal working hours (eg zero hours workers), or whose pay varies according to the amount of work done within those hours (eg, piece workers) or with the time of work (eg shift workers whose weekly shifts vary, or term-time only workers), has been extended to 52 weeks (or the number of weeks that a worker has been employed if less than 52) with effect from 6 April 2020. Where that period includes weeks where no remuneration was payable, earlier weeks (to make up 52 in total) should be taken into account when calculating the average pay, but ignoring any weeks earlier than 104 weeks before the calculation point. The aim is to give a more representative figure for the average pay of casual and seasonal workers.  The Government has updated its guidance on calculating holiday pay for workers without fixed hours or pay to reflect the change.  The Government has also launched a campaign to highlight to workers their right to paid holiday leave.
  • Two changes relevant to agency workers apply from 6 April 2020: (i) agencies must issue new work-seekers with a ‘key information document’ in a prescribed format and containing prescribed content (eg, the type of contract, minimum expected rate of pay, method of payment, details of benefits, deductions and paid holiday), before agreeing the terms of the contract;  (ii) currently workers who have a permanent contract with the agency are excluded from the right to equal pay with comparable direct hires from week 13 if they are paid a minimum amount between assignments and the contract satisfies certain conditions;  this “Swedish derogation” is being repealed from 6 April and agencies are required to notify the workers of this by 30 April 2020.  Businesses that hire agency workers employed under the Swedish derogation may need to review, and possibly renegotiate, their contracts with the agencies in light of any increased cost.
  • The threshold required for employees to make a request to their employer (where it has at least 50 employees) to negotiate on the introduction of information and consultation arrangements isreduced from 10% to 2% of employees (subject to a minimum of 15 employees).
  • The annual uplifts to the caps on tribunal compensation, the flat rate of statutory family-related leave pay, statutory sick pay, and minimum wage that will apply from April have been confirmed.  See our blog post here for details. The tax treatment of employer-provided welfare counselling services that are also medical treatment (eg CBT) changes from 6 April (see here) and new regulations also introduce more flexibility in pay arrangements for salaried hours workers in relation to the national minimum wage (the Government’s updated guidance is here).  The Government also confirmed that it will revive the naming scheme for employers who break national minimum wage law but ease the penalty regime in relation to salary sacrifice schemes.  Its response to consultation on this topic is here.
  • Small increases to the “Vento bands” for injury to feelings awards in discrimination and whistleblowing claims have been confirmed: for claims presented on or after 6 April 2020 the bands will be £900 to £9,000 for less serious cases, £9,000 to £27,000 for middle band cases, and £26,300 to £45,000 for the most serious cases (although higher awards can still be made in exceptional cases).

Two expected deadlines have been delayed:

  • The Government has confirmed that the planned extension of public sector off-payroll working rules (IR35) to large and medium-sized private sector companies will be delayed by a year, to April 2021.
  • The Government Equalities Office and the Equality and Human Rights Commission have suspended enforcement of the gender pay gap deadlines for this reporting year (2019/20). The decision means that there will be no expectation on employers to report their data.

UK: no vicarious liability for actions of genuinely self-employed contractor

The Supreme Court has ruled in Barclays Bank plc v Various Claimants that employers will not be vicariously liable for the actions of a self-employed person whom they have engaged, if the individual is genuinely in business on their own account. It overruled the Court of Appeal and found that Barclays Bank was not vicariously liable for sexual assaults carried out by a doctor whom it had engaged as an independent contractor to carry out pre-employment medical examinations.

It is established case law that an employer can be vicariously liable for certain acts of its employees or those in relationships sufficiently “akin to employment”. In an earlier case, the Supreme Court had set out five “policy reasons” which would usually make it fair, just and reasonable to impose vicarious liability. These five factors are: (i) the employer is more likely to have the means to compensate the victim and more likely to be insured; (ii) the tort is committed as a result of activity undertaken on the employer’s behalf; (iii) the activity is likely to be part of the business activity of the employer; (iv) the employer, by employing the individual, created the risk of the tort being committed; and (v) the individual is to some degree under the control of the employer. However, the Supreme Court has now confirmed that the key question remains whether the individual is carrying on business on their own account; if this is clear, then there is no need to consider the five factors. The five factors would only be relevant in doubtful cases to decide whether workers who were technically self-employed or agency workers were effectively part and parcel of the employer’s business so as to make it fair, just and reasonable to impose vicarious liability.

In this case, the doctor had been in business on his own account with a portfolio of patients and clients, which included the bank; he was paid per assessment and could refuse to do an examination. On these facts the doctor was an independent contractor and the bank was not vicariously liable for his actions.

Anna Henderson
Anna Henderson
Professional Support Consultant, London
+44 20 7466 2819

Asia Employment, Pensions and Incentives Update March 2020

Our Asia Employment, Pensions and Incentives update this month looks at:

  • our live webinar that discussed the continued impact of COVID-19 across the region and some of the challenges faced by businesses and organisations;
  • In Indonesia, the proposals outlined in the draft Omnibus Bill on Job Creation, including among other things, widespread changes to termination laws and payments;
  • the obligations in relation to final pay timelines and Certificates of Employment in the Philippines;
  • the data protection laws in Hong Kong that impact on social media screening;
  • our compliance check this month, which focuses on South Korea and the rules in relation to ensuring fixed term workers are given the same pay and benefits as permanent employees; and
  • our comparative article on the implementation of pre-employment psychometric test in PRC, India and Japan.

 

Fatim Jumabhoy
Fatim Jumabhoy
Partner, Singapore
+65 6868 9822
Narendra Adiyasa
Narendra Adiyasa
Partner, Jakarta
+62 21 3973 8000
Tess Lumsdaine
Tess Lumsdaine
Senior Associate, Hong Kong
+852 2101 4122
Rebecca Lim
Rebecca Lim
Associate, Singapore
+65 6868 8063
Gillian Miao
Gillian Miao
Counsel, Mainland China
+86 21 2322 2325

Australia: Labour Hire Licensing Update – December 2019

Further to our previous updates, there have been a number of recent developments to licensing schemes in Western Australia, South Australia and Victoria.

Most notably:

  1. Victoria: The Victorian Labour Hire Authority has announced that where a completed application is submitted to the Authority before midnight on 31 December 2019 and there is no evidence of non-compliance, it will not take enforcement action against a provider providing services without a licence or a host who enters into an arrangement with that provider;
  2. South Australia: In October 2019, the South Australian Government introduced the Labour Hire Licensing (Miscellaneous) Amendment Bill 2019 to the Legislative Council. The Bill seeks to narrow the scope of the South Australian Scheme to capture only those industries where there is a high risk of exploitation (e.g. horticulture or meat processing). The Bill has not yet progressed through Parliament. Until the Bill is passed, the current scheme will continue to apply and the 1 November 2019 deadline for licence application remains;
  3. Western Australia: On 9 December 2019, the Western Australian Government gave in-principle support to introducing a State-based labour hire licensing scheme as part of its response to a major report on wage theft. Details of the scheme have not yet been announced.

Click here to see an updated view of the current status of licensing schemes around Australia at a State and Federal level.

This article was prepared by Wendy Fauvel, Senior Associate and Greta Morand, Solicitor.  

For more information or advice on this topic, please contact:

Rohan Doyle
Rohan Doyle
Partner, Melbourne
+61 3 9288 1099
Kirsty Faichen
Kirsty Faichen
Partner, Brisbane
+61 7 3258 6492
Anthony Longland
Anthony Longland
Partner, Perth
+61 8 9211 7273
Drew Pearson
Drew Pearson
Partner, Sydney
+61 2 9225 5492

UK: first instance tribunal decision that ‘workers’ covered by TUPE

An employment tribunal has ruled that ‘workers’, ie those who are not employed or self-employed but work under a contract personally to do work, qualify for protection under the Transfer of Undertakings (Protection of Employment) Regulations 2006.

TUPE implements the EU Acquired Rights Directive, which provides for the transfer of rights and obligations arising from an employment contract or “employment relationship” covering ’employees’ as defined by national law.  Referring to the Equality Act 2010 definition of ’employee’ as including anyone working under a “contract personally to do work”, the tribunal therefore concluded that such individuals have an “employment relationship” under the Directive.  They should therefore be held as coming within the definition in TUPE, which refers to an individual who works for another ‘whether under a contract or service or apprenticeship or otherwise‘.  As such, they should be included in Employee Liability Information required to be given to the transferee, their contracts would automatically transfer to the transferee on a business transfer or change of contractor covered by TUPE (although they would not be eligible to bring unfair dismissal claims should the transferee terminate their contracts), and they would also be covered by the information and consultation requirements, the penalty for breach of which is up to 13 weeks’ gross pay per individual.

The decision is only at first instance and so not binding authority.  Employers will need to ensure that the possibility of claims based on worker status is addressed in warranties and indemnities, even if they decide, pending appellate authority, not to treat these individuals as in scope (for example, to avoid jeopardising arguments that they are in fact self-employed rather than workers).  (Dewhurst v Revisecatch Ltd t/a Ecourier)

Anna Henderson
Anna Henderson
Professional Support Consultant, London
+44 20 7466 2819

Future of Work: Adapting to the democratised workplace

The new world of work: report warns of an unprecedented rise in workplace activism

Across all sectors and geographies workers are becoming more vocal in articulating their views – about the workplace, their employer and about wider social issues – and increasingly holding organisations to account, enabled and amplified by social media. This trend is set to grow and gives rise to new and distinct risks for employers.

The paradox of the robotic age is that automation will only make human skills more valuable. The World Economic Forum estimates that 75 million jobs will be lost to automation by 2022 but 133 million new jobs will be created – jobs requiring uniquely human qualities such as emotional intelligence and fine judgment. But unlike robots, humans have opinions – and that presents its own challenges for employers.

To help prepare for what’s ahead, we surveyed ~400 cross-sector C-suites worldwide to understand the triggers and scale of this trend.

Activism on the rise

Key findings reveal that in the next 3-5 years:

  • Over 80% of companies predict a rise in workforce activism with 95% expecting an increase in workers use of social media to amplify their voice
  • Respondents anticipate an increase in online digital petitions with 77% expecting to see more crowdfunded legal challenges
  • Workforce activism is a significant potential threat to corporate reputation, warning this could cost organisations up to 25% of global revenue each year
  • Almost 50% see activism as a positive force for change.

 

The voice of the workforce will insist on being heard as never before. If traditional, internal communication channels fail to meet their needs, external means of raising concerns will fill the gap.

Adapting to the democratised workplace: Six steps to success

Workplace activism in the age of digital communication calls for a new mindset from employers. Leadership styles may have to change and established procedures and policies will certainly have to be adapted to contend with a more democratised workforce. Protecting and nurturing the trust and engagement between employers and the workforce in this environment is paramount. The organisations that will thrive will be those that find a way to redefine the workforce relationship, manage tensions and create a common, compelling vision.

To succeed in the new world of work download your copy of the report here.

Video: The voice of the workforce

 

Emma Rohsler
Emma Rohsler
Regional Head of Practice (EMEA), Paris
+33 1 53 57 72 35
Miles Bastick
Miles Bastick
Regional Head of Practice (APAC), Australia
+61 2 9225 5722
Andrew Taggart
Andrew Taggart
Head of Employment (UK), London
+44 20 7466 2434
Karen IP
Karen IP
Partner, Mainland China
+86 10 65355135
Fatim Jumabhoy
Fatim Jumabhoy
Partner, Singapore
+65 68689822
Barbara Roth
Barbara Roth
Partner, New York
+1 917 542 7858

Asia Employment, Pensions and Incentives Update November 2019

This month’s update looks at:

Finally, a reminder to readers in Jakarta – we will be holding an event to support the launch of our Asia Employment Law Guide on 13 November. If you would like to attend, please contact Chrysti Claudia Luckynelly at chrysti.luckynelly@hbtlaw.com.

For readers based in Singapore – we are holding a breakfast seminar discussing the enforceability of restraint of trade and non solicitation clauses across the region on 19 November. If you would like to attend, please RSVP.

 

Fatim Jumabhoy
Fatim Jumabhoy
Partner, Singapore
+65 6868 9822
Narendra Adiyasa
Narendra Adiyasa
Partner, Jakarta
+62 21 3973 8000
Tess Lumsdaine
Tess Lumsdaine
Senior Associate, Hong Kong
+852 2101 4122
Rebecca Lim
Rebecca Lim
Associate, Singapore
+65 6868 8063

UK: Supreme Court extends whistleblowing protection to non-workers and highlights potential to challenge ‘status’ requirements for other rights

The Supreme Court has ruled that UK whistleblowing laws must be read as providing protection against detriment to whistleblowers who do not satisfy the express requirement to be a ‘worker’, in this case judicial office-holders, in order to comply with the European Convention of Human Rights.

Article 14 of that Convention makes it unlawful to interfere with other Convention rights, such as the Article 11 right to freedom of expression, on prescribed grounds including status. Critically, the Court found that an occupational classification as worker or employee was clearly capable of being a “status”.

The decision opens the gate for other non-‘workers’, such as non-executive directors, volunteers, or job applicants to bring whistleblowing detriment claims. It also highlights the potential to challenge the requirement for worker or employee status in respect of other claims within the scope of Convention rights such as trade union and collective consultation rights. (Gilham v Ministry of Justice)

Anna Henderson
Anna Henderson
Professional Support Consultant, London
+44 20 7466 2819

Asia Employment, Pensions and Incentives Update October 2019

The October monthly update looks at:

  • in Singapore, the upcoming changes to compensation limit increases in the Work Injury Compensation Act;
  • a recent regulation that widens the number of available positions that expatriate workers can hold in Indonesia;
  • a Hong Kong District Court decision that considered whether conduct justifying summary dismissal can act as a defence to a discrimination claim;
  • our Compliance Check that reminds employers of their obligations towards HIV and AIDS-positive employees in the Philippines;
  • a comparison between the laws relating to working hours and overtime in Malaysia, the Philippines and Vietnam.

Finally, a reminder to readers based in Kuala Lumpur and Jakarta – we will be holding events to support the upcoming launch of the Asia Pacific Employment Law Guide in Kuala Lumpur on 6 November and Jakarta on 13 November. If you would like to attend either of these events, please contact Chrysti Claudia Luckynelly at chrysti.luckynelly@hbtlaw.com.

Fatim Jumabhoy
Fatim Jumabhoy
Partner, Singapore
+65 6868 9822
Narendra Adiyasa
Narendra Adiyasa
Partner, Jakarta
+62 21 3973 8000
Tess Lumsdaine
Tess Lumsdaine
Senior Associate, Hong Kong
+852 2101 4122
Rebecca Lim
Rebecca Lim
Associate, Singapore
+65 6868 8063