Workplace & Employment
On 20 May 2020, the Full Court of the Federal Court of Australia handed down its decision in WorkPac Pty Ltd v Rossato. The case centres around labour hire firm WorkPac, which employed Robert Rossato as a mine worker at two Queensland mines owned by Glencore. Mr Rossato was a casual employee, on rolling contracts, over a three-and-a-half-year period. As a casual, he was paid an extra 25 percent loading on top of his wage — which is the usual practice to make up for not being given benefits such as annual leave. The Full Federal Court dismissed WorkPac’s application for a declaration that Mr Rossato was a casual employee, instead finding that Mr Rossato was a permanent employee. It was found that because Mr Rossato's employment was "regular, certain, continuing, constant and predictable", and he was given rostered shifts well in advance, he was eligible to entitlements that full time employees receive under the National Employment Standards (NES) in the Fair Work Act 2009 (Cth) and the relevant Enterprise Agreement: being paid annual leave, paid personal/carer’s leave, paid compassionate leave, and payment for public holidays. This is an important decision for employers who engage casuals, whether directly or as a host employer. Pending any intervention by the Federal Government or appeal to the High Court, employers should now carefully review their casual employment arrangements, update the terms of their casual contracts, and revisit their arrangements with labour hire companies and their workers. In particular: • Employers should review their casual arrangements with a view to determining whether some other form of engagement is more appropriate – including part time and fixed term arrangements. • Assuming casual engagement is still appropriate, specific attention should be given to the employee’s written contract to ensure that the casual loading is a separately identifiable amount that is stated to be paid as a result of the employee not being entitled to NES or other entitlements peculiar to permanent employment. We also suggest a statement to the effect that if the employment is subsequently determined not to be casual employment, the employer is entitled to repayment of the casual loading. • Regular reviews of casual arrangements should be conducted – at least once every 12 months – to assess the likelihood of the employment being a “firm advance commitment” of employment. We can assist you if you have any questions about how the Workpac v Rossato decision may impact the work arrangements in your own organisation or more generally in relation to how you are employing or engaging your workforce.
Workplace & Employment
Q: Some mid-career employees have been working for 10 years without a formal employment contract. I've had no problem without an employment contract, but should I still have a written employment contract? (Male in his 40s working in the HR department of a Japanese company) A: Employment contracts do not necessarily have to be reduced in writing. Oral employment contracts have legal effect. Even if specific terms of employment contract have not been discussed, there is in principle an employment relationship if an employee actually works for an employer. It goes without saying that wages, working hours, annual leave and superannuation, etc. must meet the minimum labour standards set by law, even if no detailed employment conditions are negotiated. However, labour standards set by law are complex. Employers may inadvertently violate minimum labour standards if they do not ensure that minimum employment standards are well covered in the employment contract. Fair Work Ombudsman may impose a fine in case of violation of the standards. Also, even if employees are employed under conditions that exceed the minimum labour standards, it is necessary to confirm and reduce in writing that both parties understand the details of the terms. When an annual salary is presented (as opposed to hourly wages), there could be a disagreement between the parties about what their wage covers. For example, an employer may understand that the salary includes reasonable overtime work, while an employee understood that overtime works are billable separately. In this case, the employer is legally required to notify the employee in writing that the overtime payment is included in the salary. Another common issue is that in the absence of a contract, an uncertainty arises whether a notice is required to terminate an employment contract. Generally, if an employment contract states that a notice of dismissal should be given before certain weeks (except for unfair and illegal dismissal), an employee must be informed of the termination before that period. However, in the absence of a written agreement, the notice of termination must be a reasonable period. The reasonable period is determined case-by-case. If you hire a position that involves creativity, you need to make sure who owns the intellectual property that arises as your employees perform their duties. In addition, it will be disadvantageous for employers if an employment contract fails to incorporate confidentiality obligations and non-competition obligations after termination. Especially for mid-career employees or employees in senior management positions, if above terms are not stipulated in their employment contract, it can lead to major legal issues later. Though it may be difficult to ask an employee to sign an employment contract suddenly, it is recommended that a written employment contract is presented to employees at their promotion.