The verdict's out, and "double-dipping" is in - says the Federal Court. Yesterday, the Full Bench handed down its decision in Workpac v Rossato, confirming that casual employees who work on a regular and systematic basis can get permanent employment entitlements, such as annual leave, despite receiving casual loading.

After going down in the similar Skene case (see here), Workpac decided to run it back with the hope of getting the decision it and, to be honest, the wider business community, was hoping for.

Workpac first sought to argue that simply labelling Rossato a casual employee and paying him the casual loading was enough for the employment to be characterised as casual.

The Full Bench said "no", reaffirming that an employment relationship must be characterised with regard to its substance, not form. With Rossato working regularly and consistently for a number of years, it was easy for the Court to find that he was definitely not a casual.

However, the real battleground was on the "double-dipping" point. Namely, if Rossato wasn't a casual, arguably, it would be unjust for him to get both the casual loading and the permanent employment entitlements for which the additional loading compensates.

Workpac argued against "double-dipping" on the basis that:

  • the casual loading was paid under its mistaken belief that Rossato was a casual and therefore, Workpac was entitled to "restitution"; or
  • the additional casual loading could be used to offset the permanent employment entitlements on a similar basis that annual salaries are often used to offset employment entitlements such as overtime and penalty rates.

The Court also wasn't persuaded by either of these arguments.

On Workpac's supposed "mistake", the Court held that the company would have paid Rossato his rate of pay regardless of whether Workpac believed the casual loading applied. And in relation to offsetting, there was nothing in the agreements between Workpac and Rossato that indicated that the casual loading had the specific purpose of offsetting permanent employment entitlements.

There was also the problem (for Workpac) of the Fair Work Act putting tight restrictions and limitations on core entitlements, such as annual leave and personal leave, from being cashed-out.

Put simply, the Court approved "double-dipping".

Unsurprisingly, businesses and employer groups are in panic-mode, fearing an onslaught of large double-dipping claims brought by their casual workforce. The AI Group has already called for urgent legislation to remedy the situation.

The government is stuck between a rock and a hard place on this one. On one view, businesses have long been taking advantage of casual work arrangements on the failed assumption that "double-dipping" wouldn't be allowed. However, the likelihood of expensive claims is real and it's the last thing businesses of any size need right now.

We think there's a high chance the Morrison Government will come to the rescue of employers, using the economic crisis as a basis to rationalise its necessity. But then again, nothing is certain these days.

We do not disclaim anything about this article. We're quite proud of it really.