Unfair dismissal and “continuous” casual employment

This passage from a recent unfair dismissal case in the Fair Work Commission sets out the legal principles which apply when determining whether a period of casual employment constitutes “a period of continuous employment” for the purposes of qualifying for protection from unfair dismissal.

“Legislative framework and authorities

[15] As observed, a person is protected from unfair dismissal if they have completed the minimum employment period. 19 Section 383 of the Act sets out the meaning of the minimum employment period as follows:

383 Meaning of minimum employment period

The minimum employment period is:

(a) if the employer is not a small business employer – 6 months ending at the earlier of the following times:

(i)  the time when the person is given notice of the dismissal;

(ii) immediately before the dismissal; or

(b) if the employer is a small business employer – one year ending at that time.

[16] Section 384 of the Act is concerned with how an employee’s period of employment is calculated for the purpose of determining if the employee has satisfied the minimum employment period. The relevant part reads:

(1) [Meaning of period of employment]

An employee’s period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee. (emphasis added)

[17] The starting point is that a period of employment is also referred to as a period of continuous service.

[18] Section 22 defines the terms ‘service’ and ‘continuous service’, the relevant subsections follow:

General meaning

(1) A period of service by a national system employee with his or her national system employer is a period during which the employee is employed by the employer, but does not include any period (an excluded period) that does not count as service because of subsection (2).

(2) [Exceptions to meaning of service]

The following periods do not count as service:

(a) any period of unauthorised absence;

(b) any period of unpaid leave or unpaid authorised absence, other than:

(i) a period of absence under Division 8 of Part 2-2 (which deals with community service leave); or

(ii) a period of stand down under Part 3-5, under an enterprise agreement that applies to the employee, or under the employee’s contract of employment; or

(iii) a period of leave or absence of a kind prescribed by the regulations;

(c) any other period of a kind prescribed by the regulations.

(3) [Excluded period does not break continuous service]

An excluded period does not break a national system employee’s continuous service with his or her national system employer, but does not count towards the length of the employee’s continuous service…

[19] A period of continuous service can be made up of a series of periods of service. 20 An employee may have a series of contiguous periods of service with an employer that may count towards a single period of employment (period of continuous service) with that employer.21

[20] However, continuous periods of service will only count towards the employee’s period of employment if the requirements in s 384(2)(a)(i) and (ii) are met. Those requirements are, in short, that the employment was on a regular and systematic basis, and during the period of service, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis.

[21] In the decision of Ponce v DJT Staff Management Services Pty Ltd t/as Daly’s Traffic (Ponce), 22 it was observed that ‘it is the “engagement” that must be regular and systematic; not the hours worked pursuant to such engagement’.23 It was further explained in Ponce, that it is not necessary to establish that shifts, and start and finish times were regular or rostered, to establish that the employment was on a regular and systematic basis’.24

[22] In Yaraka Holdings Pty Ltd v Giljevic (Yaraka), 25 Madgwick J, concurring with the majority, said, with respect to the phrase ‘regular and systematic’, that a ‘regular… basis’ may be constituted by frequent though unpredictable engagements, and that the term ‘systematic basis’, did not have to involve predictability concerning those engagements or an assurance of work. Regarding ‘systematic basis’, he said that it implied something more than regularity, if regularity were to refer to frequency. The basis of engagement, explained Madgwick J, had to exhibit something that could fairly be called a system, method, or plan (cf the definition of ‘systematic’ in the Macquarie Dictionary, revised 3rd edn, 2001).

Consideration

[23] The word ‘engagement’ at common law, was understood to be each occasion that a casual employee worked. In Wayne Shortland v The Smiths Snackfood Co Ltd (Shortland), 26 the Full Bench observed that casual employees may be engaged from week to week, day to day, shift to shift, and so forth. Therefore, no causal employee had a continuous period of employment beyond any single engagement.27 However, the Full Bench further explained that the criteria in s 384(2)(a) made it clear that s 384 did not proceed on the basis that a casual employee’s period of employment for the purposes of the unfair dismissal remedy starts and ends with each engagement, as understood in the common law of employment.28

[24] In Yaraka, the Court noted that it is the engagement of a casual employee that must be regular and systematic, not the hours worked pursuant to such engagement. 29 It also held that the term ‘regularly’ should be construed liberally, and that ‘systematic’ does not mean predictable.30 However, as was observed in the Full Bench decision in Bronze Hospitality Pty Ltd v Janell Hansson,31 the Court in Yarkara did not say or suggest that the hours of work are analytically unimportant, and clearly, the days on which a person works and the hours worked on those days are relevant to the consideration of whether casual employment is regular and systematic, and whether the person has a reasonable expectation of ongoing employment.32

[25] In the Federal Court judgment of Bronze Hospitality Pty Ltd v Hansson (No 2) (Bronze Hospitality No.2), 33 Jackson J expressed:

Section 384(2)(a)(i) calls for an evaluation of whether the employment as a casual employee was on a regular and systematic basis. So it is the relationship of employment that must be characterised, one way or the other. It is true that the basis of the relationship can change over time, so it is necessary to determine when it became employment on a regular and systematic basis. But if, looking back after the end of the relationship (as is of course inevitable in an unfair dismissal case) the evidence as a whole supports a characterisation of its basis as regular and systematic from the beginning, it does not matter that looking forward from the beginning, one would not have yet seen all that evidence. The basis of the employment was, in fact, regular and systematic from the start, even if sufficient evidence of that fact did not accumulate until later.

[26] This Commission does not know what days were worked by Mrs Gu or what her usual start and finish times were, because neither party adduced evidence of such. The question to therefore ask from the outset is whether it will always be the case that this evidential deficiency will defeat a contention that for the duration of the employment period, in this case, in relation to Mrs Gu’s employment period, it cannot be found that she was employed on a regular and systematic basis. I am not persuaded that this will be the case in all circumstances.

[27] However, while the evidence before me clearly supports a finding that there was the repeated allocation of shifts to Mrs Gu on a weekly basis for the entirety of the employment period, the evidence of both Mrs Gu and GFC was that the number of hours worked each day fluctuated, the days worked each week differed, and as Mrs Gu put it, every day is different and there were no fixed hours or days of work.

[28] In my opinion, the evidence does not support a finding that Mrs Gu’s employment with GFC as a casual employee was on a regular and systematic basis. Whilst Mrs Gu worked a number of hours each week, there appeared to be no evidence to suggest that there was something more than this regularity. The allocation of hours appeared remarkably ad hoc – with no system being able to be observed.

[29] However, if I am wrong on this point, it nevertheless remains that I am not convinced that during the period of service as a casual employee, Mrs Gu had a reasonable expectation of continuing employment on a regular and systematic basis.

[30] Returning to Bronze Hospitality No.2 and the proper construction of s 384(2)(a) of the Act, Jackson J stated:

…If the employee’s expectation was based, not on anything the employer said, but solely on her own observation of the regularity of her work shifts, it would be wrong to look back and say that, as it turned out, there was a reasonable expectation from the very beginning. An expectation could not be reasonable until the time at which the pattern necessary to make it so has emerged.

But I do not accept that as a matter of construction of s 384(2)(a)(ii), a week and a half of regular employment cannot establish that pattern. The ordinary meaning of the words of s 384(2)(a)(ii) requires that the employee has subjectively formed an expectation of continuing employment by the employer on a regular and systematic basis. If that expectation has been formed, it is necessary to assess whether it is a reasonable one. It is true that the word ‘reasonable’ is generally used in the law to import an objective standard: Adams v Bracknell Forest Borough Council [2004] UKHL 29; [2005] 1 AC 76 at [33] (Lord Hoffmann). But the FWA does not limit the matters that may be taken into account in determining whether the expectation is reasonable. Certainly, the shorter the period of employment, generally the harder it will be for the employee to establish that he or she reasonably relied on a pattern of work, if that is the basis of his or her reasonable expectation. But the reasonableness of the expectation depends on all the circumstances, and there is no minimum period in the legislation that makes a week and half insufficient in every case. 34 (Italics for emphasis)

[31] In WorkPac Pty Ltd v Skene (Skene), 35 the Full Court observed that what is agreed at the commencement of the employment is relevant to the characterisation process (of the legal relationship). While their Honours were referring to the objective characterisation of whether employment was casual, part-time or full-time, in Bronze Hospitality No.2, the Federal Court proposed that the same must go for the question of whether an employee has objectively reasonable grounds for an expectation of continuing employment on a regular and systematic basis. The High Court in Workpac Pty Ltd v Rossato & Ors (Rossato)36 did not align itself with the reasoning of the Full Court in Skene in respect of the characterisation of the legal relationship. I will shortly touch on this further. However, what was proposed by the Court in Bronze Hospitality No.2 in respect of s 384(2)(a)(ii), appears undisturbed.

[32] GFC referred this Commission to several judgments of the High Court, 37 which it said reinforced the central importance of the applicable employment contract, because it was the contractual documents that were the ‘true, reliable and realistic statements of the rights and obligations to which the parties have agreed to bind themselves’.38

[33] Turning now to Rossato, 39 the High Court in its judgment addressed the question of what constitutes a ‘firm advance commitment to ongoing work’ for the purpose of ascertaining the existence of casual employment under the Act (as it was prior to the amendments introduced by the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth)). In Rossato, the plurality emphasised that the determination of whether the employment in question could be characterised as casual in nature necessarily proceeded upon analysis of the terms of the contract of employment. At [57] of Rossato, the plurality said:

A court can determine the character of a legal relationship between the parties only by reference to the legal rights and obligations which constitute that relationship. The search for the existence or otherwise of a ‘firm advance commitment’ must be for enforceable terms, and not unenforceable expectations or understandings that might be said to reflect the manner in which the parties performed their agreement. To the extent that Bromberg J expressed support for the notion that the characterisation exercise should have regard to the entirety of the employment relationship, his Honour erred.(footnote omitted)

[34] GFC referred the Commission to the recent decision of Drakoulis v TAFE Online Pty Ltd (Drakoulis), 40 a decision which considered an out of time unfair dismissal application (see s 394(3) of the Act). In Drakoulis, the Commissioner expressed that whilst it proved unnecessary to determine the issue of the minimum employment period, he considered that the Applicant could not have had a reasonable expectation of continuing employment on a regular and systematic basis. The Commissioner considered this to be the case because the contract of employment was clear, and because ‘[T]he High Court had made it clear that the contract is king. It trumps what actually occurred in the employment relationship’.41

[35] GFC contended that Mrs Gu could not have held any expectation of ongoing employment by virtue of the clear words contained in her employment contract.

[36] Mrs Gu’s employment contract set out the following:

Casual Engagements

As stated above, this offer is for casual employment.

As a casual employee, you will be offered casual engagements from time to time as and when required by the Company.

Each casual engagement will constitute daily hire. Your employment will being and end with each casual engagement. However, each casual engagement will be covered by the terms and conditions set out in this letter.

You will not be under any obligation to accept each offer of a casual engagement and the Company will not be under any obligation to offer you any further casual engagements.

As a casual employee, you are not entitled to paid statutory leave benefits.

For the avoidance of doubt, nothing in this letter is intended to give rise to a permanent employment relationship, or an expectation of regular, ongoing engagements. 42

[37] At this juncture it is timely to make some observations.

[38] Section 384(2) of the Act informs the reader when a casual employee’s period of service will count towards the employee’s ‘period of employment’. It is not a provision of the Act that prescribes the requirements to be satisfied for employment to be determined as casual employment. Section 384(2) proceeds on the basis that the character of the legal relationship between employer and employee has already been determined. Unless the legal relationship is one of casual employment the provision has no utility in respect of other types of legal relationships.

[39] To determine whether the legal relationship is one of casual employment, the High Court has ruled that the determination of the character of the legal relationship between the parties is undertaken only by reference to the legal rights and obligations which constitute that relationship. 43 In this case, neither party cavils with the proposition that Mrs Gu is an employee employed on a casual basis. The express terms of Mrs Gu’s employment contract state as much.

[40] However, ss 382(a)(i) and (ii) require an assessment as to whether the employee was a ‘regular casual employee’, principles of which have already been traversed and applied to the facts in this case, and whether the employee had a ‘reasonable expectation’ of continuing employment by the employer on a regular and systematic basis.

[41] In my view, the consideration of ‘reasonable expectation’ is twofold. It requires, as was identified in Bronze Hospitality No.2, an examination of whether: (a) the employee had an expectation of continuing employment by the employer on a regular and systematic basis (subjective); and (b) that expectation, if held, was ‘reasonable’ (objective).

[42] In determining whether the expectation was ‘reasonable’, regard is had to the employment contract as established at the time employment commenced. However, in my view consideration extends to all circumstances throughout duration of employment, as they prove relevant. 44 As observed in Bronze Hospitality No.2, the Act does not limit the matters that may be taken into account in determining whether the expectation is reasonable. Such matters will include, for example, whether there are any mutual undertakings that are to be inferred from conduct or implied that take effect as contractual variations, or any subsequent express contractual variation. Matters may also include the period of employment, representations made (and by whom), rostering arrangements (particularly those made amply in advance), the industry in which the work is performed, and so on.

[43] Mrs Gu’s employment contract negated ‘expectation’ by providing that, ‘[F]or the avoidance of doubt, nothing in this letter is intended to give rise to a permanent employment relationship, or an expectation of regular, ongoing engagements. 45 There was no evidence before me to suggest that the parties had departed from that which was agreed in respect of the expectation.

[44] Furthermore, it was apparent from Mr Hinchey’s evidence that GFC’s business was wholly dependent on the fishing catch and therefore labour was entirely reliant on production, which was not possible to forward plan. 46 While Mrs Gu had worked some 14 months for GFC, it was evident that GFC was not positioned to provide a guarantee of ongoing employment and the evidence did not point to one having been given through the duration of employment. The context of the employment relationship, including the work which Mrs Gu was engaged in, the industry in which that work was performed, the organisational structure of GFC’s operations, in addition to what Mrs Gu had committed to provide – her services on an unplanned casual basis, all amounted to evidence that any expectation of continuing employment (on a regular and systematic basis) which may have been held, would not have been reasonable in all the circumstances.

[45] In short, Mrs Gu may have held an expectation of continuing employment on a regular and systematic basis, which in truth was difficult to ascertain from the evidence provided (levelling no criticism to Mrs Gu in this respect), but even if she did, in all the circumstances it was not reasonable.

[46] It is timely to return to GFC’s submissions concerning Drakoulis. It was acknowledged in that decision that the issue of the minimum employment period did not warrant determining. It therefore appears that a detailed account of the facts relevant to such and consideration of apposite legal principles were quite rightly not traversed at length, given the assessment made. In the circumstances the proposition advanced in that decision as referred to by GFC, was likely not misplaced when one considers the characterisation of the legal relationship, after all the contract between employer and employee has primacy. However, when considering whether an employee held a ‘reasonable expectation’ for the purposes of s 384(2)(a)(ii), the preferable approach in my view, is that the contract is an important relevant consideration when considering the reasonableness of an expectation.”

Gu v Geraldton Fishermen’s Co-operative Pty Ltd. (2022) FWC 1342 delivered 3 June 2022 per Beaumont DP