FEDERAL COURT OF AUSTRALIA

WorkPac Pty Ltd v Rossato [2020] FCAFC 84

ORDERS

THE COURT ORDERS THAT:

1.    The Applicant and Respondent confer by 26 May 2020 with a view to reaching agreement on the terms of the declarations and orders appropriate to give effect to the Court’s judgment and by 27 May 2020 file the minutes of the proposed declarations and orders on which they agree.

2.    In the absence of agreement –

(a)    by 27 May 2020 each of the Applicant and the Respondent file and serve the terms of the declarations and orders which it is proposed will give effect to the Court’s judgment together with a written submission in support, not exceeding three pages; and

(b)    by 3 June 2020 the Applicant and the Respondent, if so advised, file and serve any submissions in reply, not exceeding three pages.

3.    Any party or Intervener seeking an order for costs is by 27 May 2020 to file and serve a written submission, not exceeding three pages, setting out the order sought and any submissions in support.

4.    Any party or Intervener opposing an order for costs is by 3 June 2020 to file and serve a written submission, not exceeding three pages, in opposition.

5.    The Court will determine any outstanding issues concerning the terms of the declarations and orders and any application for costs on the papers.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BROMBERG J:

INTRODUCTION and summary of conclusions

1    This proceeding concerns an application by the applicant (“WorkPac”) for various declarations with respect to its employment of the respondent (“Mr Rossato”).

2    Mr Rossato was an employee of WorkPac over the period of 28 July 2014 until 9 April 2018. Over that period, six consecutive contracts of employment were made between Mr Rossato and WorkPac. WorkPac treated each employment as a casual employment and Mr Rossato as a casual employee.

3    On 2 October 2018, Mr Rossato wrote to WorkPac claiming that, contrary to WorkPac’s treatment of him, he had not been a casual employee. For that claim he relied on the Full Court judgment of WorkPac Pty Ltd v Skene (2018) 264 FCR 536. He claimed outstanding entitlements to paid annual leave, paid personal/carer’s leave and paid compassionate leave and public holiday pay entitlements due under the Fair Work Act 2009 (Cth) (“FW Act”) and an enterprise agreement made under that Act known as the WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012 (“Enterprise Agreement”).

4    Mr Rossato claims that throughout the whole of the approximately three and a half years of his continuous employment by WorkPac, WorkPac did not pay him and he did not receive any paid annual leave, any paid personal/carer’s leave or any paid compassionate leave, or payment for any Christmas Days, Boxing Days or New Year’s Days which were not worked by him over the Christmas shut-down periods. The claim for paid compassionate leave and paid personal/carer’s leave is not accurately identified in the evidence, but concerns a period of about four weeks immediately prior to Mr Rossato’s retirement, when his partner fell seriously ill. The initial two days are claimed as paid compassionate leave and the remainder of the period as paid personal/carer’s leave. Mr Rossato did not attend for work during that period and claims that he was not paid whilst taking that leave.

5    Two days after Mr Rossato made his demands upon WorkPac, WorkPac commenced proceedings in this Court. It seeks declarations, which in summary and broadly stated, would declare:

(a)    that by each of six contracts of employment, or alternatively by one or more contracts of employment – Mr Rossato was an employee of WorkPac under a written contract; was a casual employee at common law and within the meaning of ss 86, 95 and 106 of the FW Act; was a “Casual Field Team Member” (“Casual FTM”) and not a “Permanent Field Team Member” (“Permanent FTM”) within the meaning and for the purposes of the Enterprise Agreement and that Mr Rossato was therefore not entitled to paid annual, personal/carer’s, or compassionate leave under the FW Act or the Enterprise Agreement or payment for public holidays under the Enterprise Agreement;

(b)    alternatively, that Mr Rossato’s pay incorporated a casual loading of 25% of the minimum rate of pay payable under the Enterprise Agreement which was in part paid in lieu of Mr Rossato’s entitlements to annual leave, personal leave (including carer’s leave and compassionate leave) under the FW Act or the Enterprise Agreement and that WorkPac is entitled to “set-off” any amount owed to Mr Rossato with respect to those entitlements as well as the claimed entitlement to payment for public holidays;

(c)    alternatively, that by reason of a total failure of consideration, or alternatively, mistake, WorkPac is entitled to restitution of that part of the remuneration paid to Mr Rossato being:

(i)    the difference between the amount payable to a Flat Rate “Permanent FTM” and a flat rate “Casual FTM” under the Enterprise Agreement; or, in the alternative

(ii)    the Casual Loading incorporated into the rate of pay of a Flat Rate “Casual FTM” under the Enterprise Agreement.

6    The proceeding was allocated to be heard and determined by a Full Court. Further detail as to how the proceeding came to be litigated and heard by the Full Court and the unusual features of the litigation are set out in the reasons of White J at [276].

7    Leave was granted to intervene to the Minister for Jobs and Industrial Relations (“Minister”), the Construction, Forestry, Maritime, Mining and Energy Union (“CFMMEU”) and Mr Petersen (the applicant in a separate class action brought against WorkPac in which claims for annual leave entitlements by employees said to have been wrongly treated as casual employees are also made). Broadly speaking, the CFMMEU and Mr Petersen made submissions supportive of Mr Rossato’s case. The Minister’s submissions dealt only with “set-off” and restitution and were supportive of WorkPac’s case.

8    The facts in this proceeding are largely uncontested and were set out in a Statement of Agreed Facts and an addendum to that Statement (“agreed facts”).

Summary of Conclusions

9    I have had the very significant benefit of reading in draft, the separate reasons of each of White and Wheelahan JJ. I respectfully agree with the dispositive conclusion reached by their Honours on each of the matters in issue. In relation to many of the issues I need to address, I have provided my own reasons. Where indicated, I have gratefully adopted the reasoning of White J or Wheelahan J.

10    For the reasons that follow I have concluded that:

(i)    In each of his employments with WorkPac, Mr Rossato was  “other than [a] casual employee” within the meaning of ss 86, 95 and 106 of the FW Act and not excluded from the entitlements to paid annual leave, paid personal/carer’s leave and paid compassionate leave provided in Divs 6 and 7 of Pt 2-2 of the FW Act and payments for public holidays in accordance with s 116 of the FW Act; and

(ii)    In each of his employments with WorkPac, Mr Rossato was a “Permanent FTM” and not a “Casual FTM” for the purposes of the Enterprise Agreement and was entitled to paid annual leave, paid personal/carer’s leave and paid compassionate leave and payment for public holidays in accordance with that Agreement.

11    WorkPac has not made payments to Mr Rossato in discharge of his outstanding entitlements to paid annual leave, paid personal/carer’s leave, paid compassionate leave or for public holidays and is not entitled to the “set-off” it claims.

12    WorkPac is not entitled to restitution of the monies it claims, either on the basis of a failure of consideration or on the basis of mistake.

13    Having reached those conclusions, subject to providing the parties with an opportunity to address the final form of the declarations that should be made and on the basis that WorkPac and Mr Rossato have informed the Court that they will agree the quantum of the following entitlements, I would make the following declarations:

(a)    In the period between 28 July 2014 and 9 April 2018, Mr Rossato was employed by WorkPac under six consecutive contracts of employment constituted by his acceptance of offers of employment dated 17 July 2014, 29 May 2015, 19 February 2016, 27 September 2016, 11 November 2016 and 21 December 2016 respectively;

(b)    In his employment under each of the contracts, Mr Rossato was other than a casual employee for the purposes of ss 86, 95 and 106 of the FW Act and was a “Permanent FTM” and not a “Casual FTM” for the purposes of the Enterprise Agreement;

(c)    Mr Rossato is entitled, pursuant to s 90(2) of the FW Act, to payment in respect of his accrued entitlement to paid annual leave;

(d)    Mr Rossato is entitled, pursuant to ss 99 and 106 of the FW Act and pursuant to cll 19.7-19.9 and 19.12 of the Enterprise Agreement, to payment in respect of his absences from work for which he should have been paid personal/carer’s leave and compassionate leave; and

(e)    Mr Rossato is entitled, pursuant to s 116 of the FW Act and cl 20 of the Enterprise Agreement, to payment in respect of those public holidays on which, but for the Christmas shutdowns, he would have been rostered to work.

14    I would dismiss WorkPac’s claims for declarations and, subject to considering any application for costs, otherwise dismiss WorkPac’s originating application.

15    These reasons are structured as follows. I will identify by way of background the relevant parties, outline in general terms the relation between them, the contracts they made, and broadly, the context in which Mr Rossato worked under those contracts. I will then set out the sources of the entitlements said by Mr Rossato to be outstanding under the FW Act. As Mr Rossato’s claim to each of those entitlements depends upon whether he was “other than [a] casual employee” it will be necessary to turn to the meaning of “casual employee” under the relevant provisions of the FW Act. Given that it is accepted that the presence of a “firm advance commitment” (a concept I shall shortly explain) would result in the conclusion that Mr Rossato was “other than a casual employee”, I will next address how the existence or absence of a “firm advance commitment” is to be assessed. A major issue in contest, although in the end not determinative, is whether that assessment must be conducted purely by reference to the contract or alternatively through the process of characterising the nature of the employment and, if by reference to the contract, whether or not post-contractual conduct may be taken into account.

16    Turning first to a purely contractual analysis, I will set out the relevant and applicable contractual principles before I turn to construe each of Mr Rossato’s contracts to determine whether or not it included a “firm advance commitment”. I will turn then to consider whether, if the assessment is to be conducted on the wider basis of a characterisation of Mr Rossato’s employment, a “firm advance commitment” existed or not.

17    Next I shall consider the entitlements claimed by Mr Rossato under the Enterprise Agreement. As those claims depend on Mr Rossato not being a “Casual FTM” under the Enterprise Agreement, I will determine whether he was an employee of that category or instead a “Permanent FTM”. Lastly, I will turn to WorkPac’s case that if Mr Rossato was “other than a casual employee” or was a “Permanent FTM” he is nevertheless not entitled to the entitlements he claims. As earlier indicated, WorkPac relies on a claimed “set-off” and also claims restitutionary relief.

BACKGROUND FACTS

18    Mr Rossato was a qualified and experienced production employee in the open cut black coal mining industry. WorkPac is a labour hire company. WorkPac engages workers and provides their services to its clients who require labour. WorkPac specialises in the provision of labour in particular industries including in the black coal mining industry.

19    Mr Rossato first engaged with WorkPac by completing its online web registration form on 21 December 2013, following this, on 23 December 2013 Mr Rossato went to WorkPac’s office in Mackay where he communicated his interest to work for WorkPac at the Collinsville Mine site. At that meeting Mr Rossato signed a copy of a document headed “Casual or Maximum Term Employee Terms & Conditions of Employment - Employee Declaration” (“Employee Declaration”). By signing the Employee Declaration, Mr Rossato declared that he had read and understood a document titled “Casual or Maximum Term Employee - Terms and Conditions of Employment” (“General Conditions”).

20    Mr Rossato commenced employment with WorkPac on 28 July 2014. Although it is not entirely clear, the better view is that the three and a half years of Mr Rossato’s continuous employment with WorkPac was performed pursuant to six “assignments” or employments under six separate contracts of employment. It is accepted that the written terms of each of those contracts are contained in two documents. The first, the General Conditions, an umbrella document applicable to each of the six contracts, and the second, a Notice of Offer (“NOCE”) which was applicable to each particular contract (“First to Sixth NOCE”).

21    Under the First Contract, Mr Rossato was employed to work at the Collinsville Mine between 28 July 2014 and 29 May 2015. He then moved to the Newlands Mine and under the Second Contract worked at that mine between 1 June 2015 and 19 February 2016. The Third Contract involved little more than a change in Mr Rossato’s rate of pay and under that contract Mr Rossato continued to work at the Newlands Mine between 19 February 2016 and 27 September 2016. Mr Rossato then moved back to the Collinsville Mine and under the Fourth Contract was employed from 27 September 2016 to 10 November 2016. The fifth and sixth contracts were also concerned with work at the Collinsville Mine and in each case were motivated by a change in Mr Rossato’s pay rate. The Fifth Contract covered the period 14 November 2016 to 21 December 2016. The Sixth Contract covered the period 21 December 2016 until Mr Rossato’s retirement on 9 April 2018.

22    The Collinsville Mine and the Newlands Mine to which I have referred were each operated by Glencore Australia Pty Ltd and its related entities (“Glencore”). At all relevant times and at each of those mines, Glencore had a workforce structure for its production workforce which included both its own employees and an appreciable component of production employees sourced through a labour hire company like WorkPac. The production employees employed by Glencore were “permanent” or on-going indefinite employees of Glencore.

23    Throughout his employments with WorkPac, Mr Rossato worked as part of the production workforce at either the Collinsville Mine or the Newlands Mine. Like many other employees of WorkPac, his service was provided by WorkPac to Glencore to meet Glencore’s requirement for production workers at those coal mines.

24    In each employment Mr Rossato performed work as directed by Glencore. He was allocated work in accordance with Glencore’s work allocation system. For the entirety of each employment Mr Rossato was allocated to a crew under the then applicable shift roster issued by Glencore. Each crew consisted of a combination of Glencore employees and WorkPac employees like Mr Rossato. All employees performed the same production operator duties under the supervision of a Glencore employee.

25    During his employments with WorkPac Mr Rossato did not take any day or part-day off due to personal illness or injury (whether paid or unpaid). He worked every shift that he was rostered to work save for where the mine was shut down over Christmas, occasions where his crew was not required to work due to inclement weather or cyclones, an occasion where he was given approval to take rest and recreation when the start-up roster at the Collinsville Mine changed to a roster of seven days on/seven days off (“7/7 roster”) and on one occasion shortly before he retired when he urgently left work to support his partner who had been airlifted to hospital.

26    Other facts common to each of the employments are provided by the legal background and in particular the terms of the Enterprise Agreement. Those terms need not be set out here. They are set out in the reasons of White J and I will refer to those I consider to be of relevance later.

the entitlements claimed under the FW Act

27    It is pertinent to provide a brief account of each of the relevant provisions of the FW Act pursuant to which Mr Rossato claims an entitlement.

28    Division 6 of Pt 2-2 of the FW Act (“Div 6”) provides for entitlements to paid annual leave. Section 86 identifies those employees who are entitled to paid annual leave by stating that the Division applies to employees “other than casual employees”. Section 90(2) provides that if an employee has a period of untaken paid annual leave when the employment ends, the “employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.”

29    Division 7 of Pt 2-2 of the FW Act provides, relevantly, for the entitlement to paid personal/carer’s leave and paid compassionate leave. Section 95 provides that the entitlement to paid personal/carer’s leave applies to employees “other than casual employees”, and s 106 makes the same provision with respect to paid compassionate leave.

30    Section 116 of the FW Act in Div 10 of Pt 2-2 provides that if an employee is absent from employment on a day or part-day that is a public holiday, the employer must pay the employee for the ordinary hours of work on that day or part-day.

The Meaning of Casual Employee

31    The meaning of casual employee as used in the expression “other than casual employees” in s 86 of the FW Act (dealing with entitlements to annual leave), s 95 of the FW Act (dealing with entitlements to personal/carer’s leave) and s 106 of the FW Act (dealing with compassionate leave) was not in contest. It was accepted that in Skene, a Full Court of this Court (Tracey, Bromberg and Rangiah JJ) correctly determined that a casual employee is an employee who has no firm advance commitment from her or his employer to continuing and indefinite work according to an agreed pattern of work (“firm advance commitment”).

32    The Full Court in Skene heard and determined an appeal from a judgment of the Federal Circuit Court of Australia. WorkPac had employed Mr Skene as a dump-truck operator from 17 April 2010 to 17 July 2010 and then again from 20 July 2010 to 17 April 2014 at coal mining operations in central Queensland. In the proceedings before the Federal Circuit Court, Mr Skene claimed that he was a permanent full-time employee of WorkPac and that he was entitled to paid annual leave and consequential entitlements to untaken paid annual leave upon his employment having come to an end. Relevantly, he claimed that his entitlement to paid annual leave derived from Div 6 and in particular ss 87 and 90. He also claimed paid annual leave and related entitlements under the enterprise agreement which covered WorkPac in relation to his employment. Before the Full Court, WorkPac appealed the judgment of the Federal Circuit Court that Mr Skene was entitled under Div 6 to be paid monies on termination for untaken annual leave.

33    WorkPac asserted that the Federal Circuit Court had erred in failing to find that Mr Skene was a “casual employee” for the purposes of s 86 of the FW Act and that he was therefore excluded from any entitlement to paid annual leave under Div 6. WorkPac contested the holding of the primary judge that, the expression “casual employee” in s 86 of the FW Act was intended to have its general law meaning (that is, the usual meaning or connotation given to the phrase by the authorities), and contended that the expression had a non-legal technical meaning uniformly used in a specialised sense in federal awards and industrial agreements. The specialised meaning contended for by WorkPac in Skene was that “casual employee” under s 86 of the FW Act meant an employee designated as such by the industrial instrument which covered the employee (see at [70]).

34    The Full Court in Skene rejected WorkPac’s appeal for a range of reasons. Relevantly, the Full Court was not persuaded that the phrase “casual employee” in s 86 of the FW Act was intended to be used in the specialised non-legal sense for which WorkPac contended. The Full Court held that “casual employee” was an expression that had acquired a general law meaning and that the legislature had used that phrase in s 86 with that intended meaning as adjusted by any indications to be drawn from the FW Act itself (see at [154] and [155]).

35    The Full Court extensively considered the authorities which had given expression to the meaning of the phrase “casual employee”. It observed at [170] that the expression “casual employee” describes a type of employment that, at least in part, takes its meaning from other recognised types of employment. It was noted (at [170]) that extensive reference is made in the FW Act to two other types of employment – full-time and part-time employment. As the Full Court observed (at [171]) both on-going full-time and part-time employments are, subject to rights of termination of the employment, characterised by a commitment given by the employer to provide the employee with continuous and indefinite employment according to an agreed pattern of ordinary hours of work, with a corresponding commitment given by the employee to continue to provide work according to the agreed pattern. As the Full Court said (at [172]), in contrast with on-going full-time or part-time employees, a casual employee “has no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work” and nor does a casual employee provide a reciprocal commitment to the employer. That characteristic (the firm advance commitment), which the Full Court regarded as typifying casual employment and distinguishing it from on-going or indefinite full-time or part-time employment, was regarded as consistent with what the Full Court in Hamzy v Tricon International Restaurants (2001) 115 FCR 78 had described as the “essence of casualness”. The Full Court in Skene (at [173]) further observed that the “indicia of casual employment referred to in the authorities – irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability – are the usual manifestations of an absence of a firm advance commitment”.

36    As those observations from Skene demonstrate, the Full Court spoke of an absence of a firm advance commitment as capturing the “essence” of casualness and as that which “typifies casual employment”. The submissions of the parties tended to treat the absence of a firm advance commitment as the defining characteristic of all casual employments whereas, in my view, the Full Court in Skene was not addressing all employments but rather the most common form – employment for the time-based (as opposed to task-based) performance of work. However, nothing turns on that observation. Mr Rossato’s contracts of employment with WorkPac were all of that common form.

How is the existence or absence of a firm advance commitment to be assessed?

37    At the level of principle, and although the meaning of “casual employee” was not in contest, how the existence or absence of a firm advance commitment is to be assessed was at the heart of the contest between WorkPac and Mr Rossato.

38    WorkPac contended that in a contract wholly in writing the existence of a firm advance commitment can only be demonstrated by an express term providing such a commitment. The corollary being that an absence of such an express term demonstrates an absence of a firm advance commitment and thus that the contract is for casual employment. On WorkPac’s contention, in relation to a contract wholly in writing, the question of whether or not a firm advance commitment exists “must be answered solely by reference to the written terms to the exclusion of all else”. That, so WorkPac contended, requires an exclusive focus upon the contract at the time it was formed and means that the post-contractual conduct of the parties is not relevant to the assessment. The parol evidence rule was said to impose that limitation.

39    WorkPac’s primary case was that the assessment raised a question of contractual construction limited to the express terms of the contracts made by WorkPac and Mr Rossato. As each of its contracts with Mr Rossato were wholly in writing and did not contain an express term giving a firm advance commitment, Mr Rossato was a casual employee.

40    On the other hand, Mr Rossato contended that his contracts with WorkPac were not wholly in writing and that, in any event, if they were, a firm advance commitment is given by each of those contracts. Mr Rossato also contended that whether a firm advance commitment was given was to be assessed by a process of “characterisation” through which (citing the observation made in Skene at [180]) “[t]he conduct of the parties to the employment relationship and the real substance, practical reality and true nature of that relationship will need to be assessed”.

41    WorkPac challenged the appropriateness of utilising a process of characterisation and argued that the Full Court in Skene was wrong to say that such a process was applicable.

42    At one level these contentions raised a conceptual divide. WorkPac essentially contended that whether Mr Rossato was a casual employee is a question of contract to be answered solely by reference to the express terms of the contract. On the other hand, Mr Rossato contended that whether or not he was a casual employee is a question of fact answered by the characterisation of all of the features or facts of his employment which serve to identify its type or specie.

43    Whether the requisite assessment raises merely a question of contract or the characterisation of all of the facts of the employment is an issue that does not strictly need to be here resolved. That is because Mr Rossato contended that if the requisite assessment is confined to his contracts, he was not a casual employee under each of those contracts. For the reasons later given, I accept that contention to be correct. However in case I am wrong, the alternative case should be considered, including because it is helpful for the purpose of addressing the assessment as purely a question of contract. It is convenient to say something more about that now but leave my ultimate conclusion on the alternative case for consideration after I have dealt with WorkPac’s primary case.

44    Mr Rossato’s contention that the assessment requires a characterisation based on all of the facts of his employment stems from what was said by the Full Court in Skene. In Skene, the Full Court accepted that the term “casual employee” has no precise meaning but that it nevertheless has a general law meaning derived in the same way as the term “employee” has derived its general law meaning. At [159], the Full Court said this:

It may be accepted that the term ‘casual employee’ has no precise meaning and that whether any particular employee is a casual employee depends upon an objective characterisation of the nature of the particular employment as a matter of fact and law having regard to all of the circumstances. That the expression lacks precise definition and that the shade of its colour is dependent upon context does not deny that the term has acquired a legal meaning, especially where the general law has laid down indicia by which the factual circumstances are to be assessed in the process of characterisation. In that regard the expression ‘casual employee’ is no different to the term ‘employee’. Both have acquired a legal meaning referrable to the particular indicia found by the authorities to be relevant to the characterisation process. For the term ‘employee’ the relevant indicia are applied through what is commonly described as a ‘totality test’: Hollis v Vabu Pty Ltd (2001) 207 CLR 21 (Vabu) at [24] (Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ). White J in South Jin recognised that the expression ‘casual employee’ had a ‘meaning in the general law’ at [65]. As did Barker J in MacMahon at [34].

45    At [180] the Full Court also said:

The conduct of the parties to the employment relationship and the real substance, practical reality and true nature of that relationship will need to be assessed. This is now the settled approach to the question of whether a person is an employee: see Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (2015) 228 FCR 346 at [142] (North and Bromberg JJ) citing R v Foster; Ex parte Commonwealth Life (Amalgamated) Assurances Ltd (1952) 85 CLR 138 at 151 and 155 (Dixon, Fullagar and Kitto JJ); Vabu at [24], [47], [57], [58] (Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ); ACT Visiting Medical Officers Association v Australian Industrial Relations Commission (2006) 153 IR 228; 232 ALR 69 at [25] and [31] (Wilcox, Conti and Stone JJ); Damevski v Giudice (2003) 133 FCR 438 at [77]-[78] (Marshall J, with whom Wilcox J agreed) and [144], [172] (Merkel J); Dalgety Farmers Ltd v Bruce (1995) 12 NSWCCR 36 at 46-48 (Kirby ACJ, with whom Clarke and Cole JJA agreed); Autoclenz Ltd v Belcher [2011] 4 All ER 745 at [22], [25]-[26], [29]-[32] (Lord Clarke SCJ, with whom Lord Hope DP, Lord Walker, Lord Collins and Lord Wilson SCJJ agreed). See also ACE Insurance Ltd v Trifunovski (2011) 200 FCR 532 at [29] (Perram J); and on appeal ACE Insurance Ltd v Trifunovski (2013) 209 FCR 146 (ACE Insurance) at [93] and [102] (Buchanan J, with whom Lander and Robertson JJ agreed). In such an assessment ‘the nature of the relationship may be legitimately examined by reference to the actual way in which the work was carried out’: ACE Insurance at [91]. The same approach is appropriate to adopt in determining the nature of the employment relationship. It is the approach adopted in MacMahon (at [38]) and apparent from the reasoning in Reed (at 424), Hamzy (at [38]), Melrose Farm (at [101]-[105]), Bernardino ([18]-[23]), Ledger (at [62] and [65]) and South Jin (at [138]-[152]) discussed above and also Community and Public Sector Union v State of Victoria (2000) 95 IR 54 at [10] (Marshall J). In Reed, Moore J at 424 said this:

The characterisation of Reed’s employment by either Reed and/or representatives of the Company generally or in a document, and the provisions of the Award, are simply matters to be taken into account in determining the true character of the employment.

46    Not all of the indicia of an employment relationship will be found in the instrument which created and governs that relationship. That is because an employment is dynamic and involves a high degree of interaction between the parties to that relationship. Accordingly, the indicia of an employment relationship are often found in the course of dealing between the parties to that relationship. In the process of defining the nature of a relationship by reference to its indicia, the course of dealing or the conduct of the parties, and not just the written terms of the contract, are likely to be relevant.

47    In Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at [24] (Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ) said this:

It should be added that the relationship between the parties, for the purposes of this litigation, is to be found not merely from these contractual terms. The system which was operated thereunder and the work practices imposed by Vabu go to establishing ‘the totality of the relationship’ between the parties; it is this which is to be considered.

48    The Full Court in Skene (at [159]) relied upon those and like observations in Hollis (as well as other authorities) in stating that a characterisation of the overall relationship was the settled approach to determining whether a person is an employee. Reliance upon Hollis was also made by Buchanan J (with Lander and Robertson JJ in agreement) in ACE Insurance Ltd v Trifunovski (2013) 209 FCR 146 at [107] where, addressing post-contractual conduct, Buchanan J said that “it now seems established in Australian law that all the circumstances should be taken into account”.

49    WorkPac submitted that the observation made in Hollis was not directed to the characterisation of a relationship created by a contract wholly in writing – in relation to which post-contractual conduct may not be utilised. By treating the observation in Hollis as applicable to all contracts, including wholly written contracts, WorkPac contended that the Full Courts in ACE and Skene were plainly wrong by failing to distinguish the position for wholly written contracts.

50    That the position in relation to wholly written contracts is distinguishable, was said by WorkPac to be a consequence of the application of the parol evidence rule. I discuss that rule in more detail below. As that discussion states, the parol evidence rule imposes a limitation on the use of evidence of post-contractual conduct for the purpose of construing the meaning of terms in a contract wholly in writing. Where, however, the Court is determining whether the parties to a contract have characterised the nature of their legal relationship correctly, the exercise will not ordinarily involve giving meaning to a term of the contract which labels the legal relationship. Rather, the essential question that arises will be whether the label or designation can “receive effect according to its terms”: Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385 at 389 and see [95] below. That exercise entails a search for the true mutual intent of the parties. Other than in the case of a sham, the exercise is premised upon a presumption that the parties intended to correctly characterise their legal relationship and that, where they failed to do so, they must have intended that the incorrect characterisation would be of no effect. The answer to the question as to whether the parties have correctly characterised their legal relationship may be given by an assessment of the contract read as a whole (as was the case in Chaplin) but is not confined to that consideration alone, because the purpose of the exercise does not enliven the parol evidence rule. So much may be seen from the judgment of the Supreme Court of the United Kingdom in Autoclenz Ltd v Belcher [2011] 4 All ER 745 (discussed further below) where the designation made in the written contract of the legal relationship between the parties as that of principal and independent contractor was not given effect, including because it was inconsistent with the conduct of the parties: see at [38]. Similarly, in Protectacoat Firthglow Ltd v Szilagyi [2009] IRLR 365, where the issue was whether a partnership relationship had been created by the written contract: see at [57]. In Homecare Direct Shopping Pty Ltd v Gray [2008] VSCA 111, the Victorian Court of Appeal considered whether the designation of principal and agent given in a written contract could be given effect. As Forrest AJA (with Neave and Kellam JJA in agreement), observed, it was permissible to examine the conduct of the parties in determining whether, in truth, their legal relationship was that of principal and agent: see at [49]-[50] and at [58].

51    There is a high threshold to establish that two recent Full Court judgments are plainly wrong. That threshold has not here been met. I do not consider either Skene or ACE to be in error in the manner suggested by WorkPac. It is not necessary to further detail why that is so because even if WorkPac is correct – that the use of post-contractual conduct in the process of characterising whether a relationship is that of employment is limited to contracts not wholly in writing – it does not follow that the same limitation applies to the characterisation of a type or specie of employment.

52    The characterisation of an employment by its type, recognises that although an employment was created and is governed by the contract, an employment is not just the contract. An employment is the product of the contract. It includes the course of dealing which has taken place under the contract. If the object of the characterisation process is to determine which kind or specie of employment (or employee) has been produced by the contract then resort must be made to the course of dealing in order to characterise the employment by type. As its architect, the contract will have much to say about the type of employment that has been constructed but, if what is being characterised is the thing that has been constructed itself, then an inspection of that construction, so that its features are noted, is both a relevant and appropriate exercise. The parol evidence rule’s limitation upon the use of post-contractual conduct is inapplicable because it is not only the written contract which is being construed or characterised.

53    A process which seeks to categorise an object or a thing into one of its different types or species is best undertaken by reference to all of the features which typify that thing, rather than merely those features that are apparent from its founding instrument or were apparent at its foundation.

54    What is here being called upon to be characterised by the term “casual employee”, is the type of employment Mr Rossato worked in at the time the impugned entitlements accrued, rather than simply what type of contract he made at the outset of that employment. The specific language used by ss 86, 95 and 106 of the FW Act is instructive. It describes the excluded employees as “casual employees”. That directs attention to the character of the employment rather than to the character of the engagement. That language may be contrasted with provisions directed at the character of that which was created upon engagement: see for instance s 170CC(1) of the former Workplace Relations Act 1996 (Cth) which identified the targeted class as “employees engaged on a casual basis for a short period”.

55    In not too dissimilar circumstances to those here relevant, in TransAdelaide v Leddy (No 2) (1998) 71 SASR 413, an issue arose as to whether the status of an employee under an enterprise agreement was “part-time” or “full-time”. Despite the relevant clause speaking to the terms of the engagement and providing that “[a] part time employee is one engaged and paid as such and is employed on a basis to work an agreed minimum number of rostered hours of less than 38 hours per week”, Doyle CJ stated (at 417) that in order for the clause to perform its function it “must refer to the terms of engagement as they stand from time to time”. His Honour went on to say that it would be “artificial to exclude from consideration events that occur after the initial engagement and during the term of employment”.

56    It is also helpful in this respect to recall the observations made by McTiernan J in Doyle v Sydney Steel Co Ltd (1936) 56 CLR 545 at 565 where his Honour considered the analogous term “casual worker” and stated, in terms directed to the facts of the employment, that whether a person is a “casual worker” is a question of fact and that “[e]ach case is to be determined on its own facts, consideration being given not only to ‘the nature of the work but also the way in which the wages are paid, or the amount of the wages, the period of time over which the employment extends, indeed all the facts and circumstances of the case’”.

57    The provisions providing for annual leave, personal/carer’s leave and compassionate leave, are listed as two of the ten “National Employment Standards” that Parliament has specifically chosen as “minimum standards that apply to the employment of employees which cannot be displaced” (s 61 of the FW Act). As was stated in Skene at [87], in the hierarchy of terms and conditions of employment, the National Employment Standards are at the pinnacle. They have primacy over and cannot be displaced by enterprise agreements, modern awards or a contract of employment. These are entitlements that Parliament has identified to be especially important and it cannot be doubted that Parliament intended that the entitlements provided for be effective, in the sense that they be provided to those employees considered to be in need of access to paid leave as a minimum standard. At [93] and [125] of Skene, and by reference to the limitations imposed by ss 92 to 94 of the FW Act on the “cashing out” of accrued annual leave, the Full Court explained Parliament’s intent that those employees entitled to paid annual leave take at least four weeks of actual leave per year so that they be provided with rest and recreation. Similar restrictions on “cashing out” paid personal/carer’s leave are contained in ss 100 and 101 of the FW Act, indicating again that Parliament regarded it as important that those employees to whom the entitlements were conferred actually utilise paid leave when sick or when required to care for a family or household member. At [168], the Full Court in Skene identified the legislative rationale for choosing to confer the entitlement to annual leave on all employees “other than casual employees”. The rationale is that, as employees who are not obliged to provide on-going service, casual employees do not ordinarily have the same need for access to rest and recreation as employees in continuing regular employment. A similar rationale is evident in relation to the exclusion made to each of the personal/carer’s leave and compassionate leave entitlements.

58    The purpose and the policy behind the inclusion of these important entitlements into the FW Act should be given effect to: s 15AA Acts Interpretation Act 1901 (Cth). The purpose would not be best effectuated if the exclusion which ss 86, 95 and 106 carves out for casual employees was artificially enlarged so that intended beneficiaries of these entitlements, or some of them, were excluded. That suggests that in the assessment to be made as to whether or not a person is an intended beneficiary of the statutory entitlements to paid leave, form will give way to substance and the fact and reality of the employee’s need to access leave should be given force. That is best achieved by an assessment based on the facts as they stand at the time when the relevant entitlement or its accrual was operational rather than merely as a matter of the written contract made at the outset of the employment. The entitlements to paid annual leave and paid personal/carer’s leave do not accrue on the formation of a contract of employment. They are tied to service and accrue in relation to each year of service: ss 87(1), 87(2) and 96 of the FW Act. It should not be thought that Parliament ceded control over access to these important entitlements by allowing – what has been truly created and truly subsists – to be usurped by expressions of intent in the written contract which may never have or which may no longer reflect the existing facts and reality of the employment. If that was permitted, the displacement which s 61(1) of the FW Act prohibits could be achieved by the written contract.

59    WorkPac contended, by reference to both the FW Act and its predecessor legislation, that there was a clear legislative intent that casual employment should be assessed without reference to post-contractual conduct. That exercise is unproductive, as the reasons of White J demonstrate. Nor is WorkPac’s reliance on the language used in Hamzy to describe the firm advance commitment persuasive.

60    Having said all that about the conceptual divide, I do not intend to suggest that it necessarily follows that there will be much of a practical divide between the two approaches to assessment here discussed. That will be so at least where, as WorkPac acknowledged, any variation to the contract made after its commencement must be given full force and effect. I will later refer to the relevant contractual principles, but it is worth here noting that orthodox contractual principles, including those that recognise the fluid variation of a contract, facilitate the contract catching up with and reflecting the facts of an employment as varied from time to time. Other principles permit substance to trump over form in the search for the reality of what has been created or agreed, even where a contract is wholly in writing.

A Firm Advance Commitment

61    For the purposes of the assessment about to be undertaken, it is necessary to make some further observations about the nature of a firm advance commitment and the indicia which suggest either its absence or presence in a contract of employment. If the assessment is to be conducted as a question of contract it must follow that a firm advance commitment must be promissory and thus a contractual term.

62    It is not necessary to discuss the postulated firm advance commitment beyond the present context of a contract which is (for reasons I will explain) of on-going or indefinite duration providing for time-based rather than task-based service. The utility of a presence or absence of a firm advance commitment as an organising principle for distinguishing between casual and non-casual employment is not in contest and in my view rightly so. Its utility in relation to task-based contracts of employment and short-term temporary employment is, I think, more contestable but need not here be further explored.

63    The following discussion is also premised on an acceptance that a casual employee may be engaged on a continuing basis: Ryde-Eastwood Leagues Club Ltd v Taylor (1994) 56 IR 385 at 401-402 (Bauer and Hungerford JJ, Murphy CC); Melrose Farm Pty Ltd v Milward [2008] WASCA 175 at [110] (Le Miere J with Steytler P in agreement). It follows that, of itself, continuity of service is not a defining characteristic of non-casual employment.

64    In order for time-based work to be performed it must be allocated in advance of its performance, in the sense that the time period or periods for performance need to be identified in advance. In a continuing employment, work will be both allocated and performed in a series of periods or blocks of time. In some employments the periods of working time will be regular, in the sense that the periods of time will be repeating even if not entirely uniform – for instance, 9am to 5pm Monday to Friday or seven dayshifts of 12 hours each followed by seven nightshifts of 12 hours each (recognisable as a full-time pattern of work) or three hours every Tuesday and Thursday morning (recognisable as a part-time pattern of work). Alternatively, the periods of working time may be irregular and intermittent involving no fixed pattern of work.

65    There is a fundamental difference between regular employment and irregular employment. In terms of periods of working time, regular employment consists of predictable periods of working time and provides substantial certainty that the work will be both available to be performed and will be performed during the designated periods. Irregular work provides neither predictability nor certainty.

66    The certainty provided by regular employment is not absolute but is usually substantial and of value. There will be no absolute certainty because the employment itself will be subject to rights of termination and the pre-programmed working time will be subject to occasional adjustments brought about by unpredictable events such as an employee’s need for sick leave or an employer’s need for overtime to be worked or to stand down an employee because of a breakdown in machinery. However, whilst not absolute, substantial certainty ordinarily has value. In regular employment, and from an employer’s point of view, there will be substantial certainty that the work will be performed by the employee allocated to perform it at the allocated time. That has obvious commercial value. Most operations reliant on labour could not function efficiently without that certainty. From the employee’s point of view, substantial certainty of the availability of future work provides substantial certainty of future earnings as well as avoiding the opportunity cost usually borne by the casual employee of standing and waiting for work to be made available. These motivations are apt to be understood as going to an important purpose or object of a contract for regular employment.

67    There is a natural reciprocity of benefits brought about by the making of a contract for regular employment sufficient to demonstrate an exchange of promises. In an on-going employment, and from an employer’s point of view, the promise given is a firm advance commitment from the employee to continuing and indefinite availability for the performance of work according to an agreed pattern of work. From an employee’s point of view, it is a firm advance commitment to continuing and indefinite work according to an agreed pattern of work. Each of those commitments is subject to rights of termination and the agreed pattern of work is subject to the need to make occasional adjustments for unpredictable events of the kind earlier referred to.

68    These commitments may be seen as stand-alone promises, but where given, they are ancillary to the fundamental promises exchanged in any contract of employment – the employer’s promise to utilise and pay for the service of the employee and the employee’s promise to perform work in the service of the employer. Where these promises are not given, their absence in an on-going time-based contract of employment will ordinarily demonstrate a contract for casual employment.

69    Where given, a firm advance commitment may be express or implied. I reject WorkPac’s contention that where the contract is wholly written, a firm advance commitment must be express. A wholly written contract consists of both express and implied terms: Narich Pty Ltd v Commissioner of Pay-Roll Tax [1983] 2 NSWLR 597 at 601 (Lord Brandon of Oakbrook on behalf of the Privy Council).

70    Where implied or inferred, the intention of the parties as to whether to provide a firm advance commitment will likely be revealed by a consideration of the agreement as a whole but with a particular focus upon the indicia the authorities have recognised over many decades as indicative of casual or non-casual employment.

71    A firm advance commitment is likely to be absent where what the Full Court described in Skene as “the usual manifestations of an absence of a firm advance commitment” are apparent, namely, irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability: see at [173]. Reliance upon indicia of that kind is found in Doyle at 555 (Dixon J), Shugg v Commissioner for Road Transport and Tramways (NSW) (1937) 57 CLR 485 at 496 (Dixon J), Reed v Blue Line Cruises Ltd (1996) 73 IR 420 at 425-426 (Moore J); Williams v MacMahon Mining Services Pty Ltd [2010] FCA 1321 at [33]-[34] (Barker J); Cetin v Ripon Pty Ltd [2003] AIRC 1195 at [59] (Ross VP, Duncan SDP, Roberts C); Bernardino v Abbott [2004] NSWSC 430 at [23] (Gzell J); Thompson v Big Bert Pty Ltd [2007] FCA 1978 at [57] (Buchanan J).

72    Another indicator of an absence of a firm advance commitment is the existence of an employee who stands and waits, or in other words, is only given the opportunity to provide her or his service in response to a specific demand that a specific period of working time be worked: see Reed at 425 (Moore J); Hamzy at [38] (Wilcox, Marshall and Katz JJ), MacMahon at [33]-[35] (Barker J), Fair Work Ombudsman v Hu (No 2) [2018] FCA 1034 at [224] (Rangiah J), Melrose Farm at [104] (Le Miere J with Steytler P in agreement) and Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456 at [69] (White J).

73    By reason of the reciprocal nature of the firm advance commitment, an employee’s capacity to choose whether or not to work a period of working time demanded or requested by the employer, suggests an absence of the firm advance commitment: see Reed at 425 (Moore J), Melrose Farm at [104] (Le Miere J with Steytler P in agreement); Shop, Distributive and Allied Employees’ Association v Harris Scarfe Australia Pty Ltd [2014] FCA 283 at [26] where Buchanan J said this:

there is a significant difference between a roster for full-time or part-time employees, which involves an allocation of work which they have agreed to undertake, and an offer of casual engagements, which a casual employee is usually free to accept or decline.

74    A provision permitting a short period of notice of termination of the contract has been regarded as a relevant consideration indicating an absence of a firm advance commitment: Skene at [191]. Short notice periods may indicate that the employment was intended to be irregular. A principal function of a notice period is to provide some opportunity to the employer or the employee affected by the termination of the contract to take measures to redress the loss of the contract. The shorter the period provided for, the shorter is the period likely to have been considered reasonably necessary to redress that loss. Redressing the loss of regular employment (from an employee’s perspective) or the loss of an employee performing regular work (from an employer’s perspective) may ordinarily be regarded as requiring a longer period of notice of termination as compared to irregular employment. For that reason, a short notice period may point to a contract for irregular work in which the firm advance commitment is absent.

75    Other indicia will likely be relevant. Some are later referred to when Mr Rossato’s contracts are considered.

relevant contractual principles

76    For the purposes of the assessment of Mr Rossato’s contracts about to be undertaken it is also necessary to address the relevant contractual principles which are to be applied in that assessment.

Text, Context and Purpose

77    As Mason J explained in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352, “evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning.” The evidence of surrounding circumstances, ie. the factual matrix, is restricted to evidence of the “objective framework of facts within which the contract came into existence, and to the parties’ presumed intention”, not to the parties’ actual intentions, aspirations or expectations.

78    The principles for the construction of commercial contracts are well established, as French CJ, Nettle and Gordon JJ stated in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at [46]-[51]:

[46]    The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

[47]    In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

[48]    Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

[49]    However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding ‘of the genesis of the transaction, the background, the context [and] the market in which the parties are operating’. It may be necessary in determining the proper construction where there is a constructional choice.

…

[50]    Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.

[51]    Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption ‘that the parties … intended to produce a commercial result’. Put another way, a commercial contract should be construed so as to avoid it ‘making commercial nonsense or working commercial inconvenience’.

79    See further Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Kraft Foods Group Brands LLC v Bega Cheese Ltd [2020] FCAFC 65 at [176] (Foster, Moshinsky and O’Bryan JJ).

Use of Post-Contractual Conduct

80    The summary of WorkPac’s case and that of Mr Rossato set out above suggests that the scope and application of the parol evidence rule and in particular the extent to which it precludes resort to post-contractual conduct to be of central importance. That, however is not so because, in my view, Mr Rossato makes out his case without any need to resort to post-contractual conduct. However, should that view be erroneous and there remains a need to consider post-contractual conduct, it is necessary to refer to authority which explains when post-contractual conduct may be utilised to discern the mutual intention of contracting parties. As will be apparent, the applicable principles are driven by the purpose for which post-contractual conduct is sought to be used.

81    Relying on Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at [35], WorkPac contended that “the parol evidence rule precludes any recourse to the post-contractual conduct of the parties”. That contention overstates the general principle discussed in Gardiner. What Gummow, Hayne and Kiefel JJ said at [35] (citing Lord Reid in James Miller and Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583 at 603) (emphasis added) was that “it is not legitimate to use as an aid in the construction of [a] contract anything which the parties said or did after it was made”. As Campbell JA (with Allsop P and Giles JA in agreement) said at [327] of Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603, Gardiner establishes that “the use of subsequent conduct is forbidden to prove any matter that cannot legitimately enter into the construction of a written contract in accordance with the objective theory of contract. In particular, it cannot be used to prove what the parties meant by particular terms that they used in their contract”.

82    The rule in Gardiner is applicable to a contract wholly in writing. However, as Campbell JA (with Basten JA and Sackar J in agreement) said in Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 (at [141]-[143]), there is a vast difference between interpreting a wholly written contract and one not wholly in writing. For a contract wholly in writing, the task of interpretation is “ascertaining the meaning that the bystander who knows all the relevant surrounding circumstances would understand from the parties using the words in that writing”. Post-contractual conduct cannot assist the task of interpretation, save in the case of “post-contractual events providing retrospectant evidence of a surrounding circumstance that was known to the parties at the time of contracting”. By contrast, where the contract is not wholly in writing the task is finding as a fact what the parties have agreed, and “a range of post-contractual conduct could be relevant to ascertaining what the parties have agreed”: see also BH Australia Constructions Pty Ltd v Kapeller (2019) 100 NSWLR 367 at [69] (Leeming JA).

83    In Lym International (see at [136]-[140]) Campbell JA agreed with the analysis of Spigelman CJ in County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 who there relied upon Lord Hoffman’s reasoning in Carmichael v National Power Plc [1999] 1 WLR 2042. In County, Spigelman CJ held that the contract there in question was partly in writing, partly oral and partly to be inferred from conduct. His Honour reasoned (at [2]) that reliance on conduct was necessary because important aspects of the agreement were not the subject of express statements, either written or oral, in a form which could constitute the making of an agreement. At [7], Spigelman CJ observed (emphasis added):

In the present case, the subject matter and the concomitant terms of the contract must be inferred from a combination of surrounding circumstances including conversations, documents and conduct none of which provide a definitive form of words. The issue is not one of interpretation, because there are no words to interpret. The issue is one of fact: what did the parties agree?

84    Referring to the parol evidence rule, at [20] Spigelman CJ concluded:

Where what is in issue is the identification of the subject matter of the contract, or the identification of necessary terms which were not the subject of express provision in a contract not reduced to writing, then consideration of post contractual conduct does not contravene the reasons underlying the [parol evidence] principle.

85    In Qube Ports Pty Ltd v Maritime Union of Australia [2018] FCAFC 72, White J (with Mortimer and Bromwich JJ in agreement) at [85] applied the reasoning in County stating, “[t]here are circumstances in which the subsequent conduct of parties to a contract may be considered for the purpose of identifying the terms of their contract (as distinct from the meaning of those terms)”.

86    That the subsequent conduct of the parties to a contract may be used to identify the terms of the contract was also accepted by Campbell JA (with Allsop P and Basten JA in agreement) in Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234 at [90]. In a detailed survey of the authorities, Campbell JA (at [90]) also set out principles that are applicable in deciding whether an agreement is wholly in writing or partly written and partly oral (authorities omitted):

(1)    When there is a document that on its face appears to be a complete contract, that provides an evidentiary basis for inferring that the document contains the whole of the express contractual terms that bind the parties.

(2)    It is open to a party to prove that, even though there is a document that on its face appears to be a complete contract, the parties have agreed orally on terms additional to those contained in the writing. Conversely, it is open to a party to prove that the parties have orally agreed that a document should contain the whole of the terms agreed between them.

(3)    The parol evidence rule applies only to contracts that are wholly in writing, and thus has no scope to operate until it has first been ascertained that the contract is wholly in writing.

(4)    Where a contract is partly written and partly oral, the terms of the contract are to be ascertained from the whole of the circumstances as a matter of fact.

(5)    In determining what are the terms of a contract that is partly written and partly oral, surrounding circumstances may be used as an aid to finding what the terms of the contract are. If it is possible to make a finding about what were the words the parties said to each other, the meaning of those words is ascertained in the light of the surrounding circumstances. If it is not possible to make a finding about the particular words that were used (as sometimes happens when a contract is partly written, partly oral and partly inferred from conduct) the surrounding circumstances can be looked at to find what in substance the parties agreed.

87    It is apparent then that the parol evidence rule, sometimes called the “exclusionary rule”, is applicable to the process of construction of a written contract. It operates to constrain the use of post-contractual conduct for the purpose of determining the legal question of what meaning is to be attributed to the express terms which have been agreed. It does not operate to constrain the use of post-contractual conduct for the task of ascertaining, as a matter of fact, the terms upon which the parties have agreed.

88    The two tasks are, as Professor Carter has observed (Carter JW, “Context and Literalism in Construction” (2014) 31 JCL 100 at 106), analytically distinct – “the question of what terms comprise the contract (‘what the contract really was’) is by definition distinct from the question of what those terms mean (‘what the contract…really meant’)”. As Professor Carter explains (Carter JW, The Construction of Commercial Contracts (Hart Publishing, 2013) at [9.02]) the exclusionary rule takes account of the purpose for which the extrinsic evidence is sought to be used and “evidence is ‘extrinsic’ only if sought to be used for a purpose proscribed by the exclusionary rule”. If extrinsic evidence is used for a purpose other than construction its use is not excluded by the exclusionary rule (at [8.36], [9.12]).

89    It remains, however, important to bear in mind, that a bright white line does not necessarily distinguish the process of construction of a contract from the process of ascertaining the terms of the contract agreed by the parties (see in a similar context BH Australia at [52], Leeming JA).

Conduct Subsequent to Initial Contract and Variation

90    One of the key features of employment contracts is that they tend to be fluid and evolving. That feature is not necessarily unique to employment contracts but is a feature of contracts which govern an on-going relationship. It is useful, I think, to keep in mind Lord Hoffman’s observation in Carmichael (at 2050) that agreements by which people are engaged to work are typically partly written, partly oral and “partly left to evolve by conduct” as time goes on.

91    As McHugh JA (with Hope and Mahoney JJA in agreement) said in an often cited passage from Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 at 11,118:

in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties’ subsequent conduct become sufficiently specific to give rise to legal rights and duties. In any dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed.

92    In the dynamic and fluid environment of a contract of employment, the subsequent actions of the parties may impliedly vary or amend the contract such that the true agreement between the parties is no longer reflected by the written contact: see Chaplin at 392-393 (Lord Fraser of Tullybelton on behalf of the Privy Council); Narich at 601 and 604 (Lord Brandon of OakBrook on behalf of the Privy Council), Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (2015) 228 FCR 346 at [149] (North and Bromberg JJ); Nikolich v Goldman Sachs J B Were Services Pty Ltd [2006] FCA 784 at [209] (Wilcox J). As Allsop CJ, Rares and McKerracher JJ recognised in Romero v Farstad Shipping (Indian Pacific) Pty Ltd (No 3) [2017] FCAFC 102 at [64], by reference to the judgment of Gleeson CJ, Gaudron and Gummow JJ in in Concut Pty Ltd v Worrell (2000) 176 ALR 693 at [18]-[19]:

[o]ften in employment contracts, the parties, over the course of their relationship will add or vary the original terms, including, as occurs routinely, by changing the remuneration payable to the employee.  In general, the relationship will evolve harmoniously by introducing such changes into a contract as variations or additions to the terms of the original contract.

93    A Court, however, will only infer that a contract has been varied where, on an objective assessment of the entirety of the relevant conduct, there is apparent a mutual intention of the parties to be bound by the terms of the variation. The precise point in time at which this agreement comes into existence may not be clear and the relationship between the parties may be dynamic in such a way that the terms of the agreement might be added to or superseded over time: see White v Timbercorp Finance Pty Ltd [2017] VSCA 361 at [145] (Ferguson CJ, Santamaria and McLeish JJA); P’Auer AG v Polybuild Technologies International Pty Ltd [2015] VSCA 42 at [8]-[13] Whelan JA (with Ferguson and Kaye JJA in agreement); Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at [369] (Allsop J with Drummond and Mansfield JJ in agreement).

Contractual Text that cannot Receive Effect According to its Terms

94    The parties’ characterisation of their relationship in a written contract, either directly via the inclusion of a label or indirectly via the inclusion of an essential term which seeks to characterise the nature of the relationship, will not always reflect the true reality of what has been agreed when read in the context of the contract as a whole. This principle is applicable to contracts wholly or partly in writing.

95    So much is made clear by the discussion of Lord Fraser of Tullybelton (on behalf of the Privy Council) in Chaplin. In that case, which concerned a contract wholly in writing, the parties had included a cl 3 into their contract which defined the relationship between the parties as “Principal and Agent and not that of Master and Servant”. Lord Fraser of Tullybelton noted (at 389) that (emphasis added) “[c]learly cl 3, which, if it stood alone, would be conclusive in favour of the Society, cannot receive effect according to its terms if they contradict the effect of the agreement as a whole”, and further, citing Denning MR in Massey v Crown Life Insurance Co [1978] 2 All ER 576 that “if the true relationship of the parties is that of master and servant under a contract of service, the parties cannot alter the truth of that relationship by putting a different label upon it”: see also Narich at 601 and see the authorities collected in Skene at [180] and Quest at [148].

96    Where the contractual relationship is sought to be characterised indirectly by the inclusion of essential terms into the written contract which are central to the nature of the relationship, even in the absence of a sham, the Court will need to ask itself whether the parties ever realistically intended or envisaged that the terms would be carried out as written: Szilagyi at [57] (Smith LJ with Keene and Sedley LJJ in agreement); see also Autoclenz at [29]-[32].

97    Autoclenz was a case principally concerned with the doctrine of pretence, but is relevant to the principle referred to in Chaplin – that where a clause addressing the nature of the agreement contradicts the effect of the agreement as a whole, it will not receive effect in accordance with its terms. The text of the contract in Autoclenz sought to characterise the claimants as independent-contractors. It sought to do that directly by the inclusion in the contract of the label “sub-contractor”. It also sought to do that indirectly, by the inclusion of essential terms regarded under English law to be inconsistent with an employment. Those terms included giving the claimants the ability to delegate their work and a term that the claimants were under no obligation to provide services to Autoclenz on any particular occasion. Lord Clarke SCJ (with Lord Hope DP, Lord Walker, Lord Collins and Lord Wilson SCJJ in agreement) found that, despite the text, the claimants were employees in all but name. That conclusion was reached by an assessment of the reality of the relationship which demonstrated that the contractual text did not reflect what had truly been agreed.

construing The Contracts

98    Not all of the terms and conditions of each of Mr Rossato’s contracts of employment are relevant to an assessment of whether or not a firm advance commitment was provided under each contract. Nor, as might be expected, is there to be found in those contracts a term which deals with that subject both directly and expressly. Whether or not such a commitment was given is to be inferred from the express terms, the factual matrix and the purposes or objects the contracts were intended to secure.

99    The terms and conditions of a contract of employment likely to be informative as to whether a firm advance commitment has been given are those dealing with the duration of employment (including as to notice of termination) and those dealing with the extent and pattern of the periods of working time that the employee has been employed to perform. It is the terms and conditions of employment dealing with those subject matters that the submissions of the parties were largely focussed upon and it is to those terms and conditions that I now turn.

The First Contract

100    The duration of the employment offered by the First NOCE is addressed in that document where “Length of Assignment” is stated as “6 months (This may vary and is a guide only)”. This is a somewhat curious specification of duration. Nevertheless, what is clear is that the term of the employment is not fixed at six months but that six months is a guide as to its expected length. That the employment being offered is not fixed term employment is also clear from cl 5.12 of the General Conditions which provides that an assignment may be terminated at any time by the giving of one hour’s notice. The General Conditions contemplate that a fixed period could be specified in a NOCE but, where it is, the period may be varied by WorkPac or Glencore on the giving of one hour’s notice (cl 5.6).

101    It is common for contracts of employment not to expressly specify that the employment is on-going or indefinite. So much is inferred from the absence of a specification of a fixed term together with the capacity of either party to terminate on notice. The same inference is to be drawn here. The First Contract was for on-going or indefinite employment subject to its termination on the giving of notice.

102    What is of some significance is that, subject to rights of termination, the duration of the employment is contemplated to be extended – of the order of six months or so. The extended nature of the employment contemplated by the General Conditions is also suggested by the terms of cl 5.11 which provide that an employee will serve a six month minimum qualifying period. What seems plain is that Mr Rossato was not offered short term temporary employment, a characteristic which may have supported an absence of a firm advance commitment. He was offered continuing or on-going indefinite employment. But as earlier stated, that of itself is not a distinguishing characteristic of non-casual employment.

103    There are a large number of provisions which address the extent of the work to be provided by Mr Rossato and performed under the First Contract and the pattern in which the work to be provided will be performed. Under a heading “Daily Working Hours”, the First NOCE said this:

(This may vary and is a guide, any significant changes notify WorkPac)

Unless you have prior authorisation from WorkPac, the following will not be recognised or paid for:

a)    hours worked over 12 hours in a shift

b)     shifts worked over 13 continuous shifts, and;

c)     rest periods of less than 10 hours between shift.

Your ordinary hours of work shall be a standard work week of 38 hours. Additional reasonable hours may be worked in your rostered arrangements.

104    One matter of immediate significance raised in this extract, but apparent more generally, is that the First Contract provided that the work to be performed by Mr Rossato would be allocated to him by a roster and performed in accordance with the pattern of work required by the roster.

105    As the extract just set out stated, Mr Rossato’s work was to be performed under his “rostered arrangements”. That is further confirmed by the First NOCE providing that Mr Rossato’s work will be performed on an “Alternating Shift”. All of that is consistent with the General Conditions which variously referred to work performed under a roster and to shift work in clauses addressing rest periods (cl 6.29), restrictions of the maximum number of continuous shifts to be worked (cl 6.30) and superannuation entitlements (cl 7.13).

106    Clause 7.4 of the General Conditions expressly required Mr Rossato to work “shifts and or rosters as prescribed in the [NOCE]” and stated that Mr Rossato may be required to work additional or replacement shifts or rosters as agreed during the engagement.

107    In accordance with what cl 7.4 contemplated, the First NOCE prescribed the nature of Mr Rossato’s shift as an alternative shift and WorkPac provided Mr Rossato with an alternative shift roster with the First NOCE which was headed “Collinsville 7/7 Roster”. That document could only have been objectively understood as the alternative shift roster worked at the Collinsville Mine by employees performing work of the kind Mr Rossato was being employed to perform. The roster identified that the work would be performed by four crews – an “A”, “B”, “C”, and “D” Crew on a seven day on seven day off alternating day/night shift basis. The roster predated Mr Rossato’s employment. It commenced on 23 April 2014 and allocated shifts continuously through to 31 January 2015, some seven months after Mr Rossato’s first employment commenced.

108    The roster did not specify the length of each shift, but its continuous alternating day/night shift arrangement is demonstrative of at least 12 hour shifts, an 84 hour shift cycle and a 42 hour working week.

109    In the extract from the First NOCE set out above, the maximum shift length is specified as 12 hours and Mr Rossato was told that a “standard work week” would be 38 hours and that additional hours may be worked under his rostered arrangements. The qualification “this may vary and is a guide” sat above the whole statement but seems to be directed at the working of “additional” hours beyond the ordinary hours worked in the “standard work week of 38 hours” and/or a variation to the standard work week itself.

110    The General Conditions (at cl 6.28) also specified that the maximum ordinary working hours per shift may be up to 12 hours and suggested that any variation would depend upon the applicable industrial instrument. Clause 7.1, headed “Ordinary Hours”, then relevantly said this:

7.1     Ordinary Hours

The employee will be engaged for the hours prescribed in the [NOCE]. The hours of work will be defined in the Relevant Industrial Instrument and your [NOCE]. Ordinary working hours are generally between 35 - 38 hours per week over a 6 month period. The employee may be requested to work such reasonable additional hours as requested by the employer.

111    Furthermore, the Enterprise Agreement also addressed what the ordinary hours and standard work week of a Flat Rate FTM like Mr Rossato would be once employed by WorkPac. The definition of “ordinary hours” of work provided that the expression meant a maximum of 35 hours per week (cl 1.6). Clause 14.2 provided that the ordinary hours of work for a Flat Rate FTM shall be “a standard work week” and that FTMs will be required to work reasonable additional hours.

112    The references made by the First NOCE, the General Conditions and the Enterprise Agreement to ordinary hours of work and the standard work week must be understood in the context of the maximum weekly hours standard provided for as part of the National Employment Standards prescribed in Div 2 of Pt 2-2 of the FW Act. That Mr Rossato’s terms and conditions of employment were intended to conform (as they were required to by law) with the National Employment Standards is specifically provided for in cl 1 of the General Conditions. As earlier stated in relation to maximum weekly hours, s 62 of the FW Act provides that for a “full-time employee” an employer must not request or require an employee to work more than 38 hours per week unless any additional hours requested or required are reasonable. Section 63(1) provides that a modern award or enterprise agreement may include terms providing for the averaging of hours of work over a specified period but for a “full-time employee” the period must not exceed 38 hours per week.

113    Whilst there is a potential for inconsistency, what seems tolerably clear is that when the First NOCE and the General Conditions spoke of ordinary hours and standard work weeks, those documents were referring to the ordinary hours or standard work week of employees working full-time hours. As pro forma documents designed to deal with assignments at various workplaces and given that the standard ordinary hours of full-time work may vary from workplace to workplace it is not surprising that ordinary hours are not specified in fixed terms. However, what is telling, is that those contractual documents are contemplating that Mr Rossato’s service will be utilised for the standard work week as well as for any additional hours worked by full-time employees at the workplace to which Mr Rossato will be assigned and that he will provide his service by working those hours of work.

114    In that context and although these terms contemplate some variability as to the actual hours of work to be allocated to Mr Rossato, together with the terms earlier addressed dealing with the duration of the employment, they manifest an offer of indefinite employment in which Mr Rossato will be utilised to work and will work the standard ordinary hours of work of a full-time employee of the workplace in which he will be employed, together with reasonable additional hours in accordance with the pattern of work fixed by the alternating shift roster applicable at that workplace. That is an offer of continuing work to be performed according to an agreed pattern of full-time hours of work. Employment of that type, by its very nature, is employment which includes a firm advance commitment. It is a kind of employment which is clearly “other than casual” within the meaning of ss 86, 95 and 106 of the FW Act.

115    The very fact that the work Mr Rossato was to perform was not to be performed on demand but was pre-programmed long in advance and fixed by a roster is strongly indicative of a firm advance commitment. The performance of work which is unpredictable, irregular or intermittent is not conducive to being pre-programmed and pre-allocated under a roster. Although from an employee’s perspective, the working of full-time hours in a particular week may constitute irregular, unpredictable or intermittent work, for instance where the employee is temporarily employed to replace a full-time employee who is ill, the working of the standard work week of a workplace on a continued and pre-programmed basis is the performance of regular, constant and predictable work. The fact that Mr Rossato’s work was to be allocated and pre-programmed well in advance under a roster, would require the on-going working of “the standard work week” and would require working shifts (ie. set blocks of hours) in the context of on-going indefinite employment, is demonstrative of work which is regular, certain, continuing, constant and predictable. Consistently with what the Full Court said in Skene at [173] those features may be regarded as the usual manifestations of the existence of a firm advance commitment.

116    Other indicia supporting the fact that what was intended was regular, continuing and predictable work for Mr Rossato are to be found in the General Conditions. These include the capacity given to WorkPac to stand-down Mr Rossato without pay in circumstances of a strike, breakdown of machinery, or any stoppage of work for any cause for which WorkPac cannot be held reasonably responsible (cll 7.1 and 7.14).

117    It is also relevant to observe that the kind of mechanisms or arrangements that would be required to facilitate the allocation of irregular or intermittent work to Mr Rossato are neither contemplated by the written terms of the contract or apparent from the surrounding circumstances. If the work intended to be provided under the contract was to be irregular or intermittent, how was Mr Rossato to be notified that he was required to work? What was the allocation mechanism which would facilitate a work pattern of that kind?

118    Nor can it be suggested that work intended to be provided under the contract was irregular or intermittent because the shifts allocated to Mr Rossato were optional – at his election to take up or not. Not only is the capacity for Mr Rossato to make such an election neither mentioned nor catered for by the contractual text or suggested by the factual matrix, implicit from the text, is that Mr Rossato would be required to and be obliged to perform the work in accordance with the allocative directions given by the applicable roster. The roster presented to Mr Rossato was not contemplated to be a set of options from which he could pick and choose which shifts he would work. The uncommerciality of such an arrangement from Glencore’s viewpoint, and thus from WorkPac’s perspective, makes it tolerably clear that such an arrangement could not have been objectively countenanced.

119    Further, the General Conditions should be construed as prohibiting any such election. Clause 5.4 is directed at requiring performance by Mr Rossato. It provides that Mr Rossato agrees to complete an assignment once he has accepted it and that should he elect not to complete an assignment for whatever reason, WorkPac reserves the right to recover any costs incurred by it in relation to that assignment. Whilst that clause would not prevent Mr Rossato from exercising his right to terminate the assignment, it does require performance by him of the work contracted during the employment. Further, cl 6.15 requires that whilst Mr Rossato is employed with WorkPac he will work exclusively for WorkPac. That clause, in the context here in question, should be seen as directed to maintaining Mr Rossato’s availability to perform the work that he is contracted to perform in accordance with the agreed pattern of work.

120    Furthermore, an election by Mr Rossato to not perform (without just cause) the shifts allocated to him would likely infringe the obligations imposed upon him by the Enterprise Agreement and may have exposed him to civil penalties and disciplinary action including the loss of his employment. Clause 14 is open to be read as, at least impliedly, requiring the performance of the rostered ordinary hours allocated to an FTM. It expressly requires a Flat Rate FTM to perform reasonable additional hours (cl 14.2). Clause 6.6.1 provides that the absence of an FTM from work for a continuous period exceeding two rostered working days without the consent of WorkPac or without a reason acceptable to WorkPac, or without notification to WorkPac, shall be prima facie evidence of the abandonment of the FTM’s employment. Clause 6.2 deals with lawful directions given to an FTM by WorkPac or a client of WorkPac. It states that a refusal to comply with any reasonable and lawful direction may result in disciplinary action including termination of employment. It imposes a duty on “any FTM” unable to perform an assigned task to immediately notify a supervisor or other appropriate person. Where the function of a roster (as was here the case) is to assign work to an employee, the assignment of that work by the roster would ordinarily involve the giving of a lawful direction. On that basis, it seems to me that Mr Rossato was obliged to carry out work in accordance with his roster unless otherwise directed or unless the direction was unreasonable because, for instance, Mr Rossato was unavailable because of an illness. WorkPac’s contention that he could elect whether or not to work a rostered shift or part thereof is unpersuasive.

121    None of the features said by WorkPac to demonstrate that there was an absence of a firm advance commitment are of significance or of such significance, either alone or in combination, to outweigh the indicia referred to above which demonstrate the contrary.

122    That the duration of the assignment (the employment) was uncertain including because the six months identified was an estimate and the period of the assignment could be varied or terminated, is of no significance. Employment of indefinite duration subject to rights of termination may be a feature of non-casual as well as casual employment.

123    WorkPac contended that Mr Rossato’s “daily working hours were to vary and the First [NOCE] indicated that the hours indicated were merely ‘a guide’”. That contention relied upon the opening words in parenthesis – “This may vary and is a guide, any significant changes notify WorkPac” – in the column headed “Daily Working Hours” in the First NOCE (see above at [103]). In so far as the submission seeks to say that the hours to be worked by Mr Rossato may vary from time to time, that is of no significance. A common feature of all kinds of employment is that additional hours (usually called “overtime”) to the standard daily hours of the workplace may be worked. In so far as the submission seeks to say that WorkPac had a unilateral power to vary day-by-day the daily standard or ordinary hours that Mr Rossato would be allocated, that would be of significance if it were true. However, the term relied upon does not say that and the contrary indications in the provisions already referred to serve to deny such an intent. What is of significance is that the hours to be worked were full-time hours programmed well in advance and allocated by a shift roster requiring work to be performed in regular and continuing standard blocks of time.

124    The fact that under cl 5.3 of the General Conditions, Mr Rossato may accept or reject any offer of an assignment and is thus not bound to take up any employment with WorkPac, is of no significance. Nor is WorkPac’s contention based upon cl 5.5 of the General Conditions that WorkPac was under no obligation to offer Mr Rossato any further assignments (ie. employments) of any significance.

125    WorkPac also relied upon Mr Rossato being paid pursuant to an hourly rate of pay. In that respect WorkPac relied upon the following statement in the First NOCE – “Your Pay rate is a Flat Rate of: $49.00 per hour”. WorkPac did not contend that Mr Rossato was employed under hourly contracts, that is, that he was separately contracted for each hour of work. In the absence of an hourly rate of pay being indicative of hourly employment, the way in which Mr Rossato’s wage was formulated seems to be of little or no significance. I accept that a fixed weekly pay rate would have been an indicator of regular employment but, on its own, an hourly pay rate is not a sufficient indicator of intended irregular employment. As McTiernan J said in Doyle at 565, “[e]ngagement at an hourly rate is not a criterion of casual employment as distinct from regular employment” and see Skene at [188]. Furthermore, the legal context was that the Enterprise Agreement provided for all employees – whether casual or not – to be paid pursuant to an hourly rate of pay.

126    WorkPac’s reliance on Mr Rossato being required to submit timesheets is of little significance. The use of timesheets is not necessarily an indicator of irregular work. The content of the timesheet provided with the First NOCE suggests that the primary purpose of the requirement to complete a timesheet was to confirm, for the purpose of calculating Mr Rossato’s pay, the hours worked. Particularly where, as was here the case, the employer was not on-site, it is not surprising that a system for confirming the actual hours worked by the employee was utilised. A mechanism for checking that scheduled work is performed is a common characteristic of many workplaces where regular and predicable work is performed.

127    That Mr Rossato’s employment could be terminated with only an hour’s notice is of significance. As observed already, regular employment is usually terminable on longer notice. However, for an employer whose business is labour hire, the consequences of a loss of a contract where terminated by the employee may well be different than in the ordinary case. Such an employer is likely to have an enhanced capacity to replace departing employees quickly because of a readily available source of spare employees on its books. Mr Rossato was on WorkPac’s books for seven months prior to being first employed by WorkPac. Accordingly, the purpose of a longer notice period, referred to above at [74], may not be operative. A short period of notice is therefore less indicative of regular employment than it may be in the ordinary case. However, even if significance is attached to this feature, its impact on an objective assessment of whether it was both expected and intended that Mr Rossato have regular employment, is marginal in the face of the other indicia already referred to which strongly point to that conclusion.

128    WorkPac’s contention that pursuant to cl 7.6 of the General Conditions an employee would be paid a minimum of four hours should the assignment (employment) be varied or interrupted, is of no significance including because the clause had no application to Mr Rossato whose term of employment was indefinite.

129    WorkPac also relied on references to “casual” or “casual employee” in the contractual material. The First NOCE was headed “Notice of Offer of Casual Employment – Flat Rate” and stated that the $49 per hour “flat rate” included a “casual loading” amongst other specified loadings, penalties and allowances. Next to the reference to “casual loading” the following notation in parenthesis was made – “refer to Schedule 2 for more information on your casual loading”. To determine “your casual loading” Sch 2 referred to the “appropriate Agreement contained in Schedule 1”.

130    The designation of the type of employment being dealt with in a contract is a relevant factor in the assessment of whether the contract includes a firm advance commitment: see Skene at [187]. However, given the term “casual” can bear a variety of meanings, the significance of such a designation will firstly depend upon the objective understanding of the parties about the meaning of the designation.

131    Part of the factual matrix includes a document headed “Assignment & Basic Safety Guide”. The document is referred to by the General Conditions and the Declaration made by Mr Rossato includes his confirmation that he had read and familiarised himself with its content. The document includes the following explanation (emphasis added):

Your engagement is on a casual basis only. This means you will be paid an hourly rate of pay for every hour you work. In most cases this does not include meal breaks, travel and induction time.

132    That statement is of some significance because it is an expression of what being engaged on “a casual basis only” may have been objectively understood to mean. It suggests that the parties may have understood a “casual” employee to be an employee who is “paid an hourly rate of pay”. That, however, does not suggest a mutual understanding that such an employment lacks a firm advance commitment and diminishes the significance to be attached to the label “casual” in the assessment of whether a firm advance commitment was given to Mr Rossato.

133    In any event, even if the objective understanding of the parties about their use of the term “casual” was of an employee who lacked a firm advance commitment, that designation “cannot receive effect according to its terms if [it] contradict[s] the effect of the agreement as a whole”: Chaplin at 389 and see [95] above. The designation clearly contradicts the agreement as a whole because, when so read, the First Contract evinces a mutual intent that Mr Rossato’s service would be utilised by WorkPac for the performance of continuing work in accordance with an agreed pattern of work.

134    I should add that I reject WorkPac’s contention that the roster had no contractual force. Clause 7.4 of the General Conditions provided that Mr Rossato “would be required to work shifts and or rosters as prescribed in the [NOCE]” and went on to provide that Mr Rossato “may be required to work additional or replacement shifts or rosters as agreed to during the engagement”. To accept that because a roster was only provided with the First NOCE and was thus not “prescribed in” that document, would be to allow form to triumph over substance. If the roster is to be regarded as “additional” to the First NOCE, it was provided to Mr Rossato and he agreed to work it. In any event, I would have arrived at the same conclusion even if a roster had not been provided to Mr Rossato with the First NOCE. The provision of a firm advance commitment to Mr Rossato is sufficiently demonstrated by those terms of the First Contract which provided for on-going employment in which Mr Rossato would work the standard ordinary hours at the Collinsville Mine as well as additional hours in accordance with an alternating shift roster. It was not necessary for Mr Rossato to be told of the specific hours he would work. It was sufficient that the pattern of work which he was being offered and which he would be required to work was identified. On Mr Rossato agreeing to provide his service in accordance with that pattern, he agreed to be available for and perform work as directed by the applicable roster. Correspondingly, WorkPac agreed to utilise Mr Rossato’s service in accordance with that pattern.

135    There is a significant aspect of the factual matrix which, to this point, I have not sufficiently discussed and which assists in confirming my conclusion that a firm advance commitment was given to Mr Rossato.

136    I have earlier described the workforce structure for production employees utilised by Glencore at its black coal mines at Collinsville and Newlands. That system of work involved the pre-programming of work long in advance of its performance and its allocation to individual employees organised in crews and working regular shifts in accordance with a roster. The system was based upon regular work, performed in crews of regular employees, working full-time plus additional hours in shifts according to a fixed pattern of work. As a supplier to Glencore of labour, Glencore’s requirements for employees who would work regular full-time plus additional hours of work in accordance with a fixed pattern of work must have been well-known to WorkPac. That conclusion flows from WorkPac’s specialisation in the provision of labour to operators of coal mines and the commercial imperative on WorkPac to appreciate and satisfy Glencore’s particular requirements for labour.

137    As a matter of commercial reality, WorkPac must be understood not only to have appreciated Glencore’s requirement for workers who would fit in with Glencore’s need for work to be performed according to a particular pattern of work, but also to have recruited and engaged employees in order to satisfy Glencore’s particular needs. The extent of WorkPac’s knowledge of Glencore’s requirement for work to be performed according to a particular pattern of work is evident from the evidence. That evidence includes WorkPac’s knowledge of Glencore’s rostering arrangements. The detailed knowledge held by WorkPac was demonstrated by its capacity to pre-populate timesheets provided to its employees at the Collinsville Mine.

138    There is good reason to think that Mr Rossato had a sufficient appreciation of Glencore’s system of work even prior to first being employed by WorkPac. Mr Rossato was a qualified and experienced Operator in open cut black coal mines before his first employment with WorkPac. He had worked for approximately five years with MacMahon Mining at the Eaglefield open cut coal mine. Mr Rossato had also worked as an “Operator” at the Collinsville Mine. The extent of time he worked at the Collinsville Mine was not given by the agreed facts. Nor was further information provided other than that he worked for “Wagner”. It is likely that “Wagner” is a labour hire provider just like WorkPac although I cannot be certain. In any event, working at the Collinsville Mine as an Operator would likely have sufficiently familiarised Mr Rossato with Glencore’s system of work to have led him to appreciate that Glencore utilised labour hire employees to perform regular work in accordance with a fixed pattern of work.

139    If that was not a matter known to Mr Rossato prior to the making of the First Contract, it was certainly a matter known to him and known to WorkPac and properly to be regarded as part of the factual matrix at the time that the second and later contracts were entered into.

140    For all those reasons, I conclude that the First Contract included a firm advance commitment, and that in his employment under that contract Mr Rossato was “other than [a] casual employee” for the purposes of ss 86, 95 and 106 of the FW Act.

First Contract – Post-Contractual Conduct

141    The conclusion reached has been arrived at without reference to any post-contractual conduct of the parties. However, in case that conclusion is wrong, it will be necessary to briefly deal with Mr Rossato’s case in the alternative in so far as it relies on subsequent conduct. For that purpose it is necessary to further set out, by reference to the agreed facts, the conduct relied upon by Mr Rossato. As that conduct forms part of the pre-contractual factual matrix for the Second Contract it will also be relevant for construing that contract.

142    Mr Rossato commenced his first shift of work under the First Contract on 28 July 2014. For the duration of that employment, Mr Rossato had access to the Collinsville Mine camp accommodation which provided him with both accommodation and food. Glencore covered the full cost of this accommodation. Mr Rossato lived over an hour away from the Collinsville Mine and attended work on a drive in/drive out basis – he would drive to the Collinsville Mine and check into the accommodation for the duration of his rostered swing of shifts (Mr Rossato’s seven days on) and check out of the accommodation and drive home once the shifts were finished.

143    Over the first few shifts of Mr Rossato’s employment he was required by Glencore and WorkPac to undergo an extensive induction process. As part of that he was required to be assessed by Glencore as competent on various items of plant at the mine. During the initial period he was directed by Glencore to work a 6am to 6.30pm block of shifts which included only new starters undertaking the induction and assessment process. The new starters worked a 12.5 hour day block of shifts for the initial swing of nine days on, from 28 July 2014 until 5 August 2014.

144    Following that initial swing, Mr Rossato was required by Glencore to work as a Production Operator on A Crew and therefore worked the 7/7 roster swing for A crew in accordance with the roster he had been provided by WorkPac with the First NOCE. As part of A Crew, and commencing 13 August 2014, Mr Rossato worked the same hours every fortnight in accordance with the A Crew 7/7 roster alternating between dayshifts (6am to 6.30pm) and nightshifts (6pm to 6.30am).

145    The only periods in which Mr Rossato worked different hours were:

    15 October 2014, which was the day after Mr Rossato’s seven days on swing. On that day together with approximately ten other Operators, Mr Rossato stayed at the Collinsville Mine as directed by Glencore to complete a CPR course and worked 4.25 hours on that day;

    In mid-December 2014, Glencore announced it would stop production at all of its Australian coal mines for three weeks over Christmas. As a result Mr Rossato and his crew did not work the seven day swing on the roster that would otherwise have commenced 17 December 2014, and returned to work for Mr Rossato’s first rostered shift after the shutdown on 3 January 2015 – being part of the way through that rostered swing. That meant that A Crew only worked the last four days of that rostered swing.

146    Sometime prior to the end of 2014, Glencore provided Mr Rossato with a 2015 roster produced and published by Glencore for his crew at the Collinsville Mine. That shift roster continued to provide for the same pattern of shifts for the A Crew 7/7 roster into 2015. The 2015 roster set out the rostered hours for the full calendar year by which means Mr Rossato became aware of his rostered shifts at least 12 months in advance. Mr Rossato attended work as part of A Crew (which continued to consist of Glencore and WorkPac employees all performing the same work as Operators) in accordance with that roster through to 26 May 2015.

147    During the period of his employment under the First Contract Mr Rossato was never asked by Glencore or WorkPac whether he intended to attend on a day he was rostered and never enquired of WorkPac or Glencore whether he would be required to attend on a day he was rostered to attend.

The Second Contract

148    On 25 May 2015, Mr Rossato received two memoranda from Glencore announcing a restructure of the Collinsville Mine due to deteriorating coal market conditions and a reduction in manning levels across Collinsville Mine’s operations. On Wednesday 27 May 2015, the recruitment co-ordinator employed by WorkPac at its Bowen Business Centre called Mr Rossato. The following note was made regarding the call:

Spoke to [Mr Rossato] about the roles at Newlands. Went over these. He said he wanted to wait it out at Collinsville. I told him these roles start Monday and I strongly suggest that you take the redeployment and head over to Newlands. He said that he would like to think about this. I told him I need him to call me today and let me know but that I can’t stress more to you that I think that you should take the opportunity to move sites.

149    That conversation occurred at 2.55pm. A further conversation occurred on the same day at 3.58pm between the same WorkPac representative and Mr Rossato the following note records that conversation:

Re: Candidate Care Call - all going well, no issues on site (except job cuts), just confused on the option with Newlands, told him to strongly suggest it, was just confused, told him to strongly think about it as its a good offer. He will and call Laura back before COB today.

150    Later on that day at 4.07pm, Mr Rossato called the WorkPac representative and told her that he was unsure of what he should do but that he was going to take the Newlands role as he didn’t want to be without a role.

151    The Newlands Mine was just over two hours’ drive from Mr Rossato’s home and so required approximately an additional hours driving time there and back at the start and end of each swing. Mr Rossato decided to accept the position at the Newlands Mine because he believed if he did not accept it there may no longer be a role for him at the Collinsville Mine and the Newlands position was more secure. It is clear from the conversations held between WorkPac’s representative and Mr Rossato to which I have referred, that WorkPac appreciated Mr Rossato’s desire for security of work and strongly encouraged him to take up employment at the Newlands Mine because that position would provide Mr Rossato with secure work.

152    At 4.55pm on 29 May 2015, the same representative of WorkPac emailed Mr Rossato. The email attached several maps, a 2015 site roster, an induction itinerary and the Second NOCE dated 29 May 2015. Also attached was an induction verification form, a hazard register and a timesheet template. The Second NOCE provided that Mr Rossato’s rate of pay was $49 per hour, as it had been at the Collinsville Mine.

153    The Second NOCE was relevantly in the same terms as the First NOCE other than that it concerned an assignment at the Newlands Mine. The length of the assignment differed and curiously 154 days replaced the estimate of six months in the First NOCE. Like the First NOCE the specification of the length of the assignment was accompanied with a statement that “This may vary and is a guide only”. The content of the column “Daily Working Hours” was the same as in the First NOCE including the reference to the ordinary hours of work being a standard work week of 38 hours and that additional reasonable hours may be worked “in your rostered arrangements”.

154    The Second NOCE specified that Mr Rossato would be working in accordance with an alternating shift structure.

155    The alternative shift roster provided to Mr Rossato with the Second NOCE is a type of roster that the agreed facts described as a “5, 5, 4 pattern” roster – a repeating roster providing for five days on, five days off, four days on, five days off, five days on and then four days off.

156    The terms of the Second Contract were not suggested by WorkPac to be relevantly distinguishable from those discussed in relation to the First Contract. The factual matrix is more in favour of Mr Rossato’s case. There can be no doubt that by that time both parties understood Glencore’s system of work and its use of WorkPac employees as regular workers providing regular work in accordance with Glencore’s rosters which provided for a fixed pattern of work. Additionally, both parties understood that Mr Rossato was moving to Newlands to take up a position which offered secure work. Taking into account those matters, and for the same reasons as given in relation to the First Contract, I conclude that the Second Contract included a firm advance commitment and that in his employment under that contract, Mr Rossato was “other than [a] casual employee” for the purposes of ss 86, 95 and 106 of the FW Act.

Second Contract – Post-Contractual Conduct

157    For the reasons earlier identified and again by reference to the agreed facts, I will set out some further facts relevant to the conduct of the parties under the Second Contract.

158    On Mr Rossato’s first shift of work at the Newlands Mine on 1 June 2015, Mr Rossato participated in an induction to the Newlands Mine site.

159    The Newlands Mine was just over two hours’ drive from Mr Rossato’s home and he attended work on a drive in/drive out basis in relation to each shift cycle. During the course of Mr Rossato’s employment under the Second Contract, he had access to the Newlands Mine camp accommodation. The cost of that accommodation was covered by Glencore from 1 June 2015 until the week commencing 15 February 2016. From that week WorkPac commenced to make deductions at the rate of $35 per week from Mr Rossato’s pay to cover the cost of the accommodation.

160    From 1 June 2015 to 24 March 2016, Mr Rossato was rostered by Glencore on the same pattern of shifts every fortnight. From 1 June 2015 to 15 September 2015 the Newlands Mine was operating on dayshift only and Mr Rossato and all members of his crew, whether Glencore employees or WorkPac employees, were alternating between the D Crew and B Crew day work rostered hours on the shift roster that had been provided to Mr Rossato with the Second NOCE. On 21 September 2015, Mr Rossato commenced working only the D Crew rostered hours on that shift roster which comprised of alternating day and night shift swings.

161    Mr Rossato’s hours of work on each shift were the same hours as the other Operators in his crew, which consisted of Glencore employees and WorkPac employees. The periods in which Mr Rossato worked or for which he was paid for different hours in accordance with a direction of Glencore were:

    1 June 2015 (his first day) in which Mr Rossato worked only a 10.5 hour shift whilst undertaking induction;

    21 December 2015 to 3 January 2016, Mr Rossato did not work due to a Christmas shutdown by Glencore; and

    7 February 2016 which was the last rostered day of the shift swing, but was not worked by Mr Rossato’s crew due to inclement weather.

162    Other than for those occasions Mr Rossato attended work in accordance with his roster.

163    Although Mr Rossato’s rostered hours over the period 1 June 2015 to 24 March 2016 did not change, there were occasions when his payment for those hours did. There were occasions when Mr Rossato was paid an additional 30 minutes pay for driving a bus to and from the mine pit at which work took place. Additionally, from 13 March 2016 a change in payment practice occurred in which Operators were allowed to claim payment from “gate to gate”, which entitled them to be paid an additional 15 minutes either side of entering and leaving the site each day. The effect of this was that although the time spent at the workface did not change, the paid hours were for a 13 hour shift plus any additional half hour (each way) when Mr Rossato was responsible for driving the bus.

164    Sometime in about September 2015, Mr Rossato heard from co-workers that there might be Operator positions available at the Collinsville Mine. On 4 September 2015, Mr Rossato called one of WorkPac’s representatives at its office in Bowen and informed her that he would like to be considered for work at the Collinsville Mine. He was informed that another representative would get that done for him but ultimately nothing eventuated.

165    While working at the Newlands Mine sometime in late 2015, Glencore provided Mr Rossato and WorkPac with a copy of the 2016 roster for the Newlands Mine. The 2016 roster set out the rostered hours for the full year (that is, 12 months in advance), by which means Mr Rossato became aware of his crew’s rostered shifts at least 12 months in advance. Mr Rossato was informed by a Glencore representative that he would be on A Crew under that roster. The rosters were posted on noticeboards on site. At about the same time Mr Rossato was made aware of the dates of the 2015/2016 Christmas shutdown.

166    Following the Christmas shutdown, Mr Rossato attended at Newlands Mine as part of the A Crew in accordance with the 2016 roster. His first rostered swing commenced on 6 January 2016.

167    During the period of his employment under the Second Contract Mr Rossato was never asked by Glencore or WorkPac whether he intended to attend on a day he was rostered to work and never enquired of WorkPac or Glencore whether he would be required to attend on a day he was rostered to work.

The Third Contract

168    On or about 11 February 2016, Mr Rossato was provided with a letter from WorkPac in which he was advised that the amount of his current “flat pay rate” would reduce to $43.05 per hour. He was told that he would be provided with a new “Notice of Offer” setting out the revised rates and conditions of his employment and that if he wished to remain in employment with WorkPac he would need to notify WorkPac as soon as practicable and before 25 February 2016.

169    On 12 February 2016, in a meeting with a representative of WorkPac, Mr Rossato reluctantly accepted the pay cut.

170    On 19 February 2016, WorkPac emailed to Mr Rossato and he received the Third NOCE. The Third NOCE was sent by WorkPac because of the reduction in Mr Rossato’s rate of pay. The Third NOCE provided for Mr Rossato’s rate of pay at $43.05 per hour effective from 26 February 2016. Mr Rossato accepted that offer of employment when he commenced to perform his duties at the Newlands Mine on the new rate from 2 March 2016 which was the start of his next rostered on swing after 26 February 2016.

171    The Third NOCE was, relevantly, in the same terms as the Second NOCE. The length of assignment was differently expressed and took the form of the First NOCE referring to “6 Months (This may vary and is a guide only)”. The way in which the rate of pay was expressed differed but not relevantly for current purposes. The terms of the Third Contract were not suggested by WorkPac to be relevantly distinguishable from those features discussed in relation to the Second Contract. The factual matrix was essentially the same. Taking all of that into account and for the same reasons as given in relation to the First Contract, I conclude that the Third Contract included a firm advance commitment and that in his employment under that contract, Mr Rossato was not a casual employee and was “other than [a] casual employee” for the purposes of ss 86, 95 and 106 of the FW Act.

Third Contract – Post-Contractual Conduct

172    From 30 March 2016, a 7/7 roster commenced at the Newlands Mine and, with the exception of workers at the site’s wash-plant facility, all Operators (including Glencore employees) went onto the 7/7 roster. Mr Rossato was directed onto the C1 Crew on this roster. He had been given prior notice by Glencore of this change in the roster and the consequent change in his crew by way of one or more pre-start meetings in the period leading up to the change. The practice of paying from gate to gate and being paid an additional 30 minutes (each way) when driving the bus continued.

173    Mr Rossato’s working hours at the workplace during each shift were consistent with the hours worked by his crew (which consisted of WorkPac and Glencore employees) in the pit at which the crew was assigned. Further, during the period of his employment under the Third Contract Mr Rossato was never asked by Glencore or WorkPac whether he intended to attend on a day he was rostered to work and never enquired of WorkPac or Glencore whether he would be required to attend on a day he was rostered to work.

The Fourth Contract

174    On 15 August 2016, Mr Rossato attended WorkPac’s Bowen Business Centre and met with a representative of WorkPac. He asked her about the Collinsville Mine and told her that he was keen to hear about roles that might come up there as he would be closer to home.

175    On or about 23 September 2016, whilst on a rostered day off, Mr Rossato received a telephone call from a representative of WorkPac and was informed that he had been successful in obtaining work at the Collinsville Mine. By a communication from WorkPac of 26 September 2016, it was confirmed to Mr Rossato that he was successful in obtaining a position at the Collinsville Mine and that he would be starting there on 27 September 2016 on nightshift.

176    At about 2.32pm on 27 September 2016, WorkPac emailed and Mr Rossato received, the Fourth NOCE. That NOCE identified Mr Rossato’s assignment as being for “Glencore Collinsville Mining A Crew”. Mr Rossato commenced work at the Collinsville Mine on A Crew on the nightshift that commenced at 6pm on 27 September 2016. In accordance with the terms of the Fourth NOCE, Mr Rossato’s commencement of work constituted his acceptance of the offer made by WorkPac and thereupon the Fourth Contract was made.

177    The Fourth NOCE was in significantly different terms to that of the earlier NOCEs provided to Mr Rossato by WorkPac. Principally, the content which had appeared under the earlier NOCEs under the heading “Daily Working Hours” (see [103] above) was replaced with the following:

178    Below that text appeared the following three sections, each of which had not been previously included in the NOCEs provided to Mr Rossato:

179    The Fourth NOCE did not have a section either headed or which addressed the “Length of Assignment” as prior NOCEs had done. It did have, in the same terms as the prior NOCEs, a section that specified that Mr Rossato’s “shift structure” was an “alternating shift”.

180    The Fourth NOCE specified Mr Rossato’s pay rate as $40 per hour. There was no reference to any casual loading being included in Mr Rossato’s rate of pay. There was no reference made to casual employment at all other than in the heading of the Fourth NOCE and in the extracts set out above.

181    I do not regard the intended term of the Fourth Contract to be any different to that of the prior contracts. There was no suggestion of temporary, short-term employment and the absence of a fixed term, in the context of the term in the General Conditions that the employment may be terminated on notice, supports the conclusion that the parties intended an on-going indefinite employment subject to rights of termination.

182    By the time of the Fourth Contract, Mr Rossato had been employed on three prior assignments. Each of the prior assignments were for work to be performed at a Glencore mine. In each case, Glencore utilised a workforce of its own permanent employees and employees of WorkPac organised into crews of production employees who worked in accordance with long-term rosters providing regular, continuing and predictable employment to that workforce as Mr Rossato’s personal experience had demonstrated and as WorkPac well knew. Subject always to Glencore’s capacity to terminate its arrangements with WorkPac, Glencore had an on-going requirement for WorkPac to provide it with employees who would work as regular employees performing regular shift work in accordance with the pattern of work programmed in advance by the rostering arrangements that Glencore typically put in place.

183    The nature of the work available at Glencore’s mines for production employees and the way in which that work was organised and allocated is relevant not only to an evaluation of the intended length of the employment which was offered to Mr Rossato but also to the extent of the work intended for Mr Rossato in that employment and the intended pattern in which that work would be performed. It must have been mutually understood by the parties that the assignment contemplated by the Fourth NOCE was specific to Glencore’s Collinsville Mine and for the purpose of servicing Glencore’s need for production employees. It follows that the parties must have understood that Mr Rossato’s employment had to fit in with Glencore’s needs and its system for allocating both the extent and the pattern of work to be performed by production employees. It must further have been understood that Mr Rossato’s intended employment would reflect those features which characterise Glencore’s system of work allocation. Those features were well-known to both WorkPac and Mr Rossato. Relevantly, they were that production employees worked extended hours (full-time as well as additional hours) in accordance with long-term shift rosters which required the regular and predictable performance of work by those employees in accordance with the continuing pattern of blocks of worktime (shifts) programmed well in advance by Glencore, notice of which was provided to employees through the provision of rosters.

184    Furthermore, it was Mr Rossato’s experience that Glencore’s roster was the usual means by which directions for the performance of work at particular times were received by him, there being no occasion when he was ever asked whether he intended to attend on a day he was rostered nor any occasion where he had inquired of either WorkPac or Glencore whether he was required to attend on a day he was rostered to work. So much must have been known to WorkPac including because WorkPac must have regarded Mr Rossato’s roster as the allocative mechanism when it pre-populated his timesheets for work at the Collinsville Mine. Further, there was no evidence of the existence of any alternative mechanism for the allocation of work for WorkPac employees working at either the Collinsville or Newlands mines and in particular, no mechanism by which Mr Rossato could be allocated work on demand (ie. as and when it may be required) and no mechanism for Mr Rossato to effectuate an election to reject an allocated shift.

185    The reason those mechanisms were absent must have been obvious to both Mr Rossato and to WorkPac. They were completely unnecessary in circumstances where Mr Rossato was working in an employment where, for the reasons already explained and subject to rights of termination, WorkPac had committed to utilise Mr Rossato’s service in accordance with the work allocations required by Glencore’s applicable roster and Mr Rossato had committed to providing his service by being available for and performing work in accordance with those rostering arrangements.

186    Additionally, part of the context was that Mr Rossato was a drive in/drive out employee whom, on his previous employment at the Collinsville Mine lived on the site’s accommodation in a room set aside for him and in circumstances where Glencore met the accommodation costs. That Mr Rossato would continue to be a drive in/drive out employee on his return to Collinsville was expressly acknowledged by the Fourth NOCE.

187    It is in that context and in the context of each of the terms and conditions of the General Conditions and those of the Enterprise Agreement which, as earlier identified, required Mr Rossato to perform the work allocated to him (see [119] and [120] above) that the mutually intended operation of the terms of the Fourth NOCE extracted above fall to be considered.

188    In so far as those terms referred to Mr Rossato being a casual employee or the assignment being casual, those characterisations contradict the agreement read as a whole in the context of the factual matrix just referred to. On the same basis as for the First Contract, but taking into account both the text of the Fourth NOCE that I deal with next and my conclusion as to its operative effect, the characterisation made that Mr Rossato was a casual employee cannot receive effect according to its terms.

189    The Fourth NOCE informed Mr Rossato that he had “the ability to refuse and cancel shifts (as per the Daily Hours/indicative shifts required)”; that if he sought to do so he was required to notify WorkPac and Glencore; and that if he refused a shift he would be responsible for any accommodation, travel, meal or other incidental costs incurred by WorkPac as a result of that refusal. All of that information was premised upon the opening remark “[a]s this is a casual assignment”. In other words, on the basis that the employment was casual employment, the rights and responsibilities Mr Rossato was informed of would be applicable.

190    In my view, the rights and responsibilities referred to should only be regarded as intended to be operative if the premise upon which they were founded was operative. That premise – that the employment was casual employment – contradicts the agreement when read as a whole for the reasons already given and was inoperative.

191    There is admittedly some circularity inherent in that conclusion which requires me to consider the rights and responsibilities referred to as if they were stand alone and not contingent on the characterisation of the employment made by the parties having an operative effect. Considered as stand-alone expressions of intent, I would conclude that the text purporting to provide Mr Rossato with the ability to refuse or cancel a shift allocated to him by Glencore, cannot receive effect according to its terms. Therefore that text does not serve to negate what is to be inferred from the terms of the Fourth Contract read as a whole in light of the factual matrix, that Mr Rossato was given a commitment that during the employment his service would be utilised for the performance of continuing work according to an agreed pattern of work.

192    The text cannot receive effect according to its terms because it contradicts the agreement when read as a whole. In particular it contradicts those terms of the General Conditions that required Mr Rossato to perform the work allocated to him and which exposed him to penalties should he not do so. The terms of the General Conditions to which I have referred must be understood in the context of the legal background provided by the Enterprise Agreement which itself required Mr Rossato to perform the work allocated to him, the failure of which could result in disciplinary action against him or an abandonment of the employment (see [120] above). Furthermore, because of the reciprocity inherent with WorkPac’s promise to utilise Mr Rossato’s service on the shifts allocated to him, the idea that Mr Rossato could elect as to whether or not he would work an allocated shift, contradicts those terms of the contract from which WorkPac’s promise is to be inferred. Looking to the factual matrix for the Fourth Contract and, in particular, the underlying commercial imperatives which inform its objects and purpose, the idea that the parties intended that Mr Rossato could sit in his accommodation at the Collinsville Mine at the start of a shift swing and treat his roster as though it were a menu from which he could choose the shifts he would work, not only contradicts the agreement as a whole but defies common sense and does so in a way sufficient to support the conclusion that, objectively considered, it was not seriously contemplated by the parties that the term in question would have operative effect.

193    As Mummery LJ noted in Dacas v Brook Street Bureau (UK) Ltd [2004] EWCA Civ 217 at [51], parties are entitled to arrange their affairs seeking to achieve a lawful aim to their own advantage, however, as in all areas of the law:

they must be prepared, if and when the matter is contested, to meet the challenge of general interpretative principles that the legal nature and effect of connected or associated transactions and the documents evidencing them are not ascertained by considering them in isolation from each other or by divorcing them from their context.

194    The conclusions I have reached also apply the principle in Chaplin referred to at [95] above. I do not regard that principle as limited to a term of a contract which purports to characterise the nature of the contract or contractual relationship created. If that principle is so limited in scope, the term here in question (like the very similar term dealt with in Autoclenz: see [97] above) is to be regarded as addressing the characterisation of the nature of the contract indirectly: see further Quest at [148].

195    For those reasons, I conclude that the Fourth Contract included a firm advance commitment and that in his employment under that contract, Mr Rossato was “other than [a] casual employee” for the purposes of ss 86, 95 and 106 of the FW Act.

Fourth Contract – Post-Contractual Conduct

196    Under the Fourth Contract, from 27 September 2016 to 15 November 2016, Mr Rossato performed the role of Competent Operator at the Collinsville Mine in A Crew. The Collinsville Mine had been temporarily closed and had resumed operation when Mr Rossato commenced work under the Fourth NOCE. Mr Rossato was informed by Glencore that he was to work a “start-up” roster during the start-up phase which lasted eight weeks, during this period Mr Rossato was made aware by Glencore in advance of the A Crew roster. There is no evidence that WorkPac received a copy of the start-up roster.

197    During his employment under the Fourth Contract, Mr Rossato was never asked by Glencore or WorkPac whether he intended to attend on a day he was rostered to work and never enquired of WorkPac or Glencore whether he would be required to attend on a day he was rostered to work.

The Fifth Contract

198    On 11 November 2016 a WorkPac representative emailed Mr Rossato the Fifth NOCE. It was in relevantly the same terms as the Fourth NOCE save that his rate of pay increased to $43.05 per hour and stated Mr Rossato’s assignment as “Glencore Collinsville Mining D Crew”. As the Fifth Contract was in substantially the same terms as the Fourth Contract, save for the pay increase of $3.05, and a change from the A Crew to the D Crew, the conclusions reached and analysis engaged in regarding whether a firm advance commitment was given to Mr Rossato by WorkPac under the Fourth Contract are equally applicable to the Fifth Contract. I therefore hold that during his employment under the Fifth Contract, Mr Rossato was “other than [a] casual employee” for the purposes of ss 86, 95 and 106 of the FW Act.

Fifth Contract – Post-Contractual Conduct

199    Mr Rossato was scheduled to work on 16 and 17 November 2016 as part of the A Crew (he did not officially commence working in D Crew until 21 November 2016), however, following a conversation with his Glencore supervisor where he noted that he would only have three days off between shifts when he commenced in D Crew, Mr Rossato did not work the last two shifts he was rostered on for in the A Crew on 16 and 17 November 2016. From 21 November 2016, Mr Rossato worked the D Crew 7/7 roster, working the same hours every fortnight alternating between dayshifts and nightshifts. D Crew also consisted of Operators who were employees of WorkPac and Glencore.

200    During his employment under the Fifth Contract, Mr Rossato was never asked by Glencore or WorkPac whether he intended to attend on a day he was rostered to work and never enquired of WorkPac or Glencore whether he would be required to attend on a day he was rostered to work, other than for in the circumstance detailed above when he was moved from the A Crew roster to the D Crew roster.

The Sixth Contract

201    Mr Rossato was informed on 15 December 2016 by a representative of WorkPac that his wage was to increase to $50 an hour; he then received the Sixth NOCE on 21 December 2016. This was sent to Mr Rossato due to the change in pay and classification. The Sixth NOCE contained substantially the same terms as the Fifth NOCE, save that Mr Rossato’s position under the Sixth NOCE was said to be “Multi Skilled Operator 7/7 DN $50” and his rate of pay was increased to $50.

202    The conclusions reached and analysis engaged in regarding whether a firm advance commitment was given to Mr Rossato by WorkPac under the Fourth Contract are equally applicable to the Sixth Contract. I therefore hold that during his employment under the Sixth Contract, Mr Rossato was “other than [a] casual employee” for the purposes of ss 86, 95 and 106 of the FW Act.

Sixth Contract – Post-Contractual Conduct

203    Mr Rossato commenced work under the Sixth NOCE on 11 January 2017 and continued to be rostered on the D Crew 7/7 roster. On or about 18 January 2017, Glencore provided WorkPac with a copy of the D Crew 7/7 roster for 2017. On or about 30 November 2017, Glencore provided WorkPac with a copy of the 2018 D Crew 7/7 roster. Mr Rossato received both the 2017 and 2018 rosters from Glencore prior to the commencement of each roster and was not provided with them by WorkPac. Mr Rossato continued to work the same fortnightly shifts under the 2017 and 2018 rosters until his retirement in April 2018, alternating between dayshifts and nightshifts. The only exceptions to Mr Rossato’s general work pattern were:

    between 26 March 2017 to 1 April 2017 where Mr Rossato did not work as the Collinsville Mine was closed due to Cyclone Debbie;

    10 May 2017, when Mr Rossato attended an induction refresher arranged by WorkPac pursuant to Glencore’s requirements, for which he was paid an additional 6.5 hour shift;

    between 24 December 2017 and 6 January 2018 when he did not work due to the Christmas shut down; and

    between 10 March 2018 and 7 April 2018 when Mr Rossato did not work (other than a single shift on 5 April 2018), because he had to urgently leave the mine to care for his partner who had been airlifted to hospital.

204    During the period of his employment under the Sixth Contract Mr Rossato was never asked by Glencore or WorkPac whether he intended to attend on a day he was rostered to work and never enquired of WorkPac or Glencore whether he would be required to attend on a day he was rostered to work aside from the period when he requested time to care for his partner as detailed above.

205    I should add in relation to each of the contracts that all of the weekly timesheets for Mr Rossato for the whole period in which he was employed by WorkPac at both the Collinsville and Newlands Mines were in evidence and a summary thereof formed part of the agreed facts. By reference to that spreadsheet, Mr Rossato submitted that:

[the] hours as rostered and worked were practically metronomic in their consistency and pattern. The only occasions where the pattern on the roster is interrupted is due to either the Christmas shut downs, an extreme weather event (Cyclone Debbie), or Mr Rossato’s need to take leave to care for his partner in 2018. His hours are at least as regular and predictable as the (Glencore) full-time employees working on the same rosters and no less regular and predictable than any permanent full-time employee.

206    That submission was not put in contest by WorkPac. It is, in my view, a fair characterisation of what the spreadsheet demonstrates.

Utilising Post-Contractual Conduct

207    Although I have set out the conduct of the parties that occurred subsequent to the making of each contract, I do not need to consider that conduct because the mutual intention of the parties that Mr Rossato have a firm advancement commitment is apparent from the terms of those contracts as construed in the context of the relevant factual matrix for each contract. If I had not come to that conclusion and had, instead, found that the mutual intent of the parties as to whether or not a firm advance commitment was to be given to Mr Rossato was not revealed by the written terms of the contract, I would have taken into account subsequent conduct to objectively discern what the parties had agreed to on that subject. Even though the contracts appear to be complete on their face, I would have, in the circumstances postulated, concluded that additional terms must have been agreed to. Whether or not Mr Rossato should have a firm advance commitment from WorkPac and whether or not he should give the reciprocal commitment to WorkPac about his availability and preparedness to work in accordance with an agreed pattern of work, are matters over which some agreement is likely to have been made. That subject is close to being at the core of a contract of employment dealing, as employment contracts must, with the extent to which the service of the employee which is being purchased will be made available by the employee and the extent to which and the pattern by which the employer will utilise the service offered.

208    To take into account the conduct subsequent to the making of each contract would not have infringed the parol evidence rule because, as Spigelman CJ said in County at [7]: “[t]he issue is not one of interpretation, because there are no words to interpret. The issue is one of fact: what did the parties agree?”

209    If, in the circumstances postulated, subsequent conduct is taken into account, that conduct clearly supports the conclusion which I have in any event reached – that in relation to each contract in question, Mr Rossato was given a firm advance commitment.

Variation

210    In the alternative, Mr Rossato contended that, if he had not been given a firm advance commitment under each of his contracts, the post-contractual conduct (in each case) evinced a variation to the contract by conduct. I would agree that in the circumstances postulated by the alternative case, a variation by conduct of the kind contended for may be found. There is nothing in the evidence of post-contractual conduct for each of the contracts, other than the existence of a firm advance commitment, that would serve to explain why all of the usual manifestations of a firm advance commitment were present. For instance, there is nothing to suggest that the work performed by Mr Rossato just happened to turn out to be regular (see Skene at [173]-[175]). In the absence of any suggestion in the evidence that some other basis explains the regularity, certainty, continuity and predictability of the work performed by Mr Rossato, the most likely explanation is that the pattern of work made available to Mr Rossato was provided to him in furtherance of a firm advance commitment implicitly given shortly after the commencement of each contract when the fact that Mr Rossato’s work would be regular and continuing became apparent.

construing The Employments

211    Taking WorkPac’s position at its highest, I have conducted the assessment of whether or not a firm advance commitment was given to Mr Rossato as a question of contract. In my view, however, and as I understand the view expressed by the Full Court in Skene, the requisite assessment requires a characterisation of the facts of the employment. As earlier stated, the assessment of whether a person is a “casual employee” is to be conducted by a characterisation of all of the relevant facts which speak to the type of employment that existed at the time the entitlements in question accrued.

212    Taking that approach leads to the same conclusions as those already expressed when the assessment is conducted as a question of contract. On the characterisation of the employment, it is not necessary for the firm advance commitment to be a contractual term. A mere subjective expectation of continuing work according to an agreed pattern of work would not be sufficient, but an objectively justified expectation of that kind would ordinarily suffice. The facts of each of the employments of Mr Rossato, including the contractual facts, justify the conclusion that a characteristic of each was that a firm advance commitment was given to Mr Rossato and that, for the purposes of ss 86, 95 and 106 of the FW Act, Mr Rossato was “other than [a] casual employee”.

ENTITLEMENTS CLAIMED UNDER THE ENTERPRISE AGREEMENT

213    The relevant provisions from the Enterprise Agreement have been set out in the judgment of White J. I will, however, provide a brief account of each.

214    Clause 19 of the Enterprise Agreement provided for entitlements to leave; these entitlements supplement those provided in the National Employment Standards (cl 19.1). Clause 19.3 provided for the accrual of paid annual leave for all FTMs “other than casual employees”. There is no provision in the Enterprise Agreement providing for the payment of untaken annual leave at the end of the employment. Clause 19.7 provided for the entitlement to paid personal/carer’s leave for all FTMs “other than casuals” and cl 19.12 provided for the entitlement to paid compassionate leave for a “permanent FTM” only and unpaid compassionate leave for casual employees. Clause 20.3 provided for payment for public holidays for all base rate FTMs “other than casuals”.

215    WorkPac and Mr Rossato were in contest over whether Mr Rossato was, for the purposes of the Enterprise Agreement, a “Casual FTM” or a “Permanent FTM”. For the reasons given by White J, which I gratefully adopt, I hold that Mr Rossato was not a “Casual FTM” and that he was a “Permanent FTM” for the purposes of the Enterprise Agreement.

payment and discharge (the “set-off” claim)

216    On this part of the case, WorkPac accepted that Mr Rossato was other than a casual employee and that he was therefore entitled to be paid the monetary entitlements he claims for annual leave, personal/carer’s leave and compassionate leave. WorkPac, however, denied that any of those entitlements are outstanding because it contended that it has already paid Mr Rossato in respect of each of them.

217    It is not in contest that during each of the employments Mr Rossato was paid weekly (“weekly payments”). Each week he received a payslip and a payment. The payslips were all in evidence. There are 182 of them in total. They show that in each week in which he worked, Mr Rossato was paid the applicable hourly rate specified in the relevant NOCE multiplied by the number of hours worked by Mr Rossato in the pay period in question. The amount paid was attributed to “wages”. The payslips do not show that any payment was made in relation to an entitlement to leave. Each payslip shows a nil balance for the item “Leave Taken”.

218    The weekly payments were the only payments made to Mr Rossato. Mr Rossato did not receive any additional payment upon the termination of any of his employments with WorkPac or at the end of the course of his employment with WorkPac. That is of significance because Mr Rossato’s claim in respect of paid annual leave, is a claim for untaken annual leave which is payable upon an employment ending (s 90(2) of the FW Act). The paid compassionate and personal/carer’s leave entitlements claimed by Mr Rossato were each payable in the period in which that leave was taken (ss 99 and 106 of the FW Act). However, at that time, as the payslips show (including by their absence), Mr Rossato was not paid for those entitlements.

219    How is it then that WorkPac contends that it paid Mr Rossato for the leave entitlements he says remain outstanding? WorkPac relied upon what it called a “set-off”. That term was used broadly, as it has been in many of the relevant authorities. The use of that term is not intended to mean what the term ordinarily means as a matter of civil procedure. WorkPac does not contend that debts owed to Mr Rossato were discharged because there were countervailing debts owed by Mr Rossato. WorkPac contends that it has no outstanding debts to Mr Rossato because the debts claimed to be outstanding were discharged by the weekly payments it has already made to Mr Rossato.

220    WorkPac’s contention, put broadly, is that the hourly rate paid to Mr Rossato by the weekly payments always included a component for a casual loading which was a loading paid for particular purposes – in part paid in lieu of all of Mr Rossato’s paid annual leave entitlements, and in part paid in lieu of all of his entitlements to paid personal leave, including both personal/carer’s leave and compassionate leave. On that basis, WorkPac contended that Mr Rossato had already been paid the monetary entitlements he claims remain outstanding. In fact, in the factual context detailed above, WorkPac’s case must be that the weekly payments pre-paid those monetary entitlements before they even arose.

221    The legal principles relied upon by WorkPac have been the subject of numerous authorities. An extensive survey of the authorities is given in the reasons of White J and it is not necessary to undertake that exercise again here. Those authorities have largely been based on observations first made by Sheldon J in Ray v Radano [1967] AR (NSW) 471 at 478-479 and adopted and re-expressed by the Full Court (Keely, Ryan and Gray JJ) in Poletti v Ecob (No 2) (1989) 31 IR 321 at 332-333 as follows:

It is to be noted that there are two separate situations dealt with in the passage from the judgment of Sheldon J which has been quoted and in the reasoning of the Commission in Pacific Publications. The first situation is that in which the parties to a contract of employment have agreed that a sum or sums of money will be paid and received for specific purposes, over and above or extraneous to award entitlements. In that situation, the contract between the parties prevents the employer afterwards claiming that payments made pursuant to the contractual obligation can be relied on in satisfaction of award entitlements arising outside the agreed purpose of the payments. The second situation is that in which there are outstanding award entitlements, and a sum of money is paid by the employer to the employee. If that sum is designated by the employer as being for a purpose other than the satisfaction of the award entitlements, the employer cannot afterwards claim to have satisfied the award entitlements by means of the payment. The former situation is a question of contract. The latter situation is an application of the common law rules governing payments by a debtor to a creditor. In the absence of a contractual obligation to pay and apply moneys to a particular obligation, where a debtor has more than one obligation to a creditor, it is open to the debtor, either before or at the time of making a payment, to appropriate it to a particular obligation. If no such appropriation is made, then the creditor may apply the payment to whichever obligation or obligations he or she wishes. See Halsbury’s Laws of England, 4th ed, vol 9, paras 505 and 506.

222    The first situation expresses a limitation (“first limitation”) upon the capacity of an employer to bring into account for one purpose monies paid for a different contractual purpose. The second situation expresses a limitation (“second limitation”) upon monies appropriated to one debt being brought into account to discharge a different debt.

223    WorkPac relies upon three grounds. One ground is that neither the first or second limitation is applicable to a case such as this where payments were made in circumstances where the parties were mistaken about the nature of the employment they had created. For the reasons given by White J that ground should be rejected.

224    By its second ground, WorkPac primarily relied upon the reasoning in Australia and New Zealand Banking Group Ltd v Finance Sector Union of Australia [2001] FCA 1785. WorkPac contended that the first limitation is inapplicable because there was a “close correlation” (Finance Sector Union at [52]) between the contractually agreed purpose or subject matter of the payments which it paid to Mr Rossato and Mr Rossato’s entitlements to annual leave, personal/carer’s leave and compassionate leave. WorkPac made the same contention in relation to Mr Rossato’s entitlement to public holiday payments but I leave that aside and will address that separately later.

225    WorkPac’s contention is premised on the weekly payments having been paid in part for the contractually agreed purpose of paying Mr Rossato a casual loading and thus providing him with a payment in lieu of annual leave, personal/carer’s leave and compassionate leave. For the reasons I later address, I hold serious reservations about accepting that that premise is demonstrated on an objective assessment of each of the contracts in question. However, irrespective of whether or not that premise is accepted, this ground fails because a close correlation between the contractually agreed purpose contended for by WorkPac and Mr Rossato’s entitlements to leave is not demonstrated. In reaching that conclusion, I respectfully agree with the reasons of Wheelahan J and make the following further observations.

226    It is sufficient to do that by reference to those entitlements to leave claimed by Mr Rossato under the FW Act. The FW Act does not define what paid annual leave, paid personal/carer’s leave or paid compassionate leave is other than by referring the reader to those provisions by which the entitlements are provided (see s 12). However, a starting point is the recognition that any form of paid leave involves both a payment and an authorised absence from work. In substance, the entitlement to paid leave is an entitlement of an employee to be absent from work for a period without loss of the remuneration that would ordinarily be earned in that period. In Mondelez v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) [2019] FCAFC 138, Bromberg and Rangiah JJ – addressing paid personal/carer’s leave – said at [148]:

Section 96(1) of the FW Act must be understood as establishing a statutory form of income protection for all national system employees, other than casual employees. That protection is provided by authorising employees to be absent from work during periods of illness or injury and requiring employers to pay employees as if they had not been absent. The legislative purpose is to protect employees against loss of earnings when unable to work due to relevant illness, injury or unexpected emergency.

227    The evident purpose of the FW Act provisions dealing with annual leave is to provide employees with access to a break from work in order to facilitate rest and recreation (see above at [57] and Skene at [93] and [125]). The evident purpose of personal/carer’s leave is to provide an employee with access to a break from work to address a personal illness or injury, or for the employee to provide care to a member of the employee’s immediate family or household (s 97 of FW Act). The evident purpose of compassionate leave is to facilitate access to a break from work in order that the employee may spend time with an immediate family member or member of the employee’s household whose life is under serious threat or, where such a person has died (s 105 of the FW Act). The protection against loss of earnings for paid leave facilitates access to that leave when it is required or convenient for the employee to take leave.

228    Each of those entitlements has a temporal dimension either wholly or substantially driven by the employee’s needs or convenience. The terms of s 88 of the FW Act demonstrate that the entitlement to paid annual leave is intended to be accessible at a time of the employee’s choosing, so long as the request for leave is not unreasonable. The timing for the taking of paid personal/carer’s leave and paid compassionate leave is determined by the employee’s need for leave of that kind. Cashing out restrictions are imposed on paid annual leave and also paid personal/carer’s leave (see [57] above). That serves to emphasise that the entitlements are not directed at providing remuneration, but whilst protecting against a loss of remuneration are directed at ensuring that the entitlements are substantially taken for their intended primary purposes. The timing of the payments that must be made is important. It is regulated and forms part of the entitlement: see ss 90(1), 99 and 106 of the FW Act. Generally, payment must accompany the leave. In the case of untaken annual leave at the end of an employment, s 90(2) of the FW Act requires that the employee be paid the amount that would have been payable to the employee had the employee taken that period of leave.

229    None of those entitlements may be characterised as an entitlement to a payment paid because of the absence of such an entitlement or, put another way, paid in compensation for the employee having no access to such an entitlement. The entitlements in question are compound entitlements comprised of an authorised absence from work and a payment. The entitlement to be paid for untaken annual leave upon termination involves the conversion of a compound entitlement into a purely monetary form but it is nevertheless of a different character to payment paid because an employee has no access to paid annual leave. It is a payment for that part of the entitlement to paid annual leave which the employee has chosen not to enjoy during the employment. It is not compensation for the absence of any right to enjoy the compound entitlement during the employment.

230    There is a superficial attraction to the notion that something given in substitution of an entitlement has an equivalent value to the entitlement itself and is therefore of the same character. However, an obligation to provide a particular entitlement will not ordinarily be discharged by not providing the entitlement and by instead providing a substitute. WorkPac’s statutory obligation was to provide Mr Rossato with entitlements to paid annual leave, paid personal/carer’s leave and paid compassionate leave in accordance with the terms of the FW Act and the Enterprise Agreement, which provided not only for paid leave but also as to when the leave may be taken and when the accompanying payment must be made. A failure to provide those entitlements in accordance with the terms of the FW Act and the terms of the Enterprise Agreement would contravene the FW Act and subject WorkPac to the civil penalty provisions of that Act (ss 44 and 50 of the FW Act). That would be so even if Mr Rossato had agreed to accept something else in lieu of or in substitution of the entitlements because WorkPac and Mr Rossato cannot contract out of those entitlements or the timing and manner of their provision: Josephson v Walker (1914) 18 CLR 691 at 696 (Griffith CJ), at 700 (Isaacs J); Metropolitan Health Service Board v Australian Nursing Federation (2000) 99 FCR 95 at [17]-[20] (French J). Furthermore, for the reasons already given, with limited exception, the FW Act does not permit the substitution of paid annual leave and paid personal/carer’s leave for money.

231    In that legislative context, even if substitution was agreed, an equivalence in value between leave entitlements and something given in substitution thereof is of no legal significance. The obligation is to provide the particular entitlement in the terms required by the statute or by the statutory instrument and, where the purpose of a payment is not to provide the entitlement in the terms required but to provide a substitute, there will not be a “close correlation” between that purpose and the entitlement required by the statute or statutory instrument, within the meaning of what the Full Court referred to in Finance Sector Union at [51]-[52].

232    The facts of that case are important to an understanding of the principle there provided for. Those facts did not involve the substitution of an entitlement. The entitlement to untaken long service leave that the employer was there obliged to provide under the award was provided by a contractual payment made to the employees. The Full Court held that there was a “close correlation” between the purpose of that contractual payment and the award entitlement, despite the fact that the contractual payment was not labelled as payment for untaken long service leave. The labelling of the contractual payment did not prevent the discharge of the award obligation to provide untaken long service leave. There is nothing in the ratio of Finance Sector Union to support the proposition that the obligation to provide a particular entitlement will be discharged when the award or statutory entitlement is not provided but something else is provided under the contract in substitution thereof.

233    I return then to the premise of WorkPac’s contention – that the agreed contractual purpose of the weekly payments included payment to Mr Rossato of a casual loading. That could only be so if Mr Rossato’s contracts provided for the payment of a casual loading.

234    The first situation referred to by the Full Court in Poletti was said to be a matter of contract. It follows that if a payment is made pursuant to a contract its purpose will be governed by the contract and must be objectively ascertained by reference to the common intention of the parties as understood by a reasonable person in the position of each of the parties taking into account the text of the contract as well as the surrounding circumstances known to the parties and the purpose and object of the transaction: Toll at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

235    I doubt that the contracts are to be objectively construed as providing that Mr Rossato be paid a casual loading. That doubt is driven by the need to recognise (as the contracts do) the intended interaction of the Enterprise Agreement with the contracts and what I consider to be the common intent of WorkPac and Mr Rossato for the conditions provided by each of the contracts to cohere with the Enterprise Agreement so as to provide outcomes which are industrially sensible. As French CJ, Nettle and Gordon JJ said in Mount Bruce at [51] “a commercial contract should be construed so as to avoid it ‘making commercial nonsense or working commercial inconvenience’”. An observation to similar effect was made by Kirby J in Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [96] where his Honour observed that the approach to construing an enterprise agreement “should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement”: see further Skene at [197].

236    The Enterprise Agreement provided both the legal background and a large part of the factual context in which the contracts were made. The General Conditions referred at cl 1 to the fact that Mr Rossato’s specific entitlements would be determined by the “award or agreement that covers your employment”. The context makes it clear that by “agreement” the General Conditions had the applicable industrial agreement in mind. Clause 2 defined “Relevant Industrial Agreement” as the “relevant Workplace Agreement or Award that applies to each particular assignment” and then said:

Where the terms and conditions of this document differ from those in the Relevant Industrial instrument, those in the Relevant Industrial instrument will apply in their entirety to the complete exclusion of those in this document.

237    The General Conditions contemplated that Mr Rossato would, for any particular assignment, be designated as either a “casual” or a “maximum term employee”. Clause 5.1 provided that each of Mr Rossato’s assignments would comprise a “discrete period of employment on a Casual or Maximum Term hourly basis”. Neither the term “casual” or “maximum term employee” are defined by the General Conditions. It seems clear, however, that by “maximum term employee” the General Conditions meant an on-going or permanent employee. The term “maximum term permanent employees” is used in cl 8.4 which provides paid compassionate leave to “maximum term permanent employees” but unpaid compassionate leave to “[c]asual employee[s]”. Only “maximum term employees” are conferred entitlements to annual leave (cl 8.1).

238    However, most of the entitlements referred to, whether applicable to “maximum term employees”, “casual employees” or both, are dealt with by reference to the Enterprise Agreement. Thus, entitlements and/or conditions are on occasions referred to as being “defined in” the Relevant Industrial Instrument (ordinary hours – cl 7.1; meal breaks – cl 7.2; overtime – cl 7.3; compassionate leave – cl 8.4). Elsewhere entitlements or conditions are provided “in accordance with the Relevant Industrial Instrument and the [National Employment Standards]” (personal/carer’s leave – cl 8.2). In the case of annual leave some specification as to the extent of the entitlement is given, but, for shift workers and for the cashing out of annual leave the “relevant Industrial Instrument” or the National Standards are said to apply.

239    The applicability of various conditions provided in the General Conditions is also made referrable to the “Relevant Industrial Instrument”. That is so in relation to working hours (cl 6.28); stand downs (cl 7.1 and 7.14); and shift work (cl 7.4).

240    Each of the NOCEs indicated that on the assignment in question, Mr Rossato was “employed under” the Enterprise Agreement. I use the word “indicated” advisedly because although an intention to refer to the Enterprise Agreement is clear, its execution is less than clear.

241    A number of observations emerge from that survey. First, the contracts recognised that a different set of conditions of employment would apply to Mr Rossato if he was employed as a casual employee as opposed to being employed as an on-going or permanent employee. Second, the contracts recognised that Mr Rossato would be “employed under” the Enterprise Agreement and thus that the employments would be subject to the Enterprise Agreement. Third, the contracts acknowledged the primacy of the Enterprise Agreement, that many of the conditions provided for were sourced in the Enterprise Agreement and the need for the terms and conditions of the contracts to accord with the Enterprise Agreement.

242    The close relationship of the contract with the Enterprise Agreement demonstrates an intent that the contract cohere with the Enterprise Agreement and operate in harmony with it. In that regard and relevantly to the issue at hand, could an intention be imputed to the parties that under the Enterprise Agreement Mr Rossato would be paid in lieu of leave entitlements whilst at the same time his contract provided those very entitlements to leave? Or conversely, could an intention be imputed to the parties that the contract pay Mr Rossato a casual loading in lieu of leave entitlements when the Enterprise Agreement conferred those very entitlements upon Mr Rossato? In my view, the answer must be no in each case. That is because what is to be imputed to the contracting parties is a recognition of the primacy of the Enterprise Agreement and an intention that the contract should cohere with the Enterprise Agreement so as to effectuate a harmonious and industrially sensible relationship between them.

243    That need and desire for harmony suggests that despite the designation “casual” made in the NOCEs, it was not intended that Mr Rossato’s status under the contracts be contradictory to and inconsistent with his status under the Enterprise Agreement. The references made to the term “casual” by the NOCEs must be read in the context of an understanding of the agreement as a whole and given effect to only in so far as the reference is consistent with that understanding.

244    Turning then to the text of the NOCEs that referred to a casual loading, the better view, given the matters to which I have referred, is that the contracts provided that the hourly rate of pay specified by the NOCEs would include payment of a casual loading, only if the EA hourly rate required to be paid to Mr Rossato also included payment of a casual loading.

245    The references made to a casual loading varied between the NOCEs. The Fifth and Sixth NOCEs expressly described the hourly pay rate as possibly, but not necessarily, including a casual loading. That was done in the following terms (emphasis added):

Your flat rate of pay may include the payment of overtime, weekend penalties, public holiday loadings, shift penalties, casual loading and any industry and special allowances that may apply.

246    There is no indication elsewhere in those NOCEs as to whether any of the penalties or loadings referred to in the description given are included or applicable. Given that the General Conditions do not deal with that matter, and given the expressions of applicability of the Enterprise Agreement to Mr Rossato’s employment (either in the General Conditions or the NOCE itself), the most likely inference is that whether or not any and which of the penalties, loadings or allowances mentioned in the description were applicable, was to be governed by the Enterprise Agreement.

247    A description of what was included in the hourly rate of pay is also given in the First and Second NOCEs as follows (emphasis added):

Your flat rate of pay includes the payment of overtime, weekend penalties, public holiday loadings, shift penalties, casual loading (refer to Schedule 2 for more information on your casual loading) and any industry and special allowances that may apply.

248    I accept that that description is open to be read as though the phrase “that may apply” is only applicable to “industry and special allowances”. However the phrase is also open to be read as applicable to all the penalties, loadings or allowances mentioned. The matters to which I have referred suggest that the better construction is the latter.

249    The Fourth NOCE does not make any reference to a casual loading whatsoever.

250    The Third NOCE takes a different form to those NOCEs earlier referred to that directly address a casual loading and its text is more difficult to reconcile with an intent for coherence with the Enterprise Agreement. There is no description in the NOCE of what the hourly rate of pay is or may be composed of, but the hourly rate is described as a “Casual Rate”. Further, the Third NOCE later states (in a manner disconnected from its earlier text) that in relation to allowances applicable to the role “[r]efer to Schedule 2 for more information on your casual loading”. Schedule 2 of the NOCE relevantly states:

Your ordinary rate of pay is your hourly rate less your performance incentive bonus where applicable. Refer to the appropriate Agreement contained in Schedule 1 to determine your casual loading. Where your casual loading is 25%, it is made up of the following components:

a.    11% of your loading is paid in lieu of Annual Leave and Leave Loading entitlements;

b.    5% of your loading is paid in lieu of Personal Leave entitlement;

c.    4% of your loading is paid in lieu of Notice of Termination requirements;

d.    2.5% of your loading is paid in recognition of the itinerant nature of casual work;

e.    2.5% of your loading is paid in lieu of Redundancy entitlements.

If your casual loading is less than 25% as prescribed in your Agreement, the above breakdown applies to your casual loading on a pro rata basis.

251    The implication from that description, and from the reference to Sch 2, is that the NOCE hourly rate includes a casual loading. However, an intended coherent interaction with the Enterprise Agreement is suggested by the statement that the casual loading is “as prescribed in your Agreement”

252    That the parties intended a harmonious rather than contradictory relationship between the terms of the Enterprise Agreement and those of the contracts is, in my view, a weighty consideration. Under the Enterprise Agreement, as I have held, Mr Rossato was not a “Casual FTM”. Accordingly, cll 6.4.5 and 6.4.6 dealing with a 25% casual loading and providing that particular components of that loading were paid “in lieu” of annual leave and “in lieu” of personal leave entitlements had no application to Mr Rossato. Furthermore, the “flat rate of pay”, being the hourly rate payable to Mr Rossato under the Enterprise Agreement (“the EA hourly rate”) does not include a casual loading (see cl 9.1.1(b)). Under the Enterprise Agreement, Mr Rossato was entitled to paid annual leave, paid personal/carer’s leave and paid compassionate leave.

253    In that legal context and given the intent for coherence with the Enterprise Agreement to which I have referred, the better view is that the common intention of WorkPac and Mr Rossato was that the Enterprise Agreement would govern whether a component of the hourly rate to be paid to Mr Rossato would or would not include a casual loading and, if so, what that casual loading would be. As the Enterprise Agreement does not provide that any component of the EA hourly rate payable to Mr Rossato be paid as a casual loading in lieu of, or partly in lieu of annual leave entitlements and personal leave entitlements, the better view is that the premise upon which WorkPac’s contention is based – that the hourly rate payable under the contracts included a casual loading – is not established.

254    Having said all that, the premise that I am here addressing was not challenged by Mr Rossato in the manner here discussed. Whilst WorkPac bears the onus of proof, the Court has not had the benefit of submissions on this issue other than on WorkPac’s contention which for the reasons just stated must be rejected, that cll 6.4.5 and 6.4.6 of the Enterprise Agreement were incorporated into the contracts. In the end, whether the premise is made good or not is not necessary to be determined as this ground fails for other reasons. In those circumstances my observations should be regarded as expressing serious but not conclusive reservations.

255    WorkPac’s third ground in support of a “set-off” was that the weekly payments were appropriated to the debts owed to Mr Rossato in respect of his entitlements to paid annual leave, paid personal/carer’s leave and paid compassionate leave. That ground raised the second limitation referred to in Poletti.

256    As was noted by the Full Court in Poletti (at 333), the second situation is an application of the common law rules governing payments by a debtor to a creditor. Those common law principles are not in contest and, so far as relevant to the ground relied upon by WorkPac, the principles are sufficiently described by Brennan CJ in Airservices Australia v Ferrier (1996) 185 CLR 483 at 494-495 as follows:

Where a debtor owes a number of distinct debts to a creditor and the debtor, on paying an amount, directs that the payment be appropriated to one of those debts, or where the creditor thereafter elects to appropriate the payment to one of those debts, the debt to which the payment is appropriated is discharged.

See also Visbord v Federal Commissioner of Taxation (1943) 68 CLR 354 at 370-371 (Latham CJ); Caltabiano v Electoral Commission of Queensland (No 1) [2010] 1 Qd R 100 at [107] (Fraser JA); Stein v Torella Holdings Pty Ltd [2010] NSWSC 1445 at [70]-[72] (Hallen AsJ).

257    An appropriation made by a debtor must be made at or prior to the time of the payment: Cory Brothers and Co Ltd v The Owners of the Turkish Steamship “Mecca” [1897] AC 286 at 293 (Lord Macnaghten); Moree Plains Shire Council v Goater [2016] FCAFC 135 at [58] (Rares, Katzmann and Markovic JJ). An appropriation may be made expressly or, in the absence of an express appropriation, it may be objectively inferred from the circumstances known to both debtor and creditor, including the purpose and object of the transaction; an undisclosed subjective intention to appropriate a payment to a particular debt is not effective; it is what a debtor did, not what the debtor meant to do which is relevant; Caltabiano at [29]-[34] (Muir JA) and at [107]-[111] (Fraser JA); and see Knysh v Corrales Pty Ltd (1989) 15 ACLR 629 at 633-635 (Morling, Pincus and Lee JJ).

258    WorkPac did not contend that any of the weekly payments were expressly appropriated, that is, made with a designation that the payment was made in discharge of one or other of the debts then owed to Mr Rossato in relation to his paid annual leave, paid personal/carer’s leave or paid compassionate leave entitlements. WorkPac, in essence, contended for an inferred appropriation. As I understand it, the basis upon which that contention was made was that a designation was to be inferred from the presence in the hourly rate paid to Mr Rossato of a casual loading which the Enterprise Agreement and Mr Rossato’s contracts designated to be paid in lieu of Mr Rossato’s entitlements to annual leave, personal/carer’s leave and compassionate leave.

259    This ground is not independent of WorkPac’s ground for discharge which I have already dealt with, which relies upon the contractual purpose of the weekly payments. Both the existence of the inferred appropriation contended for and the contractual purpose contended for must be objectively assessed. Additionally, WorkPac relies upon the contracts in support of the inferred appropriation. Therefore, the objectively assessed contractual purpose for the weekly payments is not only pertinent, but, in my view, it is determinative.

260    I would reject this ground on the same basis that I have rejected WorkPac’s contractual purpose ground. That leads to the conclusion that the weekly payments were inferentially, if not expressly, appropriated to the debts owed by WorkPac in respect of the hours of work performed by Mr Rossato and, therefore, that they were not made in payment of any entitlements to leave.

261    In relation to Mr Rossato’s claim for payments for public holidays, WorkPac failed to identify that a payment for that entitlement was made (either as part of a casual loading or otherwise) which could be brought into account. In any event, if such a payment was identifiable I would reject WorkPac’s contention on the same basis as I have in relation to Mr Rossato’s other outstanding entitlements.

262    Further, for the reasons given by both White and Wheelahan JJ, reg 2.03A of the Fair Work Regulations 2009 (Cth) is not applicable.

263    For all of those reasons, WorkPac’s “set-off” case should be rejected, and the declarations sought in reliance upon it should be dismissed.

Restitution

264    WorkPac’s claim to restitutionary relief is based on two grounds. First, that WorkPac paid Mr Rossato a casual loading by mistake. Second, that the casual loading formed a distinct and severable part of Mr Rossato’s remuneration in respect of which there has been a failure of consideration.

265    I agree with Wheelahan J, for the reasons given by his Honour, that the first ground fails. The reservation which I have earlier expressed about whether a casual loading was paid to Mr Rossato is also applicable to the second restitutionary ground. However, for the reasons given by Wheelahan J that ground fails whether or not a casual loading was paid to Mr Rossato.

266    I respectfully agree with White J for the reasons his Honour has given that, in the circumstances, the defences raised by Mr Rossato to the restitutionary claim ought not be conclusively determined.

Associate:

Dated:    20 May 2020

REASONS FOR JUDGMENT

WHITE J:

Introduction

267    The applicant, WorkPac, is a labour-hire company. Between 28 July 2014 and 9 April 2018, it employed the respondent (Mr Rossato) and supplied his labour to companies within the Glencore Group (Glencore) which were engaged in coal mining in Central Queensland.

268    By a letter to WorkPac dated 2 October 2018, Mr Rossato’s solicitors made a claim on his behalf for payments in respect of annual leave not taken by him before 9 April 2018 and for payment for public holidays and for periods of compassionate and personal leave taken by him during his employment. Mr Rossato had not received these forms of paid leave because he had been treated by WorkPac as a casual employee.

269    Mr Rossato’s solicitors made the claim on his behalf following the decision of the Full Court of this Court (Tracey, Bromberg and Rangiah JJ) in WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 264 FCR 536 delivered on 16 August 2018 in which it was held that Mr Skene, who was employed by WorkPac in circumstances similar to those of Mr Rossato, was not a casual employee.

270    WorkPac contends that, despite the decision in Skene, Mr Rossato was a casual employee for the purposes of the Fair Work Act 2009 (Cth) (the FW Act) and for the purposes of the enterprise agreement covering his employment at relevant times.

271    By letter dated 3 October 2018, that is, the day after the letter from Mr Rossato’s solicitors, WorkPac, by its solicitors, denied liability to Mr Rossato. On the following day, it filed the present proceeding in this Court.

272    By its Amended Originating Application, WorkPac seeks declarations to the following effect:

(a)    that it had, in the period commencing on 28 July 2014 and concluding on 5 April 2018, employed Mr Rossato pursuant to written contracts in six separate periods or, in the alternative, in one continuous period pursuant to one or more contracts of employment;

(b)    that throughout the period or periods of his employment, Mr Rossato had been a casual employee at common law, a casual employee for the purpose of relevant provisions in the FW Act and a “Casual Field Team Member” for the purposes of the WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012 (the 2012 EA);

(c)    that, by reason of Mr Rossato’s status as a casual employee, he had not been entitled to paid annual, personal/carer’s or compassionate leave or to payment under the 2012 EA for public holidays during the period of Christmas shutdowns;

(d)    that Mr Rossato had, throughout the period or periods of his employment, been paid a “flat hourly rate of pay” which incorporated a “casual loading” of 25% of the minimum rate of pay payable under the applicable enterprise agreement, the purpose of which was in part to compensate him for, or to be in lieu of, “entitlements” to annual, personal/carer’s leave (PC leave) and compassionate leave;

(e)    in the alternative, that it was entitled, on various bases, to “set off” portions of the payments which it had made to Mr Rossato which had been designated as having been paid in compensation for, or in lieu of, the “entitlements” to annual, PC leave or compassionate leave against any entitlement which Mr Rossato may be found to have in respect of such forms of leave and payment for public holidays; and

(f)    in the alternative, that it was entitled to restitution of the amounts which it had paid to Mr Rossato which exceeded his entitlements as a permanent employee on the basis that those amounts had been paid “on the basis of mistake”.

273    On 21 December 2018, the Chief Justice directed, pursuant to s 20(1A) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act), that the jurisdiction of the Court in relation to WorkPac’s application be exercised by the Full Court: WorkPac Pty Ltd v Rossato [2018] FCA 2100.

274    Each of the Minister for Jobs and Industrial Relations (the Minister), the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and Mr Matthew Petersen was granted leave to intervene. Mr Petersen is the applicant in Action VID89/2019, a class action brought against WorkPac on behalf of employees whose employment is said to be similar to that of Mr Skene.

275    Each of the parties and interveners provided extensive written submissions for the hearing. In addition, the Court heard oral submissions over two days.

276    The proceedings have a number of unusual features:

(i)    the trial was conducted by the Full Court;

(ii)    the trial proceeded without pleadings and, at least nominally, on the basis of an amended list of issues agreed between WorkPac and Mr Rossato;

(iii)    with the exception of some additional documents tendered by the CFMMEU, the evidence in the trial comprised a substantial Statement of Agreed Facts (agreed between WorkPac and Mr Rossato and to which 30 documents were annexed) and an Addendum to the Statement of Agreed Facts;

(iv)    it is WorkPac as the employer which is seeking the relief, rather than it defending in the more usual way an application brought by Mr Rossato. In consequence, it is WorkPac which has the onus of proof;

(v)    Mr Rossato has not to date commenced any cross-claim against WorkPac claiming payment of the entitlements in question. Instead, WorkPac has agreed that, if Mr Rossato is found to be entitled to any of the amounts he has claimed, it will, subject to the resolution of its claim to a set off, pay him those amounts;

(vi)    WorkPac accepts that the Full Court in Skene had been correct to reject the meaning of the term “casual employee” for which it had then contended. WorkPac now accepts as correct the meaning of “casual employee” adopted in Skene;

(vii)    the Court is asked by WorkPac to find that an aspect of the reasoning in Skene is “plainly wrong”, even though that reasoning seems to have been based, at least in part, on a concession by WorkPac. WorkPac says that concession made an application for special leave to appeal to the High Court against the decision in Skene inappropriate; and

(vii)    WorkPac is paying Mr Rossato’s costs.

The decision in Skene

277    In Skene, the Full Court determined appeals brought against two judgments of the Federal Circuit Court (the FCC): Skene v WorkPac Pty Ltd [2016] FCCA 3035 (Skene (FCCA)); Skene v WorkPac Pty Ltd (No 2) [2017] FCCA 525. One of the appeals was brought by WorkPac and the other by Mr Skene.

278    Mr Skene had been employed by WorkPac as a dump truck driver between 20 July 2010 and 23 April 2012 at a mine of Rio Tinto in Central Queensland. He had worked in accordance with a roster provided 12 months in advance. Mr Skene claimed that he had been entitled to the annual leave and related entitlements for which the National Employment Standards (NES) contained in Pt 2-2 of the FW Act provide (relevantly, s 87). The FW Act provides that “casual employees” do not have the benefit of this entitlement in the NES, but does not define that term.

279    The sole issue on the appeal by WorkPac was whether the FCC Judge had been correct in finding that Mr Skene was “other than a casual employee” for the purposes of s 86.

280    Mr Skene’s appeal raised three issues, only the first of which is relevant presently. That was whether the FCC Judge had been correct in finding that he was a “casual FTM” (“FTM” being an acronym for “field team member”) under the WorkPac Pty Ltd Mining (Coal) Industry Workplace Agreement 2007 (the 2007 EA), which was the predecessor of the 2012 EA.

281    WorkPac’s appeal against the finding that Mr Skene had been a casual employee for the purposes of the FW Act was dismissed. Mr Skene’s appeal against the finding that he had been a casual employee for the purposes of the 2007 EA succeeded. The reasons of the Full Court contain an extensive consideration of the term “casual employee” and its cognates generally and particularly in the context of the FW Act and the 2007 EA.

282    In summary form, in relation to WorkPac’s appeal, the Full Court:

    accepted that the term “casual employee” has no precise meaning, at [159];

    considered two different meanings of the term “casual employee”, one being a “specialised meaning” for which WorkPac had contended and the other being described as the “general law meaning” (referred to by the Full Court as the “legal” or “ordinary” meaning). The “specialised meaning” was that in the industrial relations system in Australia an employee is regarded as a casual employee, for the purposes of identifying and calculating their paid minimum entitlements, if he or she is described or defined as a casual employee under an applicable federal industrial agreement, at [70];

    rejected WorkPac’s submission that the expression “casual employee” in s 86 and in ss 95 and 106 of the FW Act has the specialised meaning, at [139]-[142], [155];

    held instead that the term “casual employee” is used in the FW Act with the “general law meaning”, at [157]-[159]. As to that meaning, the Full Court at [169] agreed with the statement of the Full Court (Wilcox, Marshall and Katz JJ) in Hamzy v Tricon International Restaurants [2001] FCA 1589; (2001) 115 FCR 78 that casual employment involves an absence of a form of firm advance commitment:

[38]    … The essence of casualness is 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.

        The Full Court in Skene later said:

[172]    [A] casual employee has no firm advance commitment from the employer to continuing and indefinite work according to an agreed pattern of work. Nor does a casual employee provide a reciprocal commitment to the employer … In our view, what is referred to in Hamzy as the “essence of casualness”, captures well what typifies casual employment and distinguishes it from either full-time or part-time employment.

[173]    The indicia of casual employment referred to in the authorities – irregular work patterns, uncertainty, discontinuity, intermittency of work and unpredictability – are the usual manifestations of an absence of a firm advance commitment of the kind just discussed. An irregular pattern of work may not always be apparent but will not necessarily mean that the underlying cause of the usual features of casual employment, what Hamzy identified as the “essence of casualness”, will be absent.

(Emphasis added)

    held that the approach adopted by the courts in determining whether a contractual relationship is that of employer and employee, namely, having regard to “the real substance, practical reality and true nature” of the relationship, which includes regard to the way in which the work was actually carried out, is also appropriate to the characterisation of employment as casual or otherwise, at [180];

    held that the presence or absence of the “requisite” firm advance commitment is to be assessed objectively, including by reference to the surrounding circumstances:

[181]    Whether the requisite firm advance commitment to continuing and indefinite work (subject to rights of termination) is absent or present must be objectively assessed including by reference to the surrounding circumstances created by both the contractual terms and the regulatory regime (including the FW Act, awards and enterprise agreements) applicable to the employment.

        The Full Court further said:

[182]    The payment by the employer and the acceptance by the employee of a casual loading, like the description of the type of employment given by the parties in their contractual documentation, speaks to the intent of the parties to create and continue a casual employment. But the objective assessment will need to consider whether that intent has been put into practice and if achieved, has been maintained. The objectively demonstrated existence of a firm advance commitment to continuing and indefinite work (subject to rights of termination) according to an agreed pattern of work will ordinarily demonstrate a contrary intent and the existence of on-going full-time or part-time employment rather than casual employment. The key indicators of an absence of the requisite firm advance commitment will be irregularity, uncertainty, unpredictability, intermittency and discontinuity in the pattern of work of the employee in question. Those features will commonly reflect the fact that, whilst employed, the availability of work for the employee is short-term and not-ongoing and that the employer’s need for further work to be performed by the employee in the future is not reasonably predictable.

(Emphasis added)

    considered that the findings of the FCC Judge that Mr Skene’s pattern of work was “regular and predictable”, “continuous” and “not subject to significant fluctuation” in the circumstance of an expectation that he would be available on an ongoing basis to perform work meant that Mr Skene was not a casual employee and was thereby entitled to the annual leave for which s 86 of the FW Act provides, at [183], [184] and [192].

283    The Full Court then addressed separately Mr Skene’s entitlements under the 2007 EA. I will return to its reasoning on that topic later in these reasons.

284    It is pertinent that, in its submissions to the Full Court in Skene, WorkPac expressly withdrew a submission that Mr Skene did not have a firm advance commitment as to the duration of employment or as to the days (or hours) he could work. In the present case, WorkPac’s counsel referred to the withdrawal of this submission as a “concession” that there had, as a matter of fact, been a firm advance commitment as to the duration of Mr Skene’s employment or the days (or hours) which he would work. Thus, on WorkPac’s challenge to the use by the Federal Circuit Court Judge of the approach stated in Hamzy failing, it appears to have been inevitable that its appeal would not succeed.

WorkPac’s claims in summary

285    WorkPac accepted that the Full Court in Skene had been correct in finding that the term “casual employee” is used in the FW Act with the “general law meaning”. It submitted that the “touchstone” for the general law meaning was that stated in Hamzy at [38], namely, “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”.

286    This meant, WorkPac submitted, that a person will be a casual employee when there is an absence of a firm advance commitment of that kind. It did not contend for the slightly different formulation of the firm advance commitment stated in Skene at [172] and [182].

287    WorkPac submitted, however, that:

(a)    the presence or absence of the “requisite” firm advance commitment should (subject to the possibility of later variation of the contract) be determined at the time that the contract of employment is made and, in the case of contracts which are wholly in writing, by reference solely to the terms of the written contract;

(b)    Mr Rossato’s employment contract had been wholly in writing;

(c)    that in so far as the Full Court in Skene had held that, in the case of contracts wholly in writing, regard could be had to extrinsic matters including the manner of post-contractual performance, it had been wrong and should not be followed by this Court;

(d)    Mr Rossato’s contract, properly construed, did not contain the “requisite” firm advance commitment and he was, accordingly, a casual employee;

(e)    even if it was permissible to have regard to evidence of post-contractual conduct, that evidence did not indicate the presence of a firm advance commitment;

(f)    Mr Rossato was a casual employee for the purposes of the 2012 EA because he had been engaged and designated as such;

(g)    alternatively, if Mr Rossato was properly characterised as a casual employee for the purposes of the FW Act, he must also have been a casual employee for the purpose of the 2012 EA made pursuant to that Act; and

(h)    if Mr Rossato was not a casual employee, it was entitled to restitution of the amounts it had paid to him on the basis of the understanding to the contrary or, alternatively, to set off against its liability for the amounts Mr Rossato claimed, the portion of the loadings paid to him to compensate for the absence of those entitlements.

The position of Mr Rossato and the Interveners

288    The Minister’s submissions supported those of WorkPac on the issue of restitution and set off. The Minister did not make any submissions on the question of whether Mr Rossato was a casual for the purposes of the FW Act or the 2012 EA.

289    Each of Mr Rossato, the CFMMEU and Mr Petersen made submissions in opposition to WorkPac’s claims.

290    All of the submissions at the hearing (in particular, those of WorkPac) proceeded on the basis that the understanding of the character of casual employment stated in Skene is correct. None of the submissions raised any issue concerning the conclusion of the Full Court on that issue. Neither Mr Rossato nor the Interveners put in issue the premise on which WorkPac’s submissions were made, namely, that the question of whether a person is a casual employee is to be determined by considering whether there is an absence of the postulated firm advance commitment. Nor did the submissions suggest that there should be any different outcome if the slightly different formulation of the firm advance commitment stated in Skene was adopted. Accordingly, that is not a matter presently before the Court. However, Mr Rossato did submit in the alternative that the question of whether his employment was casual should be assessed by a process of “characterisation” akin to that undertaken when determining whether a given contractual relationship is a contract of service.

291    A number of the submissions did turn on an understanding of the notion of “a firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work”. It will accordingly be necessary to address some aspects of that concept.

A summary of the conclusions

292    For the reasons which follow, I consider that Mr Rossato was employed by WorkPac under a succession of six contracts of employment; he was not employed as a casual employee and was not a “casual FTM” for the purposes of the 2012 EA; WorkPac is not entitled to restitution; and is not entitled to set off (in the sense that the expression is used in the present context) the payments it made to Mr Rossato against its present liabilities.

Outline of the factual setting

293    Mr Rossato applied for employment with WorkPac on 21 December 2013. He did so by completing an online registration form and on 23 December, attending WorkPac’s business centre in Mackay where he spoke to Ms John, a Recruitment Coordinator. Mr Rossato then signed a single page document (the Employee Declaration) by which he acknowledged that he had read, understood and agreed to the content of a document entitled “Casual or Maximum Term Employee – Terms and Conditions of Employment (Document Number 25, Version 4)” (the General Conditions) and that he understood that that document applied to “all WorkPac companies”. Many of the submissions at the hearing concerned the content of the General Conditions, as it was common ground that it was a source of terms in Mr Rossato’s contract of employment. I will return to it.

294    Mr Rossato commenced employment with WorkPac on 28 July 2014 performing work as a Product Operator at Glencore’s mine at Collinsville in the Bowen Basin in Queensland. He did so having accepted an offer of employment from WorkPac dated 17 July 2014 entitled “Notice of Offer of Casual Employment – Flat Rate” (the First NOCE). Mr Rossato continued to be employed by WorkPac until 9 April 2018 when he retired. Apart from some short interruptions to be identified shortly, his employment throughout that period was continuous.

295    At the time he commenced with WorkPac, Mr Rossato was an experienced mine worker and had no less than 11 mining related “competencies”. He used those competencies throughout his employment with WorkPac, as directed by Glencore.

296    Between 28 July and 5 August 2014, Mr Rossato underwent an extensive induction process, working a block of shifts from 6 am to 6.30 pm. Thereafter, until 26 May 2015, he worked alternating day and night shifts at the Collinsville Mine as a member of the A Crew. His employment was pursuant to the contract constituted by his acceptance of the First NOCE. On Monday, 25 May 2015, Mr Rossato was informed by Glencore personnel of potential reductions in the workforce at the Collinsville Mine. Over the following days, while Mr Rossato was on rostered days off, WorkPac encouraged Mr Rossato to accept a new assignment at the Glencore Mine at Newlands, located 33 km northwest of the town of Glenden in Queensland. Although initially reluctant to do so, Mr Rossato agreed because of the greater security of employment he believed it to offer.

297    On 29 May 2015, WorkPac sent Mr Rossato another Notice of Offer of Casual Employment – Flat Rate (the Second NOCE) relating to the assignment at the Newlands Mine. He accepted that offer. Between Monday, 1 June 2015 and Tuesday, 15 September 2015, Mr Rossato worked as a Production Operator at the Newlands Mine, initially as a member of the B and D Crews on an alternating basis and, from 21 September 2015, as a member of the D Crew only.

298    A change occurred in February 2016 when WorkPac informed Mr Rossato that his hourly rate would reduce from $49 to $43.05. On 19 February 2016, it sent him a further Notice of Offer of Casual Employment – Flat Rate (the Third NOCE) to reflect this change. There were some other differences between the terms in the First and Second NOCEs and those in the Third NOCE to which I will return. Mr Rossato was now designated as a “Competent Operator”. From 26 February 2016, Mr Rossato was paid the lower rate of $43.05 per hour.

299    On Tuesday, 27 September 2016, Mr Rossato commenced working again at the Collinsville Mine when it resumed operations after a period of shutdown. He commenced that work (as a Competent Operator) pursuant to a further Notice of Offer of Casual Employment – Flat Rate (the Fourth NOCE) which indicated that his assignment was to the “Glencore Collinsville Mining A Crew”. That offer was sent to him by WorkPac because of the change of Mine at which he was to work. The Fourth NOCE provided for an hourly rate of $40.

300    For the first eight weeks at Collinsville, Mr Rossato worked day shifts (mostly five days per week) as the Mine was in a start up phase. He then moved to a 7 on/7 off alternating shift roster.

301    Mr Rossato continued working at the Collinsville Mine (apart from some periods of absence to which I will return) until 9 April 2018. He did so pursuant to three offers from WorkPac. The first was the Fourth NOCE. The next was a Notice of Offer of Casual Employment – Flat Rate dated 11 November 2016 (the Fifth NOCE) which indicated that the assignment was to “Glencore Collinsville Mining D Crew” and provided for an increase in the hourly rate to $43.05. The last document was a Notice of Offer of Casual Employment – Flat Rate (the Sixth NOCE) sent to Mr Rossato on 21 December 2016, which provided for his hourly rate of pay to be $50 and for him to be appointed as “Multi Skilled Operator” to “Glencore Collinsville Mining D Crew” with effect from 4 January 2017.

302    Each of the NOCEs nominated a Senior Glencore Manager as Mr Rossato’s supervisor.

303    At both the Collinsville and Newlands Mine sites, Mr Rossato worked shift work, although there were differences in the shift structure at each site. At Collinsville, apart from the period of induction between 28 July and 5 August 2014 and the eight weeks of day shift in the start-up phase between 27 September 2016 and 21 November 2016, Mr Rossato worked 7 on/7 off shifts alternating between day and night-time work. At Newlands, he worked alternating shifts on a 5, 5, 4 pattern (5 on, 5 off, 4 on, then 5 off, 5 on, 4 off) until 24 March 2016 when a 7 on/7 off alternating shift roster was introduced at that Mine.

304    At both sites Mr Rossato worked on a “Drive In–Drive Out” (DIDO) basis. At the commencement of each swing of shifts, he drove to the mine site and stayed in the accommodation provided by Glencore during the period of his rostered shifts and then drove back home at the completion of each shift swing. In the period between 15 February 2016 and until the conclusion of the assignment at Newlands, WorkPac deducted $35 per week for the accommodation but in other periods his accommodation was provided at no charge.

305    It was an agreed fact that Glencore required at both Collinsville and Newlands an “appreciable component of the production workforce to be sourced through a labour hire company such as WorkPac” and that WorkPac was aware of that fact. That was also obvious to Mr Rossato because Glencore employees and WorkPac employees wore different shirts. The employees of both companies did the same work. The supervisor of each Crew was always a Glencore employee.

306    Mr Rossato knew the shift arrangements well in advance. This was because WorkPac provided rosters for the Collinsville and Newlands Mines with the First and Second NOCEs and because, towards the end of each year, Glencore provided rosters for the whole of the following year.

307    Apart from his rostered days off, the days and periods during which Mr Rossato did not work throughout his employment were limited. His first non-rostered days off period away from work after commencing on 28 July 2014 was the period of the Christmas shutdown (17 December 2014 to 3 January 2015).

308    In 2015, Mr Rossato’s only days away from work apart from his rostered days off were during the Christmas shutdown (21 December 2015 to 3 January 2016). During 2016, Mr Rossato’s only non-rostered days off away from work were 7 February (when his shift did not work because of inclement weather), 16 and 17 November (when he was not required to work so as to give him a sufficient break after completing work on the A Crew shift before commencing the next shift with D Crew and the period of the Christmas shutdown (23 December 2016 to 9 January 2017).

309    During 2017, Mr Rossato did not work between 26 March 2017 and 1 April 2017 when the Collinsville Mine was closed because of Cyclone Debbie. His next time away from work, apart from rostered days off, was the Christmas shutdown between 24 December 2017 and 6 January 2018.

310    Mr Rossato did not work between 10 March and 5 April 2018 because of the sudden serious illness of his partner. He returned to work for one day on 5 April 2018 before leaving again to care for his partner. Mr Rossato then retired from work with WorkPac on 9 April 2018.

311    Throughout his employment, Mr Rossato was paid only for the time he worked (although he did receive paid lunch breaks). He did not receive from WorkPac:

(a)    paid annual leave;

(b)    paid PC leave;

(c)    paid compassionate leave;

(d)    payment for Christmas Day, Boxing Day and New Year’s Days on which he did not work; and

(e)    payment for any rostered shifts not worked (such as over the Christmas shutdown periods).

Mr Rossato’s employment terms

312    It was common ground at the hearing that Mr Rossato was a “national system employee” and WorkPac a “national system employer” as defined in the FW Act.

313    There are three sources of the terms and conditions of Mr Rossato’s employment which are relevant presently: the FW Act, the 2012 EA made pursuant to s 185 of the FW Act, and Mr Rossato’s contracts of employment.

The Fair Work Act

314    Part 2-2 of the FW Act contains the NES terms and conditions of employment. They are “minimum standards that apply to the employment of employees which cannot be displaced” – see ss 41, 44(1) and 61. The minimum standards for annual leave, PC leave, compassionate leave and public holidays in issue in these proceedings are part of the NES.

315    Division 6 of Pt 2-2 of the FW Act contains the NES concerning annual leave. It commences with s 86:

This Division applies to employees, other than casual employees.

316    Section 87 provides that, depending on the circumstances of the employment, an employee is entitled to either four or five weeks of paid annual leave for each year of service with his or her employer, and that that entitlement accrues progressively during the year of service according to the employee’s ordinary hours of work, and accumulates from year to year. The paid annual leave may be taken for a period agreed between an employee and the employer and an employer must not unreasonably refuse a request by an employee to take annual leave, s 88. Section 90 provides that, if an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period. There are circumstances in which an employer and an employee may agree to the “cashing out” of some of the employee’s accrued paid annual leave entitlement, but not so that the employee’s remaining accrued entitlement will be less than four weeks, ss 92-94.

317    If the employee has a period of untaken annual leave when the employment ends, the employer must pay him or her the amount that would have been payable had the employee taken that period of leave, s 90.

318    It is accepted that the purpose of annual leave is to provide employees with a period of rest and recreation: Re 4 Yearly Review of Modern Awards – Annual Leave [2015] FWCFB 3406; (2015) 250 IR 119 at [117]; Skene at [125]-[126]. The taking of leave for this purpose has advantages for both employees and employers.

319    It is pertinent that Div 6 of Pt 2-2 creates an entitlement in employees to paid annual leave. The legislative intention is that leave be taken rather than an employee continuing to work and receiving a payment in lieu. Subject to the limited “cashing out” permitted by ss 92-94, Div 6 does not create an entitlement which can be discharged, at the discretion of the employer or the employee or both, by the making of payment in lieu. It is only on the termination of employment that an employee with an accrued period of untaken annual leave is to be paid the equivalent amount.

320    Division 7 of Pt 2-2 contains the NES provisions concerning the entitlement of an employee to paid PC leave, to unpaid carer’s leave and to paid compassionate leave. PC leave may be taken by employees who are not fit for work by reason of illness or injury or to provide care or support for a family or household member who is ill, injured or affected by an unexpected emergency (s 97). By ss 95 and 106 of the FW Act, employees, other than casual employees, have an entitlement to paid PC leave and to paid compassionate leave. The NES entitlement is for 10 days of PC leave for each year of service, accumulating from year to year (s 96). All employees, including casual employees, have an entitlement to two days of unpaid carer’s leave (s 102).

321    Again, it is pertinent to note that the NES entitlement is to leave, not to leave or payment in lieu: cf Construction, Forestry, Mining and Energy Union v Jeld-Wen Glass Australia Pty Ltd [2012] FCA 45; (2012) 213 FCR 549 at [18]-[21]. There are only limited circumstances in which untaken PC leave may be cashed out (ss 99-101) and there is no provision for payment in lieu of untaken PC leave on the termination of employment.

322    In short, ss 87, 96, 104 and 106 entitled Mr Rossato to paid annual leave, paid PC leave and paid compassionate leave only if he was other than a casual employee.

The 2012 Enterprise Agreement

323    It was an agreed fact that Mr Rossato’s employment with WorkPac was covered by the 2012 EA throughout the period of his employment.

324    Clause 1.2.2 of the 2012 EA referred to all of WorkPac’s “on-hire employees” covered by the Agreement, of which Mr Rossato was one, as “Field Team Members” (FTMs).

325    Clause 6 headed “Contract of Employment” is an important clause. It commenced with some general matters concerning the engagement of FTMs and their obligations, without making any distinction between those who are casual and those who are not:

6    Contract of Employment

6.1    Qualifying Period

(a)    Each new FTM will initially be engaged on six (6) months qualifying period, during which time the FTM's performance will be monitored. The FTM's employment status will be confirmed following completion of a satisfactory probation period.

6.2    Lawful directions

6.2.1    It is important that FTMs follow all reasonable and lawful directions, that are within the FTM's ability, given by their Leading Hand/Supervisor, or any other appropriate person, as nominated by the Company or Client. Should any FTM not be able to perform the assigned task for any reason whatsoever, it is their duty to inform their Leading Hand/Supervisor or other appropriate person immediately.

6.2.2    Refusal to comply with any reasonable and lawful direction may result in disciplinary action, which may include the termination of employment.

6.3    Skills, Competence & Training

6.3.1    FTMs are required to perform work within their skill, competence and training as required by the Company. It is agreed that FTMs will undertake all training as directed for the performance of work and the development of skills.

(Emphasis added)

326    Subclause 6.4 under the heading “Status of Employment” provided:

6.4    Status of Employment

6.4.1    FTMs under this Agreement will be employed in one or more of the following categories:

(a)    full-time FTMs; or

(b)     part-time FTMs; or

(c)     casual FTMs; or

(d)     limited term or assignment FTMs; or

(e)     FTMs employed for a specific project/site or workplace related task.

6.4.2    FTMs engaged in each of the above categories will be engaged as either a base rate FTM or a flat rate FTM. The method of remuneration for base rate and flat rate FTMs is set out in clause 9.1.1.

6.4.3    FTMs engaged and paid the base rate of pay shall be referred to in this agreement as Base Rate FTMs.

6.4.4    FTMs engaged and paid the flat rate of pay shall be referred to in this agreement as Flat Rate FTMs.

   6.4.5    Casual FTMs will be for a minimum of four (4) hours:

(a)     A person engaged as a base rate casual, as defined in clause 9.1.1, will be paid a casual loading of 25% on the rates prescribed herein. The casual loading is in lieu of all paid leave entitlements (with the exception of long service leave).

(b)    A person engaged as a flat rate casual, as defined in clause 9.1.1, will not be paid an additional amount as the casual loading has been incorporated into the flat rate of pay.

6.4.6    As your casual loading is 25%, it is made up of the following components:

(a)    11% of your loading is paid in lieu of Annual Leave and Leave Loading entitlements;

(b)    5% of your loading is paid in lieu of Personal Leave entitlement;

(c)    4% of your loading is paid in lieu of Notice of Termination requirements;

(d)    2.5% of your loading is paid in recognition of the itinerant nature of casual work;

(e)    2.5% of your loading is paid in lieu of Redundancy entitlements.

6.4.7    At the time of their engagement, the Company will inform each FTM of the status and terms of their engagement.

327    The remaining subclauses in cl 6 which are relevant presently are:

6.5    Termination of Employment

6.5.1    For the termination of employment the period of notice to be provided by the Company or an FTM is:

…

6.5.4    The employment of a limited term or assignment FTM, or an FTM employed for a project, site or workplace specific task, may be terminated by:

    (a)    the completion of the specified time; or

(b)    completion of the assignment, project, site or workplace specific task; or

    (c)    the notice provision outlined in clause 6.5.1.

   …

6.7    Standing Down of FTMs

6.7.1    The Company shall have the right to stand down an FTM without payment for any day (or part of any day) which an FTM cannot be usefully employed because of any breakdown in machinery or any stoppage of work by any cause for which the Client or Company cannot reasonably be held responsible.

6.7.2    An FTM who is stood down may elect to use accrued annual leave entitlements or RDOs for such time.

…

328    Clause 9 of the 2012 EA contained the wage rates. It provided relevantly:

9.1    Ordinary hourly wage rate

9.1.1    At the election of the Company an FTM will be paid either:

…

Flat Rate FTMs

(b)    The flat rate of pay as prescribed in Schedules 3, 4, 5, 6 and 7 for each classification. Flat rates are provided as compensation for all work (including overtime, weekend penalties, public holiday loadings, shift penalties, annual leave loading (where applicable), casual loading (where applicable), any industry and special allowances that apply to all FTMs covered by this Agreement and any industry and special allowances specifically incorporated that may not apply to all FTMs covered by this Agreement. Flat Rate FTMs shall also be entitled to any applicable allowances (which have not already been specifically incorporated) provided for by this Agreement unless such allowance is identified as applying only to Base Rate FTMs.

329    Clause 14, under the heading “Hours of Work – Flat Rate FTM”, contained a specification of the hours of work:

14    Hours of Work – Flat Rate FTM

14.1    The provisions of clause 14 shall only apply to FTMs in receipt of the flat rate of pay as prescribed in Schedules 3, 4, 5, 6 and 7 for the classification of work being performed.

14.2    The ordinary hours of work for flat rate FTMs shall be a standard work week. FTMs will be required to work reasonable additional hours prescribed in Schedules 3, 4, 5, 6 and 7 averaged over the particular work cycle being worked.

14.3    A flat rate FTM shall be employed on either day work or shift work and work hours as rostered by the Company to meet business operational needs. The shift work definitions in clause 15.4 shall be applied to determine if work is shift work.

14.4    Ordinary hours of work for FTMs will be a maximum of ten (10) per day and can be worked on any day Monday to Sunday inclusive.

14.5    Work shall be performed in accordance with the following work patterns:

…

14.9    Flat rate FTMs do not receive any additional payment for overtime loadings, weekend penalty rates, shift penalties, annual leave loading, casual loading (where applicable), public holiday rates or time worked outside the spread of hours as these have been incorporated into the flat rate.

330    The 2012 EA contemplated employees working either a six or seven day roster or a “five day weekend roster”.

331    Clause 19 of the 2012 EA concerned leave entitlements. With respect to annual leave, it provided (relevantly):

19    Leave Entitlement

19.1    Annual Leave (Permanent FTMs)

Annual leave entitlements are provided for in the NES. This clause supplements those entitlements and provides industry specific detail.

19.2    Entitlement to annual leave

(a)    An FTM is entitled to annual leave, in addition to the amount provided for in the NES, such that the employee's total entitlement to annual leave pursuant to the NES and this Agreement for each year of employment is a cumulative total of 175 ordinary hours (five weeks).

   (b)    An employee who:

(i)    is a seven day roster employee; or

(ii)    works a roster which requires ordinary shifts on public holidays and not less than 272 ordinary hours per year on Sundays, is entitled annually to an additional 35 ordinary hours (one week) of annual leave.

19.3    Accrual of annual leave

FTMs, other than casual employees, accrue annual leave at the following rate:

•    175 hours per annum for 5 weeks annual leave (average of 3.3654 hours per week)

•    210 hours per annum for 6 weeks annual leave (average of 4.0385 hours per week)

(a)    Annual leave is cumulative from year to year.

(b)    Part-time FTMs accrue annual leave on a pro-rata basis.

…

(Emphasis added)

332    With respect to PC leave and compassionate leave, cll 19.7 and 19.10 provided:

19.7    Personal/ Carer's Leave Entitlement (Permanent FTMs)

(a)    FTMs, other than casuals are entitled to 105 ordinary hours of personal/carer's leave (inclusive of the FTMs NES entitlement) on commencing employment and on each anniversary of commencement. Any personal leave which is not taken by an FTM must accumulate without limitation.

   (b)    Part-time FTMs accrue personal leave on a pro-rata basis.

…

19.10     Casual FTMs

Casual FTMs will be entitled to 2 days of unpaid carers leave in accordance with the Fair Work Act 2009.

(Emphasis added)

333    Clause 19.12 provided that a “permanent FTM” was entitled to two days of paid compassionate leave. However, cl 19.12.5 provided:

Casual FTMs will be entitled to 2 days of unpaid compassionate leave in accordance with [the] Fair Work Act 2009.

(Emphasis added)

334    Clause 20 identified the public holidays for the purposes of the 2012 EA. One of its effects was to preclude casual FTMs from any entitlement to payment for the public holidays occurring during the period of the Christmas shutdown (Christmas Day, Boxing Day and New Year’s Day).

335    It was an agreed fact that all of the FTMs provided by WorkPac to Glencore at the Collinsville and Newlands Mines were designated by WorkPac as casual employees.

Mr Rossato’s employment contracts

336    Mr Rossato’s employment contracts were the third source of his employment terms. The submissions proceeded on the basis that two principal documents contained the terms of Mr Rossato’s contracts of employment, although Mr Rossato, the CFMMEU, and Mr Petersen contested WorkPac’s claim that these documents contained the whole of the contractual terms. Amongst other things, these parties referred to WorkPac’s email of 17 July 2014 informing him of his “appointment” to Glencore at Collinsville and to the rosters provided to Mr Rossato.

The Notices of Offer of Casual Employment

337    Although the six NOCEs had much in common, there were some material differences between them.

338    Each NOCE, other than the third, had in bold the subject heading “Notice of Offer of Casual Employment – Flat Rate”. The subject heading in the Third NOCE was simply “Notice of Offer of Casual Employment”. The NOCEs commenced with some introductory paragraphs, three in the case of the first three NOCEs and five in the case of the Fourth, Fifth and Sixth NOCEs. The three paragraphs in the First NOCE were:

Robert please find below details of your assignment with GLENCORE COLLINSVILLE MINING OPERATIONS

While on this assignment you are employed under the, (sic) Level 3 (Mineworker) 2014, a copy of which is available to you online. Please refer to Schedule 1 of this document for information regarding how to access it. You can also access a copy at your local WorkPac office.

For additional information regarding this assignment, we recommend that you refer to your WorkPac Assignment & Basic Safety Guide or WorkPac Business Support Guide to Temping as provided to you during your interview. If you have lost this booklet please call Jacinta John to arrange one to be posted.

(Emphasis added)

339    It is apparent that the first sentence in the second paragraph was intended to identify for Mr Rossato that the 2012 EA would apply to his employment but there were obvious shortcomings in the manner in which it did so. The counterpart provisions in the subsequent NOCEs also contained shortcomings. This gave rise to an issue to which I will return shortly.

340    The NOCEs then followed the style of printed words at the left hand side of the page identifying a topic with the relevant detail entered opposite the printed words. Thus, the First NOCE provided:

341    Earlier, I referred to the subject line of the NOCE as being an offer of casual employment. The next reference in the NOCE concerning casual employment is in the entry concerning the identification of the flat rate, set out above. That notation referred to Sch 2.

342    The First, Second and Third NOCEs contained a Sch 2 concerning the configuration of the casual loading in the following terms:

Schedule 2 – Configuration of Casual Loading

Your ordinary rate of pay is your hourly rate less your performance incentive bonus where applicable. Refer to the appropriate Agreement contained in Schedule 1 to determine your casual loading. Where your casual loading is 25%, it is made up of the following components:

a.    11% of your loading is paid in lieu of Annual Leave and Leave Loading entitlements;

b.    5% of your loading is paid in lieu of Personal Leave entitlement;

c.    4% of your loading is paid in lieu of Notice of Termination requirements;

d.    2.5% of your loading is paid in recognition of the itinerant nature of casual work;

e.    2.5% of your loading is paid in lieu of Redundancy entitlements.

If your casual loading is less than 25% as prescribed in your Agreement, the above breakdown applies to your casual loading on a pro rata basis.

343    The Third NOCE did not contain the notation concerning the composition of the flat hourly rate. Instead, the counterpart entry was:

Your Pay Rate is a Casual Rate of:    Normal Time … $43.05

Time Half … $43.05

                        Double Time … $43.05

It did, however, refer Mr Rossato to Sch 2 for “more information on your casual loading”.

344    The Fourth, Fifth and Sixth NOCEs did not contain a Sch 2, nor any other information concerning the composition of the casual loading. As will be seen, this has a relevance to WorkPac’s claim to a set off.

345    Each of the First, Second and Third NOCEs provided that Mr Rossato’s commencement of duties at Collinsville or Newlands, as the case may be, would be taken as his acceptance of the terms and conditions referred to in the NOCE, whether or not he had signed those documents. In the Fourth, Fifth and Sixth NOCEs, this clause referred to the commencement of work with “the Client”:

Without limiting the ways in which you may accept this offer, commencing work with the Client will constitute your acceptance of these terms and conditions.

346    In the Fourth NOCE, Glencore Collinsville Mining A Crew was identified as the “Client”. In the Fifth and Sixth NOCEs, Glencore Collinsville Mining D Crew was identified as the “Client”.

347    It seemed to be accepted that Mr Rossato’s commencement of work, or continuation of work, as the case may be after his receipt of each of the NOCEs constituted an acceptance by him of the terms in the respective NOCEs.

348    In the Second NOCE, the length of the assignment was stated as a period of 154 days and not six months as did the First and Third NOCEs.

349    In the Third NOCE, WorkPac told Mr Rossato that he would be employed under the “Level 3 Casual Shift – 5 days Mon – Sun 2015 (sic), a copy of which is available to you online”.

350    The content of the Fourth, Fifth and Sixth NOCEs changed in some respects which are material. The introductory paragraphs comprised five paragraphs but it is not necessary to note them separately. The details of the assignment section commenced with an identification of WorkPac as being Mr Rossato’s employer for the “assignment” and gave him contact details for the “WorkPac Contact person”. The details of the assignment, the assignment location, the position for which he was employed and his supervisor followed a format which was similar to that of the First, Second and Third NOCEs. The following details were then provided:

The General Conditions

351    Clause 1 of the General Conditions stated that the terms and conditions contained in it provided “general information regarding your engagement with WorkPac”. It went on to say, however, that the document, once signed has “the force of law as a contract” and that it applied to all “assignments” of the employee with any member of the WorkPac Group.

352    Throughout the General Conditions, the placement of employees pursuant to the General Conditions was described as an “assignment”. This was made express in cl 4 under the heading “Duration of Agreement”:

…

4.2    The terms and conditions in this document apply to all assignments undertaken by the employee on behalf of WorkPac. The parties will not execute a new terms and conditions document for each separate assignment.

(Emphasis added)

353    Clause 1 in the General Conditions stated its relationship with the NES. It specified that, if the rates or conditions in it were less beneficial than the NES, then the NES applied in lieu.

354    Clause 2 had the effect that, if the terms and conditions in the General Conditions differed from those in the 2012 EA, those in the latter applied in their entirety to the complete exclusion of those in the General Conditions. As the 2012 EA provided that the employment of a casual FTM could be terminated without notice, WorkPac submitted that this displaced the notice provision in the General Conditions. However, that submission assumed one of the very matters to be decided, namely, whether Mr Rossato was a casual FTM to which the termination provision in the 2012 EA applied.

355    Clause 5 of the General Conditions is of some significance presently. It provided:

5.    CASUAL OR MAXIMUM TERM EMPLOYMENT ASSIGNMENTS WITH WORKPAC

5.1    Employment with WorkPac is on an assignment-by-assignment basis, with each assignment representing a discrete period of employment on a Casual or Maximum Term hourly basis.

5.2    From time to time WorkPac will bid for and will contract to provide Labour on sites covered by the National Code for the Construction Industry. In the event that you are engaged to work on a construction site you hereby acknowledge that you will be bound by that Code, to it’s intent and to any of the contractual terms offered to you for the purpose of complying with the National Code for the Construction Industry.

5.3    The employee may accept or reject any offer of an assignment.

5.4    The employee agrees to complete an assignment once the employee has accepted it. Should the employee elect not to complete the assignment for whatever reason, WorkPac reserves the right to recover any costs incurred relating to the employee’s assignment.

5.5    On completion of an assignment, whether satisfactory or otherwise, WorkPac is under no obligation to offer any other assignment/s.

5.6    WorkPac or the client may vary the assignment period by the giving of one (1) hours (sic) notice.

5.7    During the period of any assignment, the employee is under the care and supervision of WorkPac’s clients.

5.8    The employee agrees to notify their WorkPac representative before normal start time, if the employee is unable to attend during any period of the assignment.

5.9    The employee is to notify their WorkPac representative if they are required to perform duties other than those contained in the job description. Payment for such work will be at the normal hourly rate unless the duties are such that a change of classification is warranted, the change has been agreed to by WorkPac and the new rate has been agreed between the employee and WorkPac.

5.10    Employees will be given all legislative minimum terms and conditions applicable to Casual or Maximum Term employees in the State or Territory in which the assignment is located.

5.11    Casual and Maximum Term employees will serve a 6 month minimum qualifying period.

5.12    A casual assignment with WorkPac may be terminated at any time by the giving of one (1) hours (sic) notice.

5.13    Termination of a Maximum Term Assignment will be in accordance with the Relevant Industrial Instrument.

(Emphasis in the original)

356    Other clauses in the General Conditions which are pertinent presently are:

6.15    The employee, while on an assignment with WorkPac, will work exclusively for WorkPac.

…

7.1    Ordinary Hours

The employee will be engaged for the hours prescribed in the Notice of Offer of Employment. The hours of work will be defined in the Relevant Industrial Instrument and your Notice of Offer. Ordinary working hours are generally between 35 - 38 hours per week over a 6 month period. The employee may be requested to work such reasonable additional hours as requested by the employer.

In other circumstances where an employee is unable to be gainfully employed, due to circumstances beyond the employer’s control, such as breakdown of machinery, strike, or progress of other works, the employee shall be stood down without pay in accordance with the Relevant Industrial Instrument or the Fair Work Act 2009.

7.2    Meal Breaks are as defined in the Relevant Industrial Instrument.

…

7.4    Shiftwork

The employee will be required to work shifts and or rosters as prescribed in the Notice of Offer of Employment. The employee may be required to work additional or replacement shifts or rosters as agreed to during the engagement. The provisions of the Relevant Industrial Instrument will apply.

…

7.6    Where the period of the assignment is varied or interrupted, WorkPac will pay the employee a minimum of four (4) hours.

…

7.14    Stand Down Provisions

If the employee is unable to be gainfully employed due to strike, breakdown of machinery or any stoppage of work for any cause which the employer cannot be held reasonably responsible, the employer reserves the right to stand down the employee without pay in accordance with the Relevant Industrial Instrument or the Fair Work Act 2009.

The stand down of the employee under this clause does not break the continuity of employment of the employee for the purpose of any agreed entitlements.

357    The General Conditions are in the nature of an umbrella or overarching document, providing the terms and conditions applicable to all of the individual contracts which may be entered into by WorkPac with employees.

358    By signing the Employee Declaration, Mr Rossato also acknowledged that he had received a copy of a document entitled “WorkPac Assignment & Basic Safety Guide”. The introduction to that document, under the heading “Welcome to the WorkPac Team!”, stated:

Our main aim is to assist you in securing positions where you can best utilise and enhance your current skills and develop your career objectives to help you succeed. We strive to ensure that when you are booked on an assignment for WorkPac you are equipped with the knowledge of your duties and the terms of your engagement whilst working for us.

…

We hope the association we now have is mutually beneficial and long lasting between both parties. We are confident that you will enjoy working for an organisation that prides itself on its greatest asset … you!

(Emphasis added)

359    Under the heading “General Terms of Your Work Assignment”, the document included the following:

Listed below are some standard terms that will apply to all assignments with WorkPac

•    Your engagement is on a casual basis only. This means you will be paid an hourly rate of pay for every hour you work. In most cases this does not include meal breaks, travel and induction time.

•    Your hourly rate is inclusive of sick leave and holiday leave. So if you are sick and cannot turn up for work you will not be paid.

•    You are only paid for the hours you work. You are only paid for public holidays if you actually work on that day.

•    …

•    Either party can terminate an assignment with one (1) hour’s notice.

•    …

(Emphasis added)

360    Neither party contended that these provisions in the Guide formed part of the terms of Mr Rossato’s employment contract but counsel for WorkPac contended that they did form part of the factual matrix in which the contract was made which was known to both parties.

Incorporation of terms by reference?

361    It is convenient to address at this point WorkPac’s submission that cll 6.4.5 and 6.4.6 of the 2012 EA concerning the payment of the casual loading had been incorporated by reference into each of the contracts and, in the case of the first, second and third contracts, applied up to the amount which was payable under the 2012 EA. WorkPac made this submission in support of its claim to a set off.

362    The Minister made a similar submission with respect to all six NOCEs, although without identifying the particular terms of the 2012 EA said to have been incorporated. I infer that it was also cll 6.4.5 and 6.4.6. The terms indicated, so it was submitted, that WorkPac would pay an hourly rate on the basis that the employment was casual, with that hourly rate incorporating a casual loading to be paid in lieu of entitlements to paid leave.

363    WorkPac accepted that the terms of an enterprise agreement are not incorporated into a contract of employment as a matter of course: Byrne v Australian Airlines Limited (1995) 185 CLR 410 at 420-1, and see generally Soliman v University of Technology, Sydney (No 2) [2009] FCAFC 173; (2009) 191 IR 277 at [19]-[24].

364    The parties to a contract may agree that terms contained in another document are incorporated into their contract. When this occurs, the reference is usually express, but the incorporation of the term may be a matter of implication from other terms on which the parties have agreed. WorkPac accepted that the presence of an implication of this kind is to be determined by an objective ascertainment of the parties’ intentions: Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; (2004) 219 CLR 165 at [40]-[41].

365    An initial issue with this submission is the laxity with which WorkPac purported to refer to the 2012 EA in the NOCEs. There is not a single NOCE in which it did so using the correct title, namely, “WorkPac Pty Ltd Mining (Coal) Industry Enterprise Agreement 2012”.

366    The purported reference to the 2012 EA in the First and Second NOCEs was as follows:

Whilst on this assignment you are employed under the (sic), Level 3 (Mineworker) 2014, a copy of which is available to you online. Please refer to Schedule 1 on this document for information regarding how to access it. You can also access a copy at your local WorkPac office.

367    The counterpart paragraph in the Third NOCE was in the same terms, save that it told Mr Rossato that he would be employed “under the (sic), Level 3 Casual Shift – 5 Days Mon-Sun 2015”.

368    The Fourth NOCE informed Mr Rossato that he would employed “under the WorkPac Mining (Coal) Industry Workplace Agreement (Rates as at 1 July 2015), a copy of which can be referenced at www.workpac.com or provided to you upon written request” (emphasis added).

369    The Fifth NOCE informed Mr Rossato that he would be employed “under the WorkPac Ming (sic) Coal Industry Agreement, a copy of which can be referenced at www.workpac.com or provided to you upon written request”.

370    The Sixth NOCE informed Mr Rossato only that he would be employed “under the (sic), a copy of which can be referenced at www.workpac.com or provided to you upon written request”.

371    The Sch 1 to which each of the First, Second and Third NOCEs referred had the heading “Where do I find my Agreement?”. It included the 2012 EA among the 21 workplace or enterprise agreements listed. The titles of the other 20 agreements listed did not suggest that any of them would be applicable in the circumstances of Mr Rossato’s employment as in nearly all cases it was readily apparent that they related to employment of very different kinds. Schedule 1 also told Mr Rossato how to access an agreement or award in the list.

372    None of the Fourth, Fifth and Sixth NOCEs included a Sch 1, let alone reference to a Schedule or other means by which Mr Rossato could identify an applicable enterprise agreement.

373    Schedule 2 to the first three NOCEs, set out earlier in these reasons, contained a further reference which is pertinent. It had the heading “Configuration of Casual Loading” and, amongst other things, directed Mr Rossato to “the appropriate Agreement contained in Schedule 1 to determine your casual loading”.

374    Despite the unsatisfactory way in which WorkPac drew Mr Rossato’s attention to the 2012 EA, I consider that the content of the first three NOCEs was sufficient for Mr Rossato, albeit by a process requiring some discernment, to be able to identify the 2012 EA as the enterprise agreement applicable to his employment. The NOCEs did tell Mr Rossato that his employment was covered by an enterprise agreement and gave sufficient detail by which the applicable enterprise agreement could be identified.

375    By the time that he received the Fourth, Fifth and Sixth NOCEs, Mr Rossato can be taken to have known that the enterprise agreement applicable to his employment was the 2012 EA. That formed part of the factual matrix in which each of those contracts of employment was made. There was in any event only a one word error in the naming of the 2012 EA in the Fourth NOCE and the errors in its naming in the Fifth NOCE were minor.

376    Accordingly, while the position is not satisfactory, I conclude that WorkPac did inform Mr Rossato sufficiently in each case that he would be employed under the 2012 EA.

377    However, the mere fact that Mr Rossato was told that the 2012 EA applied to his employment, or that he would be employed under it, is not sufficient to indicate the incorporation of its terms into his contracts.

378    The factual matters on which Workpac relied for its submission of incorporation by reference with respect to the first, second and third contracts were that the First and Second NOCEs had specified that Mr Rossato’s rate of pay was a “flat rate”, thereby adopting (so it was said) the language of the 2012 EA; that the Third NOCE had, as a matter of substance, done the same; that the flat rate was specified as including a “casual loading” (ie, using the terminology of cll 6.4.5 and 6.4.6); and that the components of the casual loading in Sch 2 (to which Mr Rossato was referred for more information concerning the casual loading) had matched those in cl 6.4.6. It also emphasised that the amount of the casual loading (25%) applicable in Mr Rossato’s case had to be derived by reference to the 2012 EA.

379    Finally, as part of its submission concerning the incorporation of cll 6.4.5 and 6.4.6, WorkPac contended that those clauses contained “precise obligations rather than imprecise, vague or aspirational statements” and that they dealt with matters which one would expect would ordinarily be found in a contract of employment.

380    In relation to the fourth, fifth and sixth contracts, WorkPac relied on the circumstance that the respective NOCEs had provided for a flat rate which exceeded the flat rate applicable to a person in Mr Rossato’s classification in the 2012 EA; that the Fifth and Sixth NOCEs had told Mr Rossato that the flat rate may include a casual loading without providing him with any particulars of the loading; that this suggested that those matters were to be made complete by reference to the 2012 EA (if uncertainty was to be avoided); that the fact that the contract rate was higher than the rate fixed by reference to the 2012 EA meant that it was necessary to incorporate cll 6.4.5 and 6.4.6 in order to understand the amount of the casual loading; that (with the exception of the Fourth NOCE) the respective NOCEs used the same terminology as the 2012 EA; that terms such as “flat rate” and “casual loading” were terms of art; that cll 6.4.5 and 6.4.6 contained “precise obligations rather than imprecise, vague or aspirational statements”; that the two clauses dealt with matters one would expect to find in a contract of employment; and that each NOCE stated at the outset that the 2012 EA applied to Mr Rossato’s employment. WorkPac submitted that, in these circumstances, it should be concluded that the purpose of the payment of the casual loading set out in the 2012 EA had been incorporated as an express term into each of the fourth, fifth and sixth contracts.

381    WorkPac sought to support these submissions by reference to authorities which have considered whether particular policies of an employer have been incorporated into the contract of employment, including: Romero v Farstad Shipping (Indian Pacific) Pty Ltd [2014] FCAFC 177, (2014) 231 FCR 403; Riverwood International Australia Pty Ltd v McCormick [2000] FCA 889, (2000) 177 ALR 193; Regulski v State of Victoria [2015] FCA 206; Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120, (2007) 163 FCR 62; and McKeith v Royal Bank of Scotland Group PLC [2016] NSWCA 36, (2016) 216 IR 9. See also Westpac Banking Corporation v Wittenberg [2016] FCAFC 33; (2016) 242 FCR 505.

382    The question of whether a policy of an employer has been incorporated into the parties’ contract of employment involves considerations which are different from those concerning the possible incorporation in the contract of the provisions in an award or enterprise agreement. That is especially so because, in many of the cases just referred to, the employee has agreed expressly “to observe”, “comply with” or “abide by” the employer’s policies. None of the NOCEs contained a provision to that effect with respect to the 2012 EA.

383    In relation to provisions in awards and enterprise agreements, the absence of necessity for an incorporation of the terms is an important factor in the objective assessment of the parties’ intentions. If a term is unnecessary, there is no reason to suppose that the parties intended to incorporate it. Thus, in relation to the implication of award terms into a contract of employment, Brennan CJ and Dawson and Toohey JJ said in Byrne v Australian Airlines at 421:

In a system of industrial regulation where some, but not all, of the incidents of an employment relationship are determined by award, it is plainly unnecessary that the contract of employment should provide for those matters already covered by the award. The contract may provide additional benefits, but cannot derogate from the terms and conditions imposed by the award and, as we have said, the award operates with statutory force to secure those terms and conditions. Neither from the point of view of the employer nor the employee is there any need to convert those statutory rights and obligations to contractual rights and obligations.

(Citation omitted)

384    The CFMMEU submitted that, in view of this passage, clear language would be required in order that a contract of employment be regarded as having incorporated provisions of an industrial instrument. I agree.

385    The First and Second NOCEs informed Mr Rossato that the nominated flat hourly rate included the casual loading in the following manner:

Your flat rate of pay includes the payment of overtime, weekend penalties, public holiday loadings, shift penalties, casual loading (refer to Schedule 2 for more information on your casual loading) and any industry and special allowances that may apply.

(Emphasis added)

386    I will consider later whether the concluding words “that may apply” are referrable to each of the listed entitlements or only to “any industry and special allowances”.

387    The First and Second NOCEs also referred Mr Rossato to Sch 2 for more information on your casual loading. Schedule 2 referred Mr Rossato to the “appropriate Agreement contained in Schedule 1 to determine your casual loading”.

388    These provisions indicate that the two NOCEs required reference to the 2012 EA for two matters: the percentage figure of the casual loading to which reference was being made (it being so commonplace as to be notorious that casual loadings are expressed in percentage terms) and the rate to which the percentage figure was to be applied. There was no point to a reference to the former without a reference also to the latter.

389    Accordingly, I conclude that the First and Second NOCEs did incorporate by reference the portions of the 2012 EA which identified the amount of the casual loading (25%) said to be included in the flat rate and the rate to which that percentage was to be applied. This means that cl 6.4.5 can be taken to have been incorporated by reference. Clause 6.4.6 should also be taken to have been incorporated because it also identified the percentage of casual loading. Strictly speaking, it was not necessary for the remaining portion of cl 6.4.6 to have been incorporated (because it duplicated the content of Sch 2) but I consider that it would be artificial to suppose that part only of cl 6.4.6 was incorporated by reference.

390    The Third NOCE stands differently because, unlike the First and Second NOCEs, it did not tell Mr Rossato expressly that the nominated flat rate included a casual loading. It did, however, do so by implication by the statement “Refer to Sch 2 for more information on your casual loading”. Schedule 2 then referred him to Sch 1 “to determine your casual loading”. These were sufficient in my view to indicate to Mr Rossato that his flat rate did include a casual loading and that he could obtain the details from the 2012 EA.

391    For these reasons, I am satisfied that cll 6.4.5 and 6.4.6 were incorporated by reference into the first three NOCEs.

392    It will be necessary to consider later in these reasons the effect of the provision in the First and Second NOCEs that “your flat rate of pay includes the payment of … casual loading” and the terms incorporated by reference.

393    The Fourth, Fifth and Sixth NOCEs are materially different from the first three. Although the Fourth NOCE described the employment as casual, it made no reference at all to a casual loading, let alone to the nominated flat rate including a casual loading. Nor did it contain any equivalent to Schs 1 and 2 in the first three NOCEs. The Fourth NOCE did specify that the “daily rate” may include some allowance or penalties, such as crib or meal breaks or unspecified special allowances, but did not mention the inclusion of the casual loading in either a daily or hourly rate.

394    The Fifth and Sixth NOCEs were in the same form as the Fourth but did say that the flat rate of pay “may” include the payment of “overtime, weekend penalties, public holiday loadings, shift penalties, casual loading and any industry and special allowances that may apply” (emphasis added). They did not anywhere tell Mr Rossato that the nominated flat rate did include a casual loading, let alone tell him the percentage or the rate to which the percentage would be applied or indicate a means by which he could identify those matters for the purposes of the contract. There was no need for the NOCEs to do so as each was complete without those matters. This means that the submission of WorkPac based on the avoidance of uncertainty is unsound. If in relation to Mr Rossato’s employment under the fifth and sixth contracts a question as to casual loading was to be resolved, that would be done by reference to the 2012 EA itself, and not by reference to the terms of the NOCEs.

395    The other matters on which WorkPac relied for the claimed incorporation by reference into the fourth, fifth and sixth contracts are not persuasive. In particular, the fact that the components of the casual loading identified in Sch 2 matched those in cl 6.4.6 does not support incorporation by reference. On the contrary, it indicates that the incorporation was unnecessary and therefore, the difficulty in attributing to the parties on an objective basis an intention that cl 6.4.6 should be incorporated.

396    Contrary to WorkPac’s submission, the fact that it was agreeing to pay an hourly rate in excess of the flat rate otherwise applicable under the 2012 EA counts against the parties having had the intention for which it contends. The statement in the NOCEs that the 2012 EA applied to Mr Rossato’s employment cannot reasonably be understood as indicating an intention that all or any of the terms in the 2012 EA, or even the two particular clauses of the 2012 EA for which WorkPac contends, be incorporated by reference into the contracts of employment.

397    I reject the particular submissions of WorkPac and the Minister with respect to the incorporation of cll 6.4.5 and 6.4.6 into the fourth, fifth and sixth contracts. In my view, in relation to those contracts, this is a case of the conventional kind in which the terms of the industrial instrument did not become part of the contract of employment.

An absence of a firm advance commitment – some general matters

398    As already noted, the submissions proceeded on the basis that 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” is the criterion by which the existence of casual employment is to be ascertained.

399    Several of the submissions seemed to give the expression, and in particular the words “firm advance commitment”, a talismanic quality, with the postulated firm advance commitment being described as the “touchstone” for the existence of casual employment. Indeed, WorkPac submitted that the absence of a firm advance commitment was both a necessary and sufficient condition for the characterisation of employment as casual. The submissions of this kind brought to mind the oft-repeated caution about construing words in judgments as if they are provisions in a statute: Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia [1987] HCA 27, (1987) 72 ALR 1 at 6; Scott v Davis [2000] HCA 52, (2000) 204 CLR 333 at [108]; Ogden Industries Pty. Ltd. v Lucas [1970] AC 113 at 127.

400    It is appropriate to keep in mind that the critical question concerning WorkPac’s liability presently is the construction of the statutory expression “casual employee”. Its meaning should be determined in accordance with the usual principles of statutory construction having regard to its place in the FW Act considered as a whole: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28, (1998) 194 CLR 355 at [69]; Certain Lloyd’s Underwriters v Cross [2012] HCA 56, (2012) 248 CLR 378 at [23]-[26].

401    Furthermore, the reference in the authorities to an absence of a firm advance commitment of the postulated kind seems to be a statement about the general nature of casual employment, or a statement of its consequences, rather than a statement of a hard and fast criterion for its existence. Given the diverse contexts in which issues concerning the characterisation of employment as casual may arise, it is not to be expected that there will be a single “test” which can be applied for that purpose. Much may depend on the particular statutory, award or enterprise agreement context and the factual circumstances of the given case. It is pertinent in this respect that the Full Court in Skene, at [182], said only that the objectively demonstrated existence of a firm advance commitment of the postulated kind ordinarily demonstrates an intention that the employment be full-time or part-time rather than casual, and went on to say that indicators such as irregularity, uncertainty, unpredictability, intermittency and discontinuity in the pattern of work of the employee are key indicators of the absence of the requisite commitment.

402    However, proceeding on the basis on which the case was presented and argued, a number of issues seem to arise about the concept of the postulated absence of a firm advance commitment. What is the nature of the required commitment? Is it an obligation enforceable in law? If so, what do the adjectives “firm” and “advance” add to the concept? Is the parties’ agreement for the employment to continue indefinitely, albeit subject to unilateral termination by either, a commitment of the postulated kind? If the commitment is to be contractual, does it have to be express? Alternatively, is it sufficient that it can be discernible in the contract considered as a whole? Is the commitment required to be mutual? Does it involve elements of reciprocity? At what time is the commitment to be assessed? It is to be prospective? Alternatively, is the question to be considered at the time when the liability or entitlement is asserted, for example, when an employee seeks to take annual leave? Is it necessary for the days or hours which the employee is to work to be fixed? Alternatively, is it sufficient that there is an agreed means by which those days or hours will be identified? Is the postulated commitment lacking if there is commitment as to the duration of the employment but no commitment to the days or hours to be worked (or vice versa)?

403    Ordinarily, in the absence of some prescription to the contrary, employment contracts continue subject to termination by either side. That is to say, putting to one side contracts of fixed duration or for a specific task, the commitment by each party is to continue the employment relationship indefinitely, subject to the respective rights of termination. Neither the employer nor the employee commits not to exercise the right of termination. Unless the contract provides for a greater period of notice, an employer may terminate the employment on notice which, depending on the employee’s length of service, may be no more than one week – see s 117 of the FW Act. Even when notice is required, an employer may terminate the employment forthwith providing it makes payment in lieu of notice – see s 117(2)(b). If the postulated firm advance commitment exists in contracts of that type, why does it not exist in circumstances which are otherwise comparable save that a shorter period of notice, or even no notice, is required for termination?

404    WorkPac’s submissions were to the effect that the required firm advance commitment had to be contractual. Indeed, some of its submissions were to the effect that the commitment had to be express within the contract and could not be inferred from the contract considered as a whole. It contended that the terms of Mr Rossato’s employment contracts were wholly in writing so that the presence or absence of the postulated commitment was to be discerned from that writing. It sought to invoke the parol evidence rule so as to have consideration of any extraneous material excluded.

405    Mr Rossato, supported by the CFMMEU and Mr Petersen, contended that the presence or absence of the postulated firm advance commitment had to be determined by consideration of the employment relationship as a whole, including the manner in which the relationship worked out in practice. Their submissions were to the effect that a commitment of the postulated kind may be found (at least) whenever the parties’ contract is to continue indefinitely with work being performed in a regular fashion under the contract.

406    The understanding of the nature of a contract of employment has undergone considerable development over time. In former times, the common law presumed, in the absence of any agreement to the contrary, that a hiring for an indefinite period was a yearly hiring, with the consequence that the employment could be determined only by notice ending with a year of service: Healy v The Law Book Company of Australasia Pty Ltd (1942) 66 CLR 252 at 255. That understanding diminished during the first part of the 20th Century and was given its quietus in England in Richardson v Koefod [1969] 1 WLR 1812 at 1816. The common law rule then became that, in the absence of express stipulation, a contract of employment was terminable on reasonable notice: ibid. See Byrne v Australian Airlines at 429; Thorpe v South Australian National Football League (1974) 10 SASR 17 at 29; and Wittenberg at [220]-[222].

407    The presumption of a yearly hiring, while it prevailed, was readily displaced by evidence that the parties intended some other arrangement. Commonly, the payment of wages at shorter intervals (weekly or monthly) was regarded as having the effect that the hiring was instead weekly or monthly, as the case may be.

408    In Australia, the notion of weekly hire became entrenched in industrial awards in the 1920s – see the discussion by the Full Bench of the Australian Industrial Relations Commission in Re Metal, Engineering and Associated Industries Award, 1998 – Part 1 (2000) 110 IR 247 (Re Metal) at 253.

409    The introduction into the predecessors of the FW Act of provisions requiring minimum (and generally longer) periods of notice before employment could be terminated led to the notion of weekly hire falling into desuetude. Instead, in the absence of some different stipulation, employment came to be regarded as continuous or indefinite (sometimes referred to as “permanent employment”) but terminable on notice or for cause: Re Metal at [56]-[57]. The periodicity of the employment then ceased to be a distinguishing feature of employment as casual and non-casual.

410    In former times, it was thought that, unlike permanent employees, the predecessors of the employees now described as casual entered into a new contract of employment with each new engagement and that the contract concluded on the cessation of the engagement: Thompson v Big Bert Pty Ltd t/as Charles Hotel [2007] FCA 1978; (2007) 168 IR 309 at [58].

411    Provision was made in industrial awards for work of this kind by the recognition of daily or hourly hire: Re Metal at 253-4. With respect to this type of employment, the Full Bench said:

[54]    In relation to “employed by the hour”, it seems generally to have been accepted, although the reasons for doing so may now be obsolete, that the essence of weekly hire, daily hire, and hourly hire engagements was that each be terminable by the corresponding period of notice on either side. In some earlier awards that condition was explicit. In practice, that construction of an hourly hire employment resulted in the employment being considered to expire on the end of a shift unless renewed, or being terminated on either an hour’s notice prior to completion of shift, or effectively by the employer not offering further work at the conclusion of a shift.

(Citation omitted)

412    Employment of this kind was the predecessor of casual employment. However, it is now recognised that a person may be engaged as a casual employee under a single continuing contract: Ryde-Eastwood Leagues Club Limited v Taylor (1994) 56 IR 385 at 399, Melrose Farm Pty Ltd t/as Milesaway Tours v Milward [2008] WASCA 175; (2008) 175 IR 455 at [110]. The actual performance of work under that contract may be intermittent or irregular. As was noted by Moore J in Reed v Blue Line Cruises Ltd (1996) 73 IR 420 at 425, when the employment is casual, the employer can elect to offer employment on a particular day or days and, when offered, the employee can elect whether or not to work. Buchanan J made a statement to like effect in Shop, Distributive & Allied Employees’ Association v Harris Scarfe Australia Pty Ltd [2014] FCA 283 when determining a claim of a casual employee to payment for a public holiday:

[26]    … There is a significant difference between a roster for full-time or part-time employees, which involves an allocation of work which they have agreed to undertake, and an offer of casual engagements, which a casual employee is usually free to accept or decline. The consequence for a casual employee of declining a “rostered” shift may be that no more are offered but the consequence for a full-time or part-time employee is that they have refused to work and have breached their contract of employment.

Casual employment – general

413    I have already touched on some aspects of casual employment. It does not seem to have been a term known to the common law, although employment which ended at the completion of each day or task was. While casual employment has been recognised for many years in statutory and award provisions as a type of employment, its definition has proved difficult. The authorities reviewed in Skene and others indicate, as one would expect, that the meaning given to it varies according to the particular context in which the issue arises for determination and that the matters bearing on its existence may vary according to the factual circumstances. This is one reason why attempts to provide a single definition have proved difficult. The authorities do, however, provide some assistance in understanding the content of the postulated firm advance commitment.

414    In Doyle v Sydney Steel Company Ltd (1936) 56 CLR 545, the High Court considered whether a boilermaker engaged under informal arrangements and whose work had been temporary, obtained at irregular intervals and with successive employers within a 10 month period was a “casual worker” for the purposes of calculating average weekly earnings under the Workers’ Compensation Act 1926-1929 (NSW). Starke J said at 551:

The description “casual worker” is not one of precision: it is a colloquial expression, and where, upon all the facts, there is a reasonably debatable question whether the work is casual or regular, the question is one of fact for the commission.

(Emphasis added)

415    Dixon J said, at 555:

But unfortunately what is casual employment is ill defined. Indeed it is scarcely too much to say that it seems open to a tribunal of fact to treat most forms of intermittent or irregular work as casual.

(Emphasis added)

416    McTiernan J said, at 565:

Now the term “casual worker” is not capable of exact definition. Hamilton LJ said in Knight v Bucknill: “I think that ‘casual’ is here used not as a term of precision, but as a colloquial term.” Each case is to be determined on its own facts, consideration being given not only to “the nature of the work but also the way in which the wages are paid, or the amount of the wages, the period of time over which the employment extends, indeed all the facts and circumstances of the case” … The question being one of fact, the commission’s finding should not be set aside if there was evidence to support it.

(Citations omitted and emphasis added)

417    In Shugg v Commissioner for Road Transport and Tramways (NSW) (1937) 57 CLR 485, the question was whether an employee who had worked on a bank holiday was entitled to leave on full pay for one day in lieu of that day. It was argued that, because the employee had been engaged pursuant to a statutory power to employ casual employees, he was not an “officer” to whom the statutory entitlement applied. Dixon J said at 496:

The expression “casual” is a word of indefinite meaning which elsewhere has caused difficulty. We are apt to associate with the word elements of chance or of discontinuity. We perhaps think of casual employment as occasional or intermittent. But it has been found so difficult to fix any definite tests for casual employment that under Workmen’s Compensation Acts refuge has been taken in treating it as a question of fact in each case.

418    In Reed, Moore J considered the effect of reg 30B of the Industrial Relations Regulations (Cth) (the IR Regulations) which was made pursuant to s 170CC of the Industrial Relations Act 1988 (Cth) (IR Act). Section 170CC gave effect to the Convention concerning Termination of Employment at the Initiative of the Employer (the TE Convention) and excluded “a casual employee engaged for a short period [with the shortness of the period being defined in a later Regulation]” from its obligations with respect to termination of employment. His Honour considered at 424 that the meaning of the expression “casual employee engaged for a short period” was informed by the terminology in the TE Convention, which spoke of a person “engaged on a casual basis for a short period” (emphasis added).

419    Moore J then referred to implications arising from the TE Convention itself, and to dictionary meanings of the word “casual” and continued, at 425-6:

In my opinion, what is intended by Art 2(2)(c) is that the regime embodied in the Convention should not apply to employment where the employment is known to the parties at the time of engagement to be informal, irregular and uncertain and not likely to continue for any length of time. It is accepted that it would not be reasonable to impose that regime on employment of that character.

A characteristic of engagement on a casual basis is, in my opinion, that the employer can elect to offer employment on a particular day or days and when offered, the employee can elect to work. Another characteristic is that there is no certainty about the period over which employment of this type will be offered. It is the informality, uncertainty and irregularity of the engagement that gives it the characteristic of being casual.

Regulation 30B reflects a similar concept having regard to how a casual engaged for a short period is identified …

…

In my opinion, a casual employee for the purposes of reg 30B is an employee who is, from time to time offered employment for a limited period on the basis that the offer of employment might be accepted or rejected but in circumstances where it could be expected that further employment of the same type would or might be offered and accepted but there was no certainty about the period over which it would continue to be offered.

(Emphasis added)

420    Although Moore J did not use the term “absence of a firm advance commitment”, it can be seen that his Honour may have found such an absence in the irregularity and uncertainty of the employment, the improbability of its continuance and the freedom of action on both sides as to the offering and performance of work.

421    Section 170CC of the IR Act was considered again in Hamzy. By this time, it had the form effected by the Workplace Relations and Other Legislation Amendment Act 1996 (Cth) (the WROLA Act) which, relevantly for present purposes, permitted the exclusion of “employees engaged on a casual basis for a short period”. Regulation 30B now formed part of the Workplace Relations Regulations 1996 (Cth) (the WR Regulations) and, by subreg (1)(d), continued to exclude “a casual employee engaged for a short period within the meaning of subregulation (3)”. Subregulation(3) was still in its original form.

422    Although the proceedings before the Full Court in Hamzy raised a number of issues, that which it determined was the validity of reg 30B(1)(d) and reg 30B(3). Both subregulations were declared to be invalid as not being authorised by s 170CC, at [82]. The reasons for that conclusion are not presently material but, in the course of its reasons, the Full Court considered the expressions “engaged on a casual basis for a short period” and “a casual employee engaged for a short period, within the meaning of subregulation (3)” used in s 170CC(1)(c) and in reg 30B(1)(d) respectively. The Court then said:

[38]    In our opinion there is no material difference between the description "employees engaged on a casual basis for a short period", in s 170CC(1)(c) of the Workplace Relations Act, and the description "a casual employee engaged for a short period", in reg 30B(1)(d). Both descriptions embrace an employee who works only on demand by the employer (or perhaps only by agreement between employer and employee) over a "short period" (whatever that may be). The essence of casualness is 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. But that is not inconsistent with the possibility of the employee's work pattern turning out to be regular and systematic.

(Emphasis added)

423    The Full Court then considered the time at which the status of the employee was to be evaluated for the purposes of reg 30B and concluded:

[41]    In our opinion, the better interpretation of reg 30B is that the question whether a person is a "casual employee engaged for a short period", for the purposes of possible exclusion of that employee from the operation of any part of Div 3 of Part VIA of the Act, is to be determined as at the date of the person's termination of employment.

424    The reasoning in Hamzy suggests that it is the as required nature of the employment or its shortness which are indications of the absence of the postulated firm advance commitment.

425    In Community and Public Sector Union v State of Victoria [2000] FCA 759; (2000) 99 IR 217 (CPSU), the question was whether two employees in the Victorian prison system had been properly paid on the basis that their employment was casual. The Public Sector Management Act 1992 (Vic) permitted the employment of persons on a casual basis. The applicable award provided that “persons employed on a casual basis” (emphasis added) would receive a loading in lieu of any entitlement to other benefits under the award. The Full Court held that, in this context, the legal character of the employees’ employment for the purposes of the award was determined by the manner of their initial engagement, and continued:

[5]    … It is irrelevant, in our opinion, that the evidence might support a conclusion that, after their initial engagement, their employment had some of the hallmarks of regular employment rather than casual employment. It is unnecessary to consider those authorities which accept that, in appropriate circumstances, employment can properly be characterised as regular casual employment. It is also irrelevant, for present purposes, whether the Award was drafted on the assumption that casual employees would work in a particular way and not in the way that [the employees] in fact worked.

426    In Cetin v Ripon Pty Ltd t/as Parkview Hotel [2003] AIRC 1195 (PR938639) at [59], the Australian Industrial Relations Commission said:

Consistent with the approach of Moore J in Blue Line Cruises, the informality, uncertainty and irregularity of an engagement supports a conclusion that the employment has the characteristic of being casual. Conversely regular and systematic engagements with a reasonable expectation of continuing employment are usually not characteristic of casual employment.

427    Bernardino v Abbott [2004] NSWSC 430 concerned the entitlement of an employee on termination of employment to payment in respect of untaken annual leave under the Annual Holidays Act 1944 (NSW). That entitlement turned on the question of whether the employee was other than a casual. Gzell J referred to Doyle, Reed, and Cetin and continued:

[21]    In the instant circumstances, the fact that the plaintiff was paid an hourly rate limited to hours actual worked, that on occasion he worked irregular hours, that he received no overtime or public holiday loadings, that he worked in a variety of roles including his work at the next door coffee shop and that he received no sick pay, no annual leave pay nor payment for public holidays are suggestive of casual employment.

[22]    On the other hand, the employee declaration, his expectation that he would be working for Pinemaze for many years, his appointment to the fixed positions of second chef, first chef and manager of the coffee shop, the regular hours of work each week and the circumstance that the continued performance of his functions was regarded as full-time employment by the defendant are suggestive of full-time employment.

[23]    In my view, the regularity and stability of his employment and the expectation that it would continue for a considerable length of time outweigh other aspects of the matter. I am of the view that the plaintiff was not engaged in casual employment and was entitled to annual leave pay.

(Emphasis added)

428    In Melrose Farm, the Western Australian Industrial Appeal Court considered whether an employee was a casual employee for the purposes of an industrial award. Le Miere J (with whom Steytler P agreed and with whom Pullin J would have agreed had he considered it necessary to decide the issue), said:

[103]    In Australian law, the expressions “casual employee” or “casual employment” are expressions with no fixed meanings …

His Honour then referred to Reed and Hamzy and continued:

[106]    There is no one definitive test to distinguish between casual and permanent employees. There are several features characteristic of casual employment … The essence of casual employment is 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. It is not a necessary characteristic of casual employment that the employee work under a series of separate and distinct contracts of employment each entered into for a fixed period.

(Emphasis added)

429    Of assistance with respect to the concept of a “firm advance commitment”, Le Miere J noted:

[110]    … There may be a continuing contract one term of which is that the employer can elect to offer work on a particular day or days and when offered the employee can elect to work or not. Such a contract might create a casual employment relationship.

430    That should not of course be understood as a statement of the only circumstance in which the postulated firm advance commitment may be absent.

431    In MacMahon Mining Services Pty Ltd v Williams [2010] FCA 1321; (2010) 201 IR 123, Barker J considered on appeal whether a miner employed under a written contract of employment describing him as a casual employee and which specified that he would receive an hourly rate of pay including a loading in lieu of paid leave entitlements was a casual. The circumstances of the employment have some similarities with those of this case. The issue on the appeal concerned the application of s 227 of the Workplace Relations Act 1996 (Cth) (the WR Act), the counterpart of s 86 of the FW Act. Barker J referred to Doyle and Reed and said:

[33]    [T]he concept of a casual worker being involved in work which is discontinuous – intermittent or irregular – remains relevant and helpful in understanding the concept today …

[34]    I do not consider that [the observations by Moore J in Reed] should be read other than as general observations concerning the concept of casual employment. Certainly, they were not, in my view, intended to be observations about employment on a casual basis under any particular statutory or regulatory regime. They are a helpful commentary on what the early authorities, such as Doyle, have to say on the topic of what casual employment is under the general law today.

[35]    This in my view is confirmed by what the Full Federal Court said in [Hamzy], at [38]; namely, that “casual employee” embraces “an employee who works only on demand by the employer” and that “the essence of casualness is 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”.

…

[38]    To the extent that the parties by the Contract described their relationship as employer and “casual employee” it is well understood that the descriptions supplied by such an instrument will not override the true legal relationship that arises from a full consideration of the circumstances …

(Citations omitted and emphasis added)

432    At [41], Barker J held that it had been open to the Magistrate to attach “reduced significance” to the fact that the employment could be terminated on one hour’s notice. His Honour then continued:

[42]     In my view, all of the remaining named factors identified by the Federal Magistrate … point squarely to the employee not being in casual employment. While it is plainly relevant to have regard to the fact the Contract could be terminated on one hour’s notice, when one has regard to the Contract overall, it was open to the Federal Magistrate to find that Mr Williams was not a “casual employee” under the general law and therefore for the purposes of the WR Act. His engagement was not for the performance of work on an intermittent or irregular basis. The future was provided for. The nature of the work required of the employee was stipulated. A roster was in place which made clear the regularity of the employment. Travel arrangements were organised to facilitate it. All this suggests that this was an employment arrangement far beyond that of casual employment. That the Contract may be terminated on an hour’s notice may be said, as I consider it is, a countervailing relevant factor. In the event, [the] Federal Magistrate did not, on a proper reading of his judgment, consider this to be a determinative factor. It was open to him so to find …

(Emphasis added)

433    In Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456, I considered whether supermarket trolley collectors were casual employees for the purposes of s 185 of the WR Act, which required that “a casual employee” in defined circumstances be paid a casual loading which was at least equal to the “guaranteed casual loading percentage”. The contracts of employment were wholly informal so that their terms had to be inferred from their performance. Like the FW Act, the WR Act did not contain any definition of the term “casual employee” or its cognates. I held that it was reasonable to infer that, subject to some qualifications, the term was used with its meaning in the general law and continued:

[66]    Although casual employment is common, its precise definition has proved elusive. In its original conception, casual employees were those whose work was intermittent or irregular (Doyle v Sydney Steel Co Ltd (1936) 56 CLR 545 at 555) so that the employees did not know when completing one period of work if, or when, they would be employed again. Casual employees were generally thought to be engaged under a series of separate and distinct contracts with each contract terminating on the completion of the task or period for which they were engaged. Being generally paid by the hour, their employment could be terminated on an hour’s notice.

434    After referring to Doyle, Reed and Hamzy, I continued:

[71]    In addition to these features of casual employment, the authorities indicate that the characterisation of a worker’s employment as casual, or otherwise, is essentially a question of fact in which no single criterion is likely to be decisive. Instead, regard must be had to a number of matters, including the way in which the parties themselves regarded their relationship, any commitment by the employer or the worker to ongoing employment, the regularity or otherwise of the worker’s hours or days of work, how the worker was notified of each period of work, the payment of an hourly rate for the hours actually worked, any indication that the hourly rate was intended to encompass leave entitlements, the absence of payment of the benefits associated with employment of an indefinite nature such as paid annual leave, sick leave and public holidays, and whether the employer and worker were able to refuse to offer or accept, as the case may be, further work …

(Citations omitted and emphasis added)

435    In Ledger v Stay Upright Pty Ltd [2016] FCA 659, Buchanan J considered whether two employees were casual employees and so not entitled to paid annual leave pursuant to the Australian Fair Pay and Conditions Standard (AFPCS) made under the WR Act, an award made under the FW Act, the FW Act itself or the Annual Holidays Act.

436    Like the FW Act, none of the AFPCS, the WR Act or the Annual Holidays Act contained a definition of “casual employee”. Clause 10.4 of the award defined a casual employee as one “engaged and paid by the hour”.

437    As a preliminary to his conclusions, Buchanan J said:

[13]    Employment is a contractual relationship. The terms of the contract are established in accordance with the mutual intent of the parties at the outset, either expressly or by implication, although it may be possible in particular cases to draw inferences about the mutual intent of the parties at that time from their subsequent conduct.

[14]    It is apparent from the agreed statement of the parties’ positions that they each agreed that the nature of the engagement had not changed during the period of the engagement(s). The applicants contended that they were not ever casual employees; the respondent contended that the applicants were always casual. In the present case, at least, it is not necessary to come to grips with the possibility that the character of the engagement changed by mutual accord at some time after commencement. In that context, it is significant that the nature of the applicants’ engagements was stated at the outset to be “casual”. A feature of the pay arrangements supporting this characterisation, which applied throughout, is that payment was calculated hourly, corresponding to hours of work performed.

…

[17]    Permanent employment (whether full-time or part-time) is based on a regular periodic engagement (weekly at a minimum), generally with a corresponding period of notice (exceptions to this general position do not require discussion here). Casual employment, by contrast, is usually based on an hourly or daily engagement.

438    Buchanan J concluded as follows:

[62]    It is clear that [Moore J in Reed] accepted that the appropriate characterisation of the nature of employment is one which must be determined by reference to what is known at the commencement of the engagement …

…

[64]    Doing the best I can with the evidence before me I am not satisfied that either of the applicants was ever engaged otherwise than as a casual employee. This is a matter where they bore the onus, and they have not discharged it.

[65]    The things most in favour of their contentions of permanent employment are the length, general regularity and frequent weekly hours of their engagements. However, it is clear that the engagements were otherwise not fixed, not certain and were variable. Hours of work depended on agreed rosters and payment was based upon the submission of specific timesheets. Payments were earned, calculated and paid on an hourly basis. Both parties to the contracts conducted themselves on the footing that absences (for any reason) were not paid. The significance of that circumstance is that the absence was not treated as an absence from work. Leave was not required and could not be withheld.

(Emphasis added)

439    As is apparent, these reasons were not directed to the notion of a “firm advance commitment”. Instead, Buchanan J considered that it was the contractual arrangement which was the determinant. In that consideration, his Honour focussed on indicia such as the parties’ own description of the character of the employment, the manner in which the entitlement to wages occurred, the uncertainty and variability of the working hours and the fact that the absences from work were not paid. It also seems that Buchanan J thought it appropriate to have regard to at least some aspects of the parties’ post-contractual conduct.

440    In Fair Work Ombudsman v Hu (No 2) [2018] FCA 1034; (2018) 279 IR 162, the question was whether the respondent parties knew that employees of a labour hire firm engaged in mushroom picking were casual employees for the purposes of the FW Act. Rangiah J referred to the statement in Hamzy that “The essence of casualness is 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” and continued:

[224]    … I understand the Full Court to have used the word “essence” to indicate that these considerations were important, but not that they were necessarily determinative in and of themselves. In the present case, the employment agreements were for fixed periods, but the days and hours of work were not fixed and were dependent upon Marland Mushrooms’ labour requirements. This provides a strong indication that the employees were engaged as casual employees. In my opinion, the employees were casual employees.

441    As previously noted, the Full Court in Skene identified the “key indicators” of an absence of the requisite firm advance commitment as being “irregularity, uncertainty, unpredictability, intermittency and discontinuity in the pattern of work”, at [173], [182].

442    It is also well recognised that the terms of an employment relationship may change over time. That may be by express agreement or by nuanced accretions. But even in the latter case, one has to be able to identify a variation in the contractual terms, even if one cannot identify precisely when the variation occurred.

443    There are several statements in the authorities to the effect that the characterisation of employment as casual is a question of fact (Doyle per Starke J at 551, per McTiernan J at 565; Melrose Farm at [102] and [106]; South Jin at [71]). But these were cases in which the contract was informal and its terms to be inferred from the manner in which the work was performed pursuant to it. When the contract is more formal, attention must be given to the agreed terms: Ledger at [13], [62]-[65]; Connelly v Wells (1994) 55 IR 73 at 74.

444    The authorities reviewed above provide some support for the following propositions:

(a)    the postulated firm advance commitment may be lacking when the employment is intermittent or irregular (Doyle, Shugg, Reed, MacMahon, Skene), informal and unlikely to continue for any length of time (Reed) and other than regular and stable (Bernardino);

(b)    the postulated firm advance commitment may be absent if the employer can elect whether to offer employment on a particular day and if, when offered, the employee can elect whether or not to work (Reed, Melrose Farm);

(c)    the postulated firm advance commitment may be absent if the employee works only on demand or as required over a short period (Hamzy, MacMahon, Hu);

(d)    the description of the employment as being by the hour and agreement that the employment may be terminated on an hour’s notice are relevant but not conclusive considerations (Skene at [188]-[191]);

(e)    the description which the parties themselves give to their relationship is a relevant but not conclusive consideration (MacMahon, Skene);

(f)    the postulated firm advance commitment does not have to be express but may be discerned from the employment arrangement considered as a whole (Doyle, Shugg, MacMahon). This is particularly so when the employment contract is informal (South Jin) or not wholly in writing;

(g)    the statutory context may indicate that the existence of the firm advance commitment is to be determined by reference to the circumstances known at the time of the engagement (Reed, CPSU and Ledger) or by those circumstances and the manner of performance of the contract (Hamzy, MacMahon); and

(h)    account may have to be taken of changes in the employment relationship which occur after its commencement (Ledger, Skene at [178]).

445    The first three of these matters (and perhaps the fourth and fifth) seem to be in the nature of external indicia of the absence of the postulated commitment. That is to say, they are matters which may give rise to an inference that the commitment is lacking.

446    That suggests that the two-tiered structure of an employment contract, to which the authors of Freedland: The Personal Employment Contract, OUP 2003 refer at 91 in their quotation from the first edition provides a helpful framework of reference:

[T]he contract has a two-tiered structure. At the first level there is an exchange of work and remuneration … At the second level there is an exchange of mutual obligations for future performance. The second level – the promises to employ and be employed – provides the arrangement with its stability and its continuity as a contract. The promises to employ and to be employed may be of short duration, or may be terminable at short notice; but they still form an integral and most important part of the structure of the contract. They are the mutual undertakings to maintain the employment relationship in being which are inherent in any contract of employment properly so called.

(Citations omitted an emphasis in the original)

447    In the present context, it is the existence and nature of the underlying mutual undertakings in the second tier which are in question. The undertakings of that kind are commonly not express. They may be implicit in the contract or be inferred from other matters which are express. In an informal contract, they may, like any other term, be inferred from the parties’ conduct.

448    This counts against WorkPac’s submission that the firm advance commitment must be express. It may, however, suggest that the requisite commitment involves something more than an expectation.

The time for determination of the “firm advance commitment”

449    WorkPac submitted that three matters supported its contention that, in the absence of variation of the employment contract, the existence or otherwise of the firm advance commitment was to be ascertained at the time the contract was made, by reference only to the contractual terms, and without reference to post-contractual conduct:

(a)    the elements inherent in the expression “firm advance commitment”;

(b)    the manner in which the term “casual employee” is used in the FW Act; and

(c)    the legislative history of use of the term “casual employee”.

450    I will address these matters in turn.

The elements of a “firm advance commitment”

451    WorkPac subjected each element of the expression “firm advance commitment” to close analysis, submitting that that analysis supported its claim that the requisite commitment must be assessed by reference only to the terms of the contract and without reference to post-contractual conduct.

452    WorkPac noted that the online Oxford Dictionary of English defined “commitment” as (relevantly):

6.a. The action or an act of obligating or binding oneself or another to a particular course of action, policy, etc; the action of giving an undertaking, either explicitly or by implication. Also: an undertaking or pledge of this kind …

453    WorkPac submitted that a commitment of this kind cannot be found in a post-contractual course of conduct and that, in any event, the term “commitment” is of its nature forward-looking. The existence of such a commitment may shape the course of conduct but the latter cannot be a source of the former.

454    WorkPac emphasised that the term “firm” was suggestive of a binding commitment rather than something “indicative, tenuous or aspirational”. It submitted that the requirement that the commitment be given in “advance” pointed to the requirement for it to have existed at the commencement of the parties’ relationship, rather than being derived ex post facto.

455    I indicate now that, whatever be the merit of WorkPac’s submission otherwise, its submission on this topic is not persuasive. It was one of WorkPac’s submissions which tended to give the expression “firm advance commitment” the talismanic quality to which I referred earlier. On my understanding, it is preferable to understand Skene as stating a matter of general principle or approach rather than purporting to lay down some hard and fast rule for the identification of casual employment.

456    Further, and in any event, the submission assumes that s 86 of the FW Act and its cognates requires the assessment of whether the employee is a casual to be made by reference to the contract at the time of its original formation. One ought not approach the task of statutory construction of the term “casual employee” with that presupposition in mind as it is possible that s 86 and its cognates contemplate the assessment being made at the time the entitlement in question is asserted (for example, an entitlement to take annual leave), with account being taken of all of the circumstances of the employment which had occurred prior to that time. Further, one should not conflate the time when the existence or otherwise of the postulated firm advance commitment is to be ascertained with the time at which that commitment must exist.

Implications from the Fair Work Act

457    WorkPac noted that the term “casual employee” is used in a number of provisions in the FW Act. It submitted that the ways in which the term is used in those provisions demonstrates “a clear legislative intention” that casual employment should be assessed without reference to post-contractual conduct or to the way in which the employment happens to work out. In making this submission, WorkPac relied on two principles:

(i)    in the absence of a contrary intention, the same words used within a statute should be given a consistent meaning: Skene at [106]; Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at 618 (Mason J); Queensland v Forest [2008] FCAFC 96, (2008) 168 FCR 532 at [41] (Black CJ); and Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (the Laverton North and Cheltenham Premises Case) [2018] FCAFC 88, (2018) 262 FCR 473 at [3] (Allsop CJ); and

(ii)    when construing a statute, all words are to be given meaning and effect: Project Blue Sky at [71]; Saeed v Minister for Immigration and Citizenship [2010] HCA 23, (2010) 241 CLR 252 at [39].

458    The term “casual employee” is to be construed having regard to the context of the FW Act, considered as a whole: Project Blue Sky at [69]. A number of matters in that context are pertinent.

The different types of employment

459    The expression “employees, other than casual employees” used in s 86 and its cognates indicates that casual employees are a subset of employees generally. That makes it natural to enquire as to the nature of the employment in the wider class, to see whether that employment has a feature not shared by casual employment.

460    The FW Act recognises casual employment as one of several types of employment. This is evident in ss 114(4)(e) and 139(1)(b). The latter provides:

(1)    A modern award may include terms about any of the following matters:

  (a)    …

(b)    type of employment, such as full-time employment, casual employment, regular part-time employment and shift work, and the facilitation of flexible working arrangements, particularly for employees with family responsibilities;

…

461    None of these four types of employment (which are not said to be exhaustive) is defined, although the FW Act does specify, in effect, a norm of 38 hours as the maximum of ordinary time to be worked by an employee each week – see s 20(2) and s 62(1). This may imply that a full-time employee is one who is engaged for 38 hours or its equivalent and a part-time employee one who is employed for a lesser number of hours.

462    Some of these types of employment are mutually exclusive: for example an employee cannot simultaneously have both full-time and part-time employment with the one employer and, possibly, an employee cannot be in both casual and regular part-time employment simultaneously.

463    However, it cannot be said that all of the types of employment mentioned are mutually exclusive: an employee may be casual and yet work 38 hours in a week, and a shift worker may be full-time, part-time or casual. This limits the implications which can be drawn from the reference to the four types of employment.

464    Generally, the distinction between casual employment and other employments has not turned, at least solely, on the extent of the hours of work to be performed (whether full-time hours or less) or on whether those hours are to be performed in a shift arrangement. In Skene, the Full Bench at [171] and [172], equated the terms “full-time” and “part-time” with employment which is permanent, in the sense of ongoing, with full-time employees being those who work the ordinary full-time hours applicable at the particular workplace and part-time employees those who work some agreed number of lesser hours. That allowed the Full Court to conclude that “in their ordinary conceptions, casual employment and full-time employment are mutually exclusive categories of employment”, at [177].

465    Another (and not entirely different) view is that full-time employment is in substance the lineal descendant of weekly hire employment – see Re Metal at [10]. That may suggest that the FW Act uses the term “casual employee” to refer (in contrast) to that category of employee whose employment in former times was typically of an hourly or daily kind, being irregular and intermittent.

466    In any event, on either of these alternative understandings, the FW Act contemplates that casual employment is different from full-time and part-time employment.

Implications from purpose

467    Some implications as to the sense in which the FW Act uses the term “casual employee” can be drawn from the apparent purpose of the reference to that term in the various provisions in the FW Act in which it is used. The principal purpose is to indicate that particular employees (casual employees) do not have the benefit of entitlements for which the FW Act provides, or are to have those entitlements only if other elements are present in the employment.

468    Sections 67(1), 86, 95, 106 and 111 are examples of the first kind of provision. In those sections, the expressions “other than a casual employee”, “other than casual employees” and “not a casual employee” are used to indicate that the employee does not have the NES entitlements to parental leave, annual leave, PC leave, paid compassionate leave and jury service leave respectively. Another example is s 116 which indicates that a casual employee who is not rostered to work on a public holiday is not entitled to be paid for that day. See also s 123 which excludes casual employees from the NES provisions concerning notice of termination of employment and redundancy pay.

469    There are three provisions which have the effect that casual employees have the entitlements for which the FW Act provides only if other elements are present: s 65(2)(b), s 67(2)(b) and s 384.

470    Section 65(2)(b) specifies that a casual employee may make a request for the flexible working arrangements for which s 65 provides when that is otherwise permissible only if he or she is a “long term casual employee” of the employer concerned before making the request and, further, if the employee has a reasonable expectation of continuing employment by the employer on “a regular and systematic basis”. The term “long term casual employee” is defined in s 12 of the FW Act:

a national system employee of a national system employer is a long term casual employee at a particular time if, at that time:

(a)    the employee is a casual employee; and

(b)    the employee has been employed by the employer on a regular and systematic basis for a sequence of periods of employment during a period of at least 12 months.

471    Section 67(2) is a provision of a like kind with respect to the entitlement to parental leave.

472    Section 384 is in the suite of provisions providing protection to employees against unfair dismissal. Employees have that protection only if they have completed a minimum period of employment (s 382), which is 12 months if the employer is a “small business employer” (defined in s 23) but is otherwise six months. Section 384(2) provides that a period of service as a casual employee does not count towards the employee’s period of employment unless:

(i)    the employment as a casual employee was on a regular and systematic basis; and

(ii)    during the period of service as a casual employee, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis.

473    Section 23 is analogous to this group of provisions because it indicates that, in the calculation of the number of employees for the purpose of determining whether a national system employer is a “small business employer”, a casual employee is not to be counted unless, at the relevant time, he or she has been employed by the employer “on a regular and systematic basis”.

474    There are two other provisions which may be mentioned in this context. Division 2 of Pt 3-6 and Div 3 of Pt 6-4 impose obligations on employers terminating the employment of 15 or more employees for reasons of an economic, technological, structural or similar kind. However, in each case, the obligations are expressed not to apply in respect of “a casual employee” – see s 534(1)(c) and s 789(1)(c).

475    It is appropriate to mention another group of provisions, even though the term “casual employees” is used only once in those provisions. They are the provisions in Pt 2-6 of the FW Act concerning minimum wages. The FWC must establish and maintain a safety net of fair minimum wages including setting, varying or revoking “modern award minimum wages” (s 284(2)) and by making a “national minimum wage order” (s 285(2)). This includes provision for a “casual loading” (ss 284(3), 287(2), 294(2) and 295(1)). The payment of loadings to casuals is well established. Section 295(1)(b) provides that the casual loading for award/agreement free employees must be expressed as a percentage.

476    The FW Act seems to contemplate that provision for casual loadings will be made in any applicable modern award or enterprise agreement.

477    The payment of the casual loading is accordingly an addition to the amount otherwise determined to be appropriate for the performance of the work in question in ordinary time. The inference is that the FW Act intends the loading to be compensation for recognised disabilities associated with casual work (sometimes referred to as the uncertainty or the itineracy of the work) or as compensation for detriments suffered by casual employees (for example, the absence of entitlements to paid leave) – see Macken’s Law of Employment, 8th Edition, Lawbook Co. 2016 at [2.90]; Re Metal at [134], [143], [148]-[155], [158]; and Request from the Minister for Employment and Workplace Relations – 28 March 2008 [2008] AIRCFB 1000, (2008) 177 IR 364 at [49]-[50].

478    The exclusion of casual employees from the benefit of the NES concerning forms of paid leave suggests recognition in the FW Act that the entitlement to those forms of leave is inappropriate having regard to the nature of their employment. That is, that the nature of their employment makes it inappropriate for them to have the entitlement to the minimum period of rest and recreation or the minimum period of PC leave established by the NES for all national system employees, despite the underlying rationale for the provision of leave of those kinds. Likewise, that the nature of their employment makes it inappropriate for casuals to have the minimum period of notice of termination of employment or redundancy entitlements for which the FW Act provides.

479    The FW Act does not contain any express statement of the rationale for these exclusions. However, an obvious rationale is that the FW Act contemplates that the very nature of the casual employment to which it refers makes these benefits unnecessary or inappropriate. For example, the intermittent, irregular, or short term nature of casual employment makes the provision of the paid forms of leave inappropriate. An analysis of this kind was adopted in Reed at 424-5 and in Skene at [164]-[168]. Another possible rationale may be that the FW Act considers it unnecessary to provide for casuals to have entitlements to these forms of paid absences from work because, not being bound to provide their services, casual employees are free to work or not, as they choose.

480    A possible third rationale can be put aside. That is that the FW Act contemplated that the NES entitlements may be taken either as leave or in money and that, in the case of casuals, they should be taken in money. For the reasons given earlier, that is inconsistent with the nature of the NES. They provide entitlements to paid leave, not to paid leave or cash equivalent as the employment parties agree (although, as noted, some limited cashing out of entitlements is permitted). Moreover, the casual loading is in the nature of a compensation for an absence of entitlement, not a payment in lieu of taking the entitlement.

481    To my mind, an analysis of the apparent purpose of the exclusion of casual employees from the NES entitlements supports the view that the FW Act contemplates that employment of that kind is irregular, intermittent or uncertain.

The prescriptive nature of the provisions

482    The provisions in the FW Act to which I have referred are prescriptive in nature. They impose obligations on employers which, if contravened, may lead to the imposition of civil penalties.

483    It is in the nature of a prescriptive provision that employers should know, at the time when compliance is required, what is required of them. In the case of annual leave, an employer should know at the time when the request for leave is made whether it is obliged to provide paid leave of the requested kind. Likewise, employees should know at the same time whether or not they have the claimed entitlement. Employers should also know whether the casual loading is payable. They should know that at the time the payment is required.

484    There may be an extent to which uncertainty about these matters is unavoidable, just as at is when the question is whether the contractual arrangement is one of service or for service. But it is reasonable to suppose that it is a legislative intention of the FW Act that it can be applied by employers and employees in a practical way and, so far as possible, without necessitating a nuanced evaluation of the circumstances of the employment arrangement. That supports the view that the determination of the status of the employee should (subject to the possibility of later variation) be made at the time of the commencement of the employment, because the time for payment will occur soon thereafter.

Implications from the “distinct and cumulative requirements”

485    WorkPac submitted that the term “casual employee” is used in three different ways in the FW Act with distinct and cumulative requirements, with the consequence that implications as to the meaning of the term can be drawn from these usages.

486    First, “casual employee” appears as a freestanding term without any additional description or qualification. Examples are s 86, 95 and 106 with which this case is concerned.

487    Secondly, the term “casual employee” is used in the larger expression “a casual employee … employed by the employer on a regular and systematic basis” in the definition of “small business employer” in s 23 of the FW Act.

488    Thirdly, the term “casual employee” is used in the provisions which exclude service as a casual employee from the calculation of an employee’s period of service for certain purposes unless “the employment as a casual employee was on a regular and systematic basis” and “during the period of service as a casual employee the employee has a reasonable expectation of continuing employment by the employer on a regular and systematic basis” – see ss 65(2), 67(2) and 384 referred to above.

489    WorkPac’s submissions in short was that the FW Act draws a distinction between:

(i)    a casual employee;

(ii)    a casual employee employed on a “regular and systematic basis”; and

(iii)    a casual employee who has been employed on a regular and systematic basis and who has a reasonable expectation of continuing employment on a regular and systematic basis.

490    WorkPac submitted that the use of these three expressions with “distinct and cumulative requirements” indicates three matters:

(a)    the fact that a person has been employed on a regular and systematic basis and has a reasonable expectation that he or she will continue to be so employed cannot indicate that the person is not a casual. That is because ss 65(2), 67(2) and 384(2) depend on each of the three elements being present;

(d)    conflating the determination of the elements (ii) and/or (iii) with the inquiry to which element (i) is directed would deprive the latter of independent significance; and

(e)    this being so, the FW Act evinces a legislative intention that the question of whether a person is a “casual employee” should be answered by reference to considerations other than whether the person has been employed on a regular and systematic basis and whether the person has a reasonable expectation of continuing to be so employed, that is, without reference to the post-contractual performance of the contract.

491    In support of the third of these propositions, WorkPac noted that the assessment of whether the person has been employed on a regular and systematic basis is necessarily retrospective. This indicated strongly, it submitted, that a retrospective assessment could have “no determinative significance” in the assessment of the antecedent question of whether a person was a casual.

492    WorkPac submitted further that the notion of a reasonable expectation of continuing employment on a regular and systematic basis stands in contrast with the notion of a “firm advance commitment”. This meant, it contended, that there is an implicit distinction in the FW Act between a firm advance commitment in the terms of the employment contract and the possibility of there being post-contractual conduct from which an employee may derive a “reasonable expectation” of continued employment.

493    WorkPac’s submission, in summary, was that the use of the expression “casual employee” in the various provisions of the FW Act indicates an intention that the post-contractual conduct of the parties cannot be “an essential or decisive factor” in determining whether or not a person is a “casual employee” for the purposes of the FW Act.

494    It is appropriate to note again the confined purpose for which WorkPac referred to the provisions in the FW Act. It was not for the purpose of distinguishing casual employees from other employees. WorkPac made the references to support its contention that a person’s status as a casual employee is to be determined by reference to the contract of employment, at the time the person is employed, and without reference to post-contractual conduct.

495    Part of WorkPac’s submission may be accepted. The fact that the FW Act contemplates that there may be some casuals whose employment is regular and systematic and who have a reasonable expectation of continuity of employment involves necessarily it contemplating that there will be some casuals whose employment does not have those attributes. Further, ss 65(2), 67(2) and 384 indicate that, in the circumstances for which they provide, it is appropriate to have regard to post-contractual conduct.

496    However, it is difficult to see that the provisions in the FW Act concerning the use of post-contractual performance of an employment contract for the purposes of indicating the entitlement of a casual employee to a particular benefit can imply anything about the time at which the status of the employee as a casual is to be determined or about the means by which that characterisation is to be undertaken. The fact that the manner of post-contractual performance is made relevant in one respect cannot imply that no reference to post-contractual performance can be made for any other purpose, let alone that references to all kinds of post-contractual performance are excluded. It can be inferred that the FW Act does not contemplate that the particular forms of post-contractual performance to which ss 65(2), 67(2) and 384 refer will entitle a casual employee to other entitlements in the NES. But that does not mean that those circumstances, when they exist, are necessarily irrelevant to the determination of whether a person is a casual and can indicate anything about the means by which that determination is to be undertaken. WorkPac’s submissions did not indicate how that could be so.

Legislative history

497    It is necessary first to set out the legislative history to which WorkPac referred.

498    The first use of the term “casual employee” or an equivalent in federal industrial legislation occurred in 1993 when, by the Industrial Relations Reform Act 1993 (Cth) (the 1993 Amendment), Pt VIA was inserted into the IR Act. The purpose of Div 3 in Pt IVA was to give effect to Australia’s obligations under the TE Convention and to Recommendation No 166 of the General Conference of the International Labour Organisation, being the Recommendation Concerning Termination of Employment at the Initiative of the Employer (the Recommendation). The TE Convention and the Recommendation were incorporated as Schs 10 and 11 respectively to the IR Act – see s 170CA(1). Amongst other things, the new Pt VIA imposed requirements for a termination of employment to be lawful (including the provision of minimum periods of notice and forms of procedural fairness) and provided remedies and sanctions for those terminations which were not lawfully carried out.

499    Schedule 14, inserted into the IR Act at the same time with respect to parental leave, contained the term “casual or seasonal employee”.

500    When first enacted, s 170CC authorised regulations to exclude certain employments from the operation of particular provisions in Div 3, but only if this was permitted by Art 2(2) of the TE Convention. Section 170CC was amended by the Industrial Relations Amendment Act (No. 2) 1994 (Cth) but that amendment is not material for present purposes. Section 170CB provided that an expression in Div 3 had the same meaning as in the TE Convention.

501    Article 2 of the TE Convention permitted member nations to exclude from the provisions of the Convention workers in three categories, including “workers engaged on a casual basis for a short period”.

502    Regulation 30B of the IR Regulations gave effect to the exclusion permitted by s 170CC. Regulation 30B was repealed and replaced by the Workplace Relations Regulations (Amendment), No. 307 of Statutory Rules in 1996 but still excluded “a casual employee engaged for a short period, within the meaning of subregulation (3)”.

503    Regulation 30B(3) provided:

(3)    For the purposes of the paragraph (1)(d), a casual employee is taken to be engaged for a short period unless:

(a)    the employee is engaged by a particular employer on a regular and systematic basis for a sequence of periods of employment during a period of at least 6 months; and

(b)    the employee has, or but for a decision by the employer to terminate the employee’s employment, would have had, a reasonable expectation of continuing employment by the employer.

504    As noted earlier, the issue in Reed was whether the provisions in Pt IVA Div 3 applied to Mr Reed’s employment. That turned on whether he was a casual employee for the purposes of reg 30B(1)(d). The issue in Hamzy concerned the validity of reg 30B(3) in the WR Regulations and, as noted, it was declared invalid.

505    WorkPac submitted the construction of reg 30B in the IR Regulations by Moore J in Reed was “consistent” with its analysis of the provisions in the FW Act. One may accept that that is so but it is appropriate to note two matters. First, Moore J emphasised that the expression in Art 2(2) of the Convention was “engaged on a casual basis for a short period” and not just “casual”. Secondly, Moore J considered that the TE Convention intended that it be employment which was “known to the parties at the time of engagement to be informal, irregular and uncertain and not likely to continue for any length of time” which should be regarded as casual. That is to say, his Honour contemplated that it was employment which was known by the parties to have those particular characteristics at the time of the commencement of the employment which should be regarded as casual.

506    As I understood it, the submission of WorkPac did not seek to rely upon any aspect of the reasoning of the Full Court in Hamzy with respect to the time at which the characterisation of employment is casual or otherwise. It is understandable that it did not, because the Full Court in Hamzy expressed the view that the relevant time for consideration of whether a person was “a casual employee engaged for a short period” was the time of the person’s termination of employment, at [39]-[41]. WorkPac sought to distinguish this part of Hamzy by repeating the submission that the formulation in Hamzy of the “essence of casualness” was in terms which focused attention on the terms of the contract of employment.

507    In my view, WorkPac’s reliance on this part of the legislative history does not lend any assistance to the resolution of the issues presently before the Court. The terminology used in s 170CC and in reg 30B differs from that now under consideration. As the decision in CPSU indicates, differences of that kind may be critical.

508    WorkPac also referred to the subsequent legislative history concerning the predecessors of provisions in the NES. However, there did not seem to be any part of that history which is of assistance presently. The submissions of WorkPac did not indicate how that could be so. At best, I would regard the matters to which WorkPac referred as being neutral in character. It is accordingly unnecessary to refer to the statutory provisions.

Summary of position

509    In my opinion, none of the matters to which WorkPac referred point decisively to the time at which the postulated firm advance commitment is to be assessed for the purpose of provisions such as s 86. However, to my mind, two matters are significant.

510    The first is the prescriptive nature of the provisions with the implication that the FW Act contemplates that the parties will know of their obligations at the time of the commencement of the employment.

511    The second is the general approach of the common law stated by Gleeson CJ in Connelly v Wells at 74:

Where the relationship between two persons is founded in contract, the character of the relationship depends upon the meaning and effect of the contract. In the absence of a suggestion that a contract was varied after it was originally made, its meaning and effect must be determined as at the time it was entered into. If the contract is in writing, then the court which is considering the nature of the relationship between the parties is directed to an examination of the terms of the written agreement in the light of the circumstances surrounding its making.

(Citation omitted)

512    In my view, it is reasonable to suppose that the FW Act was enacted with knowledge of the common law position stated in this passage. It cannot be said that the FW Act evinces an intention to modify that common law position. Accordingly, I would accept that the existence or otherwise of the postulated firm advance commitment is, subject to the possibility of later variation, to be assessed at the time of the commencement of Mr Rossato’s employment. As will be seen, this requires consideration of the position at the time of commencement of each of the six contracts under which he was employed.

The approach to contract construction and the parol evidence rule

513    WorkPac submitted that Mr Rossato’s employment contracts were wholly in writing. Mr Rossato, the CFMMEU and Mr Petersen contested that proposition. The subject matters which they identified as not being addressed in the written contracts included:

(a)    a specification of the hours of work;

(b)    the pattern of work;

(c)    workplace safety; and

(d)    the provision of personal protective equipment (PPE).

514    More generally, Mr Rossato and these two Interveners contended that the Court could, in accordance with Skene at [180]-[182], have regard to evidence concerning the way in which the employment contracts had in fact been performed with a view to ascertaining the existence of the postulated commitment and the regularity and predictability of the work.

515    As to the hours and pattern of work, I will refer to shortly to provisions in the written documents which do address those topics. It is not altogether helpful to divert to an examination of whether the written terms on those topics are a complete statement of the parties’ agreement. Nor is it necessary to consider the provisions in the written documents concerning workplace safety and the provision of PPE. It was not suggested that the terms concerning those matters could bear in a meaningful way on the existence of the postulated firm advance commitment.

516    The real contest between the parties concerned the evidence of the way in which Mr Rossato’s employment had worked out in practice. In this respect, Mr Rossato, the CFMMEU and Mr Petersen relied on Skene at [180] in which the Full Court held that, in the determination of the postulated firm advance commitment, regard could be had to the actual way in which the work was carried out, that is, to post-contractual performance.

517    WorkPac, on the other hand, contended that, as Mr Rossato’s employment contracts had been wholly in writing, the parol evidence rule precluded reference to extrinsic evidence of this kind, that Skene was wrong on this point, and that it should not be followed by this Court.

518    For the reasons which follow, I do not consider it necessary for the Court presently to address all these matters.

519    The approach to the construction of Mr Rossato’s contracts which WorkPac urged on the Court was, in effect, that which applies in the construction of commercial contracts. That approach has been stated in a number of cases, including Pacific Carriers Ltd v BNP Paribas [2004] HCA 35, (2004) 218 CLR 451; Toll; Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7, (2014) 251 CLR 640 and, more recently, in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104. The propositions stated by the plurality (French CJ, Nettle and Gordon JJ) in Mount Bruce Mining include:

(a)    the rights and liabilities of parties under the contract are to be determined objectively by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose, at [46];

(b)    when determining the meaning of contractual terms, the question is what a reasonable business person would have understood them to mean. That inquiry requires consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract, at [47];

(c)    if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning, at [48];

(d)    however, recourse to events, circumstances and things external to the contract may be necessary to identify the commercial purpose or objects of the contract when that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”, at [49];

(e)    each of the events, circumstances and things external to the contract to which recourse may be had is objective, being matters known to the parties or which assist in identifying the purpose or object of the transaction, at [50];

(f)    evidence of the parties’ statements and actions reflecting their actual intentions and expectations are inadmissible, at [50]; and

(g)    unless a contrary intention is indicated in the contract, a court is entitled to approach the task of construction on the assumption that the parties intended to produce a commercial result, at [51].

520    The plurality also stated expressly that these propositions were not intended to state any departure from the law as set out in Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337 and Electricity Generation, at [52].

521    In the oft-quoted passage in Codelfa, Mason J said at 352:

The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties …

…

[W]hen the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectation of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to parties’ presumed intention in this setting.

522    In Electricity Generation, the majority (French CJ, Hayne, Crennan and Kiefel JJ) said at [35]:

... The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean … As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating” … [U]nless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption “that the parties … intended to produce a commercial result”. A commercial contract is to be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.

(Citations omitted)

523    The resolution of this case does not require consideration of the debate concerning the “ambiguity threshold”.

524    Relevantly for present purposes, the authorities indicate that when contractual terms are ambiguous or susceptible to more than one meaning, regard may be had to evidence of the circumstances surrounding the making of the contract. Regard may also be had to the commercial purpose or objects of the contract. However, in either case, the matters to which regard may be had are those known to the parties at the time the contract was formed.

525    Ambiguity may often be found in a contract. In OneSteel Manufacturing Pty Ltd v Blue Scope Steel (AIS) Pty Ltd [2013] NSWCA 27; (2013) 85 NSWLR 1 at [61], Allsop P referred to the “pervasive reality” that a contract will often have potentially more than one meaning, “that words are inherently contextual in their meaning and that reasonable minds often differ about what is the true meaning”.

526    At the very least in the present case there is uncertainty about the nature of the commitment to the future employment in each contract which makes it appropriate to have regard to the factual matrix in which each contract was made. Both parties made reference to aspects of the factual matrix.

527    In Codelfa, Mason J described the broad purpose of the parol evidence rule as being to exclude extrinsic evidence including direct statements of intention (except in cases of latent ambiguity) and antecedent negotiations to subtract from, add to, vary or contradict the language of the written instrument, at 347. However, his Honour specifically excepted from the exclusion evidence of surrounding circumstances at the time of the formation of the contract: ibid. The parol evidence rule operates to exclude evidence of pre-contractual negotiations and of the parties’ subjective intentions, but it does not exclude evidence of the circumstances surrounding the making of the contract (the factual matrix) for the purposes identified above.

528    The subsequent conduct of the parties to a contract is not admissible as an aid in the construction of the contract, at least when it is wholly in writing: Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 at [35] (Gummow, Hayne and Kiefel JJ). Whether that is a freestanding rule or an aspect of the parol evidence rule need not be addressed presently. The exclusionary rule operates only to preclude evidence of subsequent conduct as an aid to the interpretation of the contract. It does not operate to preclude a party from adducing evidence directed to the identification of the terms of the contract: Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234 at [114]; Qube Ports Pty Ltd v Maritime Union of Australia [2018] FCAFC 72 at [85], and see the authorities cited therein.

529    In the view which I take of the matter, it is not necessary to review in more detail the principles bearing upon the application of the parol evidence rule and the use of post-contractual conduct. That is because, for the reasons which follow, I consider that, even on the approach most favourable to WorkPac, its claim that Mr Rossato was a casual throughout his employment must fail.

Construing the employment contracts

530    WorkPac contended that it had employed Mr Rossato in six discrete periods of employment and that, in each period, Mr Rossato had been engaged under a separate contract. Although it was not entirely clear, Mr Rossato’s submissions seemed to dispute that he had been engaged under six separate contracts.

531    In the circumstances described above, there is little difficulty in concluding that Mr Rossato was employed under six separate contracts. Each of the NOCEs constituted a separate offer and it was not in contest that Mr Rossato had by his conduct accepted each of those offers. The finding that there were six separate contracts does not of course conclude the question of whether there was one continuous period of employment.

532    It was not apparent at the trial that much turned on whether Mr Rossato had had one continuous period of employment, or six consecutive periods of employment. Subject to the matter to be mentioned shortly, the former, on one view, seems more likely because, as noted earlier, Mr Rossato’s employment was, with very few interruptions, continuous. Moreover, while there is the potential for it to be understood that Mr Rossato had one period of employment at Collinsville, followed by a period at Newlands, followed by another period at Collinsville, an analysis to that effect does not seem appropriate in respect of the contract pursuant to the Third NOCE or in respect of the contracts pursuant to the Fifth and Sixth NOCEs. The principal effect of the Third NOCE was to reduce Mr Rossato’s hourly rate. The Fifth and Sixth NOCEs changed the rate and, in the case of the Sixth, the position in which Mr Rossato was employed at Collinsville.

533    However, cl 5.1 of the General Conditions, provided expressly that employment with WorkPac was on an assignment by assignment basis “with each assignment representing a discrete period of employment …”. Each of the NOCEs referred to the employment being offered as an “assignment”.

534    Having regard to those provisions, it should be concluded that Mr Rossato had six periods of employment although, as I have said, the significance of that finding to the issues in the trial was not immediately apparent.

535    I note, again, that it was common ground that the General Conditions formed part of Mr Rossato’s employment contract.

The first contract

536    By the First NOCE, Mr Rossato was informed of his “assignment” with Glencore at Collinsville. The term “assignment” is used throughout the First NOCE, in identifying the entity for whom Mr Rossato was to perform work, the address of that entity, the duration of his work, the safety equipment which was required, and so on. Mr Rossato was given an identified commencement time (6 am on 28 July 2014) and was told that his daily working hours would be “06:00-17:00”. This was qualified by the statement that the daily working hours may vary. WorkPac indicated that Glencore could require different hours from those stated. It indicated, however, that hours in excess of certain spreads would not be recognised and paid by it. Mr Rossato was told that he would work on an alternating shift structure and that he was entitled to a paid meal break. The First NOCE informed Mr Rossato that timesheets had to be submitted and that he could expect delays in the payment of his wages if that did not occur in a timely way.

537    The only express references in the First NOCE to the employment being casual were in its subject line, in the header to each page and in the explanation of the composition of the flat hourly rate. As already seen, that explanation did not indicate whether the casual loading was 20%, 25%, or for that matter any other figure. Instead, Mr Rossato was referred to the “appropriate Agreement” contained in the Schedule 1 list to identify the appropriate percentage. As previously noted, by a process of elimination, Mr Rossato could have discerned that the 2012 EA was the applicable agreement in his case.

538    WorkPac’s submissions emphasised the following:

(a)    the nominated daily working hours of “06:00-17:00” were stated to be a “guide” and capable of variation;

(b)    the length of the “assignment” at the Collinsville Mine of Glencore offered to Mr Rossato was uncertain as the stipulated six months was described as a “guide only” which could vary and, further, cl 5.6 of the General Conditions provided that either WorkPac or Glencore (but not Mr Rossato) could vary the “assignment period” by giving notice of one hour;

(c)    Mr Rossato’s ability to accept or reject any offer of an assignment (General Conditions, cl 5.3);

(d)    WorkPac was under no obligation to offer any other assignments upon completion of an assignment (General Conditions, cl 5.5);

(e)    clause 5.1 of the General Conditions and the First NOCE itself indicated that the employment was on an hourly basis and cl 5.12 indicated that the assignment could be terminated at any time by the giving of one hour’s notice; and

(f)    the payment of a casual loading is distinctive of casual employment.

539    The CFMMEU submitted that there was an inconsistency in the First NOCE between the statement that Mr Rossato’s daily working hours would be “06:00 to 17:00” and the stipulation that he would be working alternating shifts. That was especially so, it submitted, in the circumstance that the roster accompanying the First NOCE indicated alternating day and night shifts. The CFMMEU referred to this as one matter indicating that the First NOCE and the General Conditions did not contain all of the terms of Mr Rossato’s contract. I agree that there is prima facie an inconsistency of the kind to which the CFMMEU referred. However, I am disinclined to attach significance to it given that cl 7.4 of the General Conditions contemplated that Mr Rossato may be required to work “replacement shifts or rosters”.

540    A number of matters in the factual matrix seem pertinent to the construction of the first employment contract.

541    The first is that both WorkPac and Mr Rossato can be taken to have been aware of the manner in which mining was undertaken at Collinsville. In WorkPac’s case, that was obviously so. In Mr Rossato’s case, it is probable that he had that knowledge derived from his previous experience, which included working for another contractor at Collinsville itself and from his employment for approximately five years with Macmahon Mining at the Eaglefield Opencut Coal Mine in the Bowen Basin. This means that each can be taken to have known that the mining was undertaken by production workers such as Mr Rossato working in established shifts.

542    Secondly, and in any event, WorkPac provided the Collinsville roster to Mr Rossato with the First NOCE. I will refer shortly to the significance of that provision. For present purposes, even if one accepts WorkPac’s contention that the roster provided with the First NOCE did not form part of the contractual terms, it did form part of the factual matrix in which the contract was made. It indicated a mutual understanding that the employment offered was organised, structured, ongoing, regular and predictable.

543    Thirdly, both parties were aware at the time the first contract was made of the relative remoteness of the Collinsville Mine. It was an agreed fact that Mr Rossato lived “over an hour” away from the Mine. Both parties contemplated that he would be “Drive In – Drive Out” and would reside in the accommodation provided by Glencore during each swing of shifts. That arrangement seems inconsistent with an expectation of the employment being intermittent or discontinuous and, further, with Mr Rossato having a choice as to whether to work on a particular day. It is just not to be expected that either Glencore or WorkPac contemplated that Mr Rossato would be provided with accommodation free of charge and yet could choose whether or not to work. Likewise, it is improbable that Glencore or WorkPac contemplated providing free accommodation on the basis that, having the employees on site, Glencore would elect whether or not to offer work on a particular day. In my opinion, the accommodation arrangements were indicative of the commitment to regular work and, in turn, to indefinite employment.

544    WorkPac submitted that part of the factual matrix in which Mr Rossato’s contract is to be construed is that neither it nor Mr Rossato knew the period for which Mr Rossato would be required by Glencore. It submitted that that was a matter which was entirely within Glencore’s control. That meant, WorkPac submitted, that it had not been able to make any commitment to Mr Rossato as to the duration of his employment and, accordingly, that it was natural for both parties to have understood that it was not doing so.

545    Although WorkPac had the onus of proof, it adduced very little evidence concerning its contractual relationship with Glencore. The Statement of Agreed Facts indicated only that it received requests, described as “job orders”, from a client such as Glencore for it to provide the services of a specific number of workers in accordance with the client’s requirements. WorkPac submitted that the Court should infer from the absence of evidence on the topic that it had no control over the period for which workers would be required. I do not accept that submission. Contrary to WorkPac’s submission, an absence of evidence concerning its capacity to influence the period for which Mr Rossato’s labour may be required does not indicate that WorkPac had not made some arrangement with Glencore on that topic. An absence of evidence is not equivalent to evidence of absence: Risk v Northern Territory of Australia [2006] FCA 404 at [340]; Agricultural Land Management Ltd v Jackson (No 2) [2014] WASC 102, (2014) 285 FLR 121 at [137]; Australian Securities and Investments Commission v Cassimatis (No 8) [2016] FCA 1023, (2016) 336 ALR 209 at [702]. The terms of the WorkPac contract with Glencore were no doubt a matter of commercial negotiation. For all that the Court knows, WorkPac and Glencore did take into account in that negotiation the time WorkPac needed to conclude the arrangements with its employees when Glencore’s requirements reduced or ceased. Contrary to WorkPac’s submission, the Court should not conclude that peremptory termination of labour hire contracts in circumstances like the present is inherent in the nature of those contracts. Counsel for WorkPac ultimately acknowledged that it may have been open to WorkPac to have obtained a commitment from Glencore as to the number employees required pursuant to the labour hire arrangement and the period for which they were required.

546    Further, and in any event, there is no evidence at all that Mr Rossato had any knowledge of WorkPac’s particular arrangements with Glencore and it seems implausible that he would have.

547    However, it is reasonable to infer that both parties knew that Mr Rossato’s services would be required by WorkPac only for as long as Glencore sought the supply of that labour. But that says nothing about the notice Glencore would give Workpac concerning a change or cessation of requirements. Nor is it inconsistent with the existence of the postulated firm advance commitment in Mr Rossato’s employment contract. On the contrary, it supports the view that both parties contemplated that Mr Rossato’s employment would continue indefinitely, subject only to its termination in the event that Glencore no longer had need for his services. That is a commonplace circumstance in employment contracts.

548    There is much to indicate that the arrangement on which WorkPac and Mr Rossato agreed was, in substance, one of employment which was to continue indefinitely. They described it as “an assignment”, a word which by itself conveys connotations of continuity. They also agreed that the assignment should not be of a fixed length but would be of the order of six months. Clause 5.11 of the General Conditions provided that both “Casual and Maximum Term employees will serve a 6 month minimum qualifying period”. Neither the General Conditions nor any of the NOCEs specified the matter for which the employees would qualify at the end of the six month period, but that is not material presently. It is the contemplation of continuing employment of that length which is pertinent. Clause 6.15 served to emphasise the commitment WorkPac expected of Mr Rossato because it requested him to work exclusively for it so long as the assignments subsisted. Clauses 7.1 and 7.14 permitted WorkPac to stand down Mr Rossato if he could not be gainfully employed for reasons beyond its control.

549    It is the case that the First NOCE told Mr Rossato that the daily working hours may vary and that the stated hours were a guide only. However, in the factual matrix known to both WorkPac and Mr Rossato at the time, these words did not convey that the hours may vary from day to day or that Mr Rossato would work only as required. Instead the words conveyed that the daily working hours may involve a different spread than 6 am to 5 pm. In particular, the words “any significant changes notify WorkPac” conveyed a mutual understanding that it was open to Glencore to require a different spread of hours and that, if it did, Mr Rossato was obliged to work them. The provision that hours worked in excess of 12 in a shift, or shifts which exceeded 13 continuous shifts, or which involved rest periods of less than 10 hours between shifts, would not be paid tended to confirm the expected continuity of work.

550    The circumstance that there was some uncertainty about the overall duration of the assignment does not seem material. On any view, WorkPac conveyed to Mr Rossato that the assignment was for an extended period of time (and offered him employment on that basis). The offer to Mr Rossato in this respect seems indistinguishable from the circumstances of many contracts of employment of the ordinary kind in which the parties agree expressly or tacitly that the employment will continue indefinitely, subject to rights of termination.

551    Likewise, the fact that the assignment could be varied or terminated on one hour’s notice (General Conditions, cll 5.6 and 5.12) is not inconsistent with a firm advance commitment of the postulated kind. All that it indicates is that the employment could be varied or terminated on notice. Termination on notice is an incident of all employments of an indefinite nature. Even in those cases, the employment can be terminated without notice, provided that payment in lieu of notice is made. The shortness of the notice required does not of itself point to an absence of the postulated firm advance commitment.

552    In this respect, some of WorkPac’s submissions seemed to conflate the notion of the commitment with the means by which the commitment may be brought to an end. They are conceptually different. The commitment which WorkPac and Mr Rossato had given to each other concerning the continuity of the employment is a distinct matter from the agreement which they reached concerning the way in which their respective commitments could be concluded.

553    Although it does not add much to the point now being made, I note that WorkPac was bound to pay a minimum of four hours pay when the assignment was varied or interrupted – see General Conditions, cl 7.6.

554    Mr Rossato’s ability to accept or reject any offer of an assignment was immaterial given the agreement that each assignment represented a discrete period of employment. The fact that Mr Rossato may have chosen not to accept a particular assignment says nothing about the nature of the assignments which he did accept.

555    Likewise, the fact that WorkPac was under no obligation to offer any other assignment, that is, new employment, on the completion of one assignment is immaterial. The assignments were for an extended period, not for a single day.

556    The circumstance that the first contract provided for Mr Rossato’s employment to be an hourly rate tends to lose any significance which it may otherwise have had because the 2012 EA provided for the wages of all employees, whether permanent or casual, to be calculated by reference to an hourly rate.

557    With respect to the commitment given by Mr Rossato, WorkPac’s submissions overlooked, or failed to give significance to, cll 5.4 and 7.4 in the General Conditions:

5.4    The employee agrees to complete an assignment once the employee has accepted it. Should the employee elect not to complete the assignment for whatever reason, WorkPac reserves the right to recover any costs incurred relating to the employee’s assignment.

…

7.4    Shift work

The employee will be required to work shifts and or rosters as prescribed in the Notice of Offer of Employment. The employee may be required to work additional or replacement shifts or rosters as agreed to during the engagement. The provisions of the Relevant Industrial Instrument will apply.

(Emphasis added)

558    The notion of completion of an assignment involves some ambiguity but, on any reasonable view, cl 5.4 contained a commitment by Mr Rossato to complete the assignment with the prospect of him facing a claim for damages from WorkPac if he failed to do so. It is reasonable to suppose that WorkPac sought this commitment from Mr Rossato because it was relying on him to do so in order that it may fulfil its contractual obligations to Glencore. This commitment makes implausible the notion that Mr Rossato could elect to work or not work any shift as he chose from time to time. WorkPac submitted that the damages for which Mr Rossato may be liable under cl 5.4 may be limited to the detriment it suffered by him not giving one hour’s notice. It is not necessary to consider the merit of that submission beyond noting that cl 5.4 may not be so confined.

559    WorkPac submitted that the fact that Mr Rossato had undertaken his work pursuant to a roster was a matter of no significance. It submitted that the reliance by the Full Court in Skene on Mr Skene’s performance of work pursuant to a roster had been erroneous. The significance which the Full Court attached to Mr Skene’s performance of work pursuant to a roster is not altogether clear although it seems that it was significant to the element of an “agreed pattern of work”. This is evident in the Full Court’s reference, at [183], to the first instance finding that Mr Skene’s pattern of work was “regular and predictable”, “continuous” and “not subject to significant fluctuation”. The Full Court also referred to the finding that there was “an expectation that Mr Skene would be available, on an ongoing basis, to perform the duties required of him in accordance with his roster”, which had been set 12 months in advance. On my understanding, these were only two of the matters on which the Full Court relied and, again, I note that WorkPac had formally conceded the existence of a “firm advance commitment” as to the duration of Mr Skene’s work.

560    WorkPac accepted that work pursuant to a roster had been regarded as significant by Lucev FM at first instance in Williams v MacMahon Mining Services Pty Ltd [2009] FMCA 511; (2009) 231 FLR 59 (Williams (FMCA)). As already noted, the circumstances of Mr Williams’ employment have a number of similarities with those of Mr Rossato. WorkPac submitted, however, that Williams (FMCA) was distinguishable because work in accordance with a shift roster (12 hour shifts on a two weeks on/one week off) was an express requirement in the contract. It submitted that there was no such requirement in the present case.

561    This submission of WorkPac is difficult to sustain. First, each of the NOCEs indicated that Mr Rossato was to work in shifts and that they would be alternating shifts.

562    Secondly, cl 7.4 of the General Conditions, which required Mr Rossato to work the shifts and rosters prescribed in the NOCE and any replacement shifts or rosters, was applicable.

563    As it happens, none of the NOCEs “prescribed” a roster as contemplated by cl 7.4. Each did, however, provide that Mr Rossato would be working alternating shifts. Moreover, the email of 17 July 2014 by which WorkPac informed Mr Rossato of his “appointment” with Glencore at Collinsville included the following:

Please find attached paperwork relating to your start.

•    Notice of Offer – please review your payroll details to ensure they are accurate.

•    Induction Verification Form – please complete and sign at the end of your induction. Once signed by site, please return to WorkPac ASAP.

•    Timesheet

•    Job Hazard Register

•    Roster

•    Camp Details.

564    It is not necessary to express a concluded view on Mr Rossato’s submission that all of the material which WorkPac emailed on 17 July 2014 formed part of the offer of employment which had been accepted by Mr Rossato. At the very least, that material formed part of the factual matrix of matters known to both parties at the time in which the contractual terms contained in the First NOCE and in the General Conditions are to be considered.

565    The attached roster, which had the heading “Collinsville 7/7 Roster”, showed the roster arrangements for four Crews (A, B, C and D) for the period 23 April 2014 to 31 January 2015. The latter date coincided very closely with the expiration of the estimated six months of employment but, so far as the evidence shows, that may have been coincidence. The roster showed with reference to each day in the period between 23 April 2014 and 31 January 2015 when each Crew was rostered on and rostered off and indicated those shifts of each Crew which would be day shifts and those which would be night shifts. The fact that the roster commenced at a date some three months before the commencement of Mr Rossato’s employment implied that it was an established shift structure at Collinsville, with the implications about continuity which that entailed.

566    Read in conjunction, the three documents (the General Conditions, the First NOCE, and the roster) indicated objectively that Mr Rossato was being offered work which would involve him working regular and predictable hours of shift work in accordance with the roster, subject to the possibility that he be required to work “additional or replacement shifts or rosters as agreed to during the engagement”. That was the pattern of work offered to Mr Rossato and on which he agreed.

567    WorkPac sought, on four bases, to diminish the significance of the roster provided to Mr Rossato on 17 July 2014 as evidencing a “firm advance commitment”. Mr Rossato, the CFMMEU and Mr Petersen on the other hand submitted that it did have that effect.

568    WorkPac submitted, first, that the evidence did not indicate that the roster had had any significance for Mr Rossato given that he did not know the crew to which he would be appointed, or even if it would be a single crew. The submission was that, if Mr Rossato did not know the crew with which he was to work, then the roster told him only the general pattern of rosters worked at that time at the Mine but nothing about his own work arrangements. It followed, so the submission ran, that there was no objective basis on which it could be concluded that the roster was in any way binding or promissory in nature.

569    Secondly, WorkPac submitted that there was no written term in the contract requiring Mr Rossato to work the roster provided. It submitted that any such term would have been void for uncertainty.

570    Thirdly, WorkPac submitted that, if the provision of the roster had had the effect of requiring Mr Rossato to work shifts in accordance with it, then it was inconsistent with express terms in the General Conditions, including cll 5.6, 5.12, 7.1 and with what WorkPac described as the “inherent variability” of Mr Rossato’s daily working hours and with the “inherent indeterminacy” of the length of the assignment.

571    WorkPac submitted, fourthly, that an indication that the roster did not have contractual force was that any departure from it by Glencore would have put it (WorkPac) in breach of its contract with Mr Rossato in that it would then have been unable to provide work to him in accordance with the roster.

572    As is apparent, some of these submissions seemed to be premised on an assumption that the firm advance commitment had to be found expressly in the contract. There is no justification for such a premise. There is no reason in principle why the commitment may not be discerned from the contract considered as a whole. Moreover, there is no reason why its existence should not be in the form of an unspoken mutual undertaking of the kind to which the authors of Freedland refer. That is no different from an ordinary contract of employment of indefinite duration.

573    Contrary to WorkPac’s submission, there did not need to be evidence of the significance which Mr Rossato subjectively attached to the provision of the roster. In accordance with orthodox principle, the matter is to be determined objectively: Mount Bruce Mining at [46]. Considered in that way, both WorkPac and Mr Rossato understood that, if Mr Rossato accepted the First NOCE, he would work regular and predictable hours in alternating shifts and that the pattern of the shifts would, at least until varied by Glencore, be as set out in the roster provided. That was an integral element of the assignment which WorkPac offered to Mr Rossato. He was also told that the shift work may involve some flexibility, because additional or replacement shifts or rosters may be agreed during the course of his engagement – see cl 7.4 in the General Conditions. Mr Rossato and WorkPac agreed that Glencore would be responsible for issuing him, amongst other things, with work instructions. The effect is that Mr Rossato agreed to work shifts in accordance with the roster provided or in accordance with any replacement roster.

574    It may be observed in this respect that the term “as agreed” in cl 7.4 must refer to an agreement between Glencore and WorkPac. There was no need for cl 7.4 to require Mr Rossato to work in accordance with an agreement to which he was himself a party.

575    A further difficulty for the submission of WorkPac concerning the subjective significance which Mr Rossato could attach to the roster is that the roster pattern for all four Crews was identical: 7 days on/7 days off alternating between day and night shifts. That being so, it is not apparent how either party could have thought the particular Crew to which Mr Rossato would be allocated would be a matter of significance.

576    Considered objectively, the material concerning shift work provided to Mr Rossato at the time of the First NOCE conveyed that he was being employed to work in a well organised and integrated work structure operating indefinitely. To my mind, that circumstance, coupled with the information that the assignment may, subject to variation, be for a period of the order of six months, gave rise, objectively, to a commitment of continuity.

577    WorkPac’s submission that there was no written term requiring Mr Rossato to work in accordance with the particular roster accompanying the First NOCE overlooks cl 7.4 of the General Conditions. That clause contains just such a stipulation by informing Mr Rossato that he was required to work the shifts and rosters prescribed in the NOCE. The fact that the roster accompanied the First NOCE, rather than being “prescribed” in it, cannot be regarded as a matter of consequence. It is a matter of form only.

578    This particular submission of WorkPac seemed to be inconsistent with its contention that the employment contract was wholly in writing, as it meant that there had to be an oral or implied term requiring Mr Rossato to work in accordance with the rostered shift arrangements.

579    WorkPac’s submission that an understanding that the provision of the roster required Mr Rossato to work in accordance with it is inconsistent with the express terms of the contract also suffers from difficulties. The terms to which WorkPac referred were those permitting it or Glencore to vary the assignment period on one hour’s notice, permitting it to terminate the assignment on one hour’s notice and the stand down provision in cl 7.1. For the reasons given earlier, this submission conflates the existence of a commitment with the means by which it could be terminated.

580    WorkPac’s submission concerning the prospect of it being in breach of its contract with Mr Rossato if the roster had “contractual force” cannot be accepted. In the first place, it assumes inappropriately that the roster itself had to have contractual force in order to be evidence of the postulated firm advance commitment. But putting that point to one side, by cl 7.4 of the General Conditions, Mr Rossato bound himself to work the additional or replacement shifts or rosters as may be agreed between WorkPac and Glencore. WorkPac had the benefit of that commitment. It is therefore difficult to see how the postulated breach of contract could arise.

581    At the end of 2014 Glencore provided Mr Rossato with a roster for 2015. That roster listed Mr Rossato as a member of “A Crew Production” and showed, for each of Crews A, B, C and D, the shifts they would be working and their rostered days off. Some indication of the size of the shifts is apparent from the fact that the roster showed that A Crew comprised 33 employees, B Crew 36, C Crew 35, and D Crew 37. In addition, there were employees on these shifts in special Crews. For example, eight maintenance employees and four coal handling and preparation employees worked on the A shift.

582    WorkPac submitted that the provision of this roster was of no significance because it had been provided to Mr Rossato by Glencore (that is, by a stranger to its contract with Mr Rossato) and the provision was, in any event, entirely post-contractual.

583    Neither of these matters seem persuasive. It was an express term between WorkPac and Mr Rossato that Glencore would be responsible for issuing him with work instructions – see General Conditions, cl 2. There is no reason to suppose that that clause did not encompass the provision of rosters concerning the shift arrangements applicable to him with the pattern of work agreed upon being that disclosed in the rosters.

584    Further, and in any event, the roster provided in December 2014 was simply a continuation of the pattern of shift arrangements contained in the roster which accompanied the First NOCE. It is not sensible to regard it as a different pattern simply because the roster related to the 2015 calendar year. If that conclusion be wrong, then the 2015 roster should be regarded as a “replacement” roster for the purposes of cl 7.4 and therefore a roster of the kind to which Mr Rossato had bound himself. It is true that there is no express evidence of an agreement between Glencore and WorkPac with respect to the 2015 roster but it would fanciful to suppose that that had not been agreed, at least tacitly, between the two entities.

585    Mr Rossato’s timesheets, which were an annexure to the Statement of Agreed Facts, are pertinent to this submission of WorkPac. It was WorkPac which entered the commencement and completion times for each day of work by Mr Rossato at Collinsville. It did so in advance of the shifts being worked, which the parties referred to as “pre-populating” the timesheets. In order to make these entries, WorkPac must have known in advance the hours required by Glencore. This post-contractual conduct seems to be confirmatory of an agreed pattern of work. Even if the evidence of this post-contractual conduct not be admissible in the first contract, it does form part of the factual matrix known by both parties in respect of the subsequent contracts.

586    It is pertinent that a number of matters which are typically regarded as indicia of casual employment in the work arrangements were not present. There was, for example, no indication that Mr Rossato was to be told each day or at the commencement of each swing of shifts whether or not he was required, or that he had to check the daily or periodic work requirements. It was the rosters which informed Mr Rossato of these matters, together with the times determined by Glencore as the commencement time for each shift. There was no need for Mr Rossato to be told more frequently. That too is suggestive of an agreement for employment which was to continue indefinitely.

587    The inference which arises strongly from the evidence is that this was employment of an ongoing indefinite kind. That was part of the consideration which WorkPac provided in order to have Mr Rossato available on an ongoing basis. There is an element of unreality in regarding the contractual arrangement as providing for other than regular and certain work, continuing indefinitely but subject to the parties’ rights of termination.

588    In summary, a number of matters indicate that the postulated firm advance commitment is evident in respect of Mr Rossato’s employment pursuant to the first contract. By agreeing to cl 5.4, in particular, Mr Rossato gave WorkPac a commitment of that nature. WorkPac had not given Mr Rossato a commitment in corresponding terms but had, by a number of means, indicated to Mr Rossato that his employment would, subject to termination on notice, continue indefinitely. These were WorkPac’s description of its engagement of Mr Rossato as an “assignment”, its indication that the assignment was of indefinite duration by telling him that the six month estimate was a guide only, its statement that each assignment was “a discrete period of employment” (General Conditions, cl 5.1), its statement that he would serve “a 6 month minimum qualifying period” (General Conditions, cl 5.11), its statement that he could be stood down without pay if he was unable to be gainfully employed because of circumstances beyond its control (General Conditions, cll 7.1 and 7.14), and its requirement that he work the shifts or rosters prescribed or any agreed replacement shifts or rosters. All of these matters suggested a well organised and stable structure of work according to a known pattern conveying a firm advance commitment of the postulated kind. It should not be inferred that the arrangement was one in which WorkPac could choose on any particular day whether or not to offer work on that day. The fact that the assignment could be varied or terminated on periods of notice which were much shorter than the periods of notice prescribed in the NES (s 117 of the FW Act) does not alter that conclusion.

589    It is the fact that both the First NOCE and the General Conditions referred to the employment as being casual, to the rate of pay being an hourly rate and to the payment of a casual loading. Likewise, WorkPac’s Guide issued to Mr Rossato and which formed part of the factual matrix referred to the employment as “casual”. WorkPac emphasised these matters. I have referred already to the fact that the 2012 EA provided for all employees, whether permanent or casual, to be paid an hourly rate. This diminishes the significance of the contract providing for Mr Rossato to be paid an hourly rate. I agree, however, that the description of the arrangement as casual, the payment of an hourly rate, the payment of a casual loading, and the shortness of the period of notice required to terminate or vary the assignment are relevant.

590    Some of the matters are a consequence of WorkPac’s own designation of Mr Rosato as casual. If that designation be incorrect, the matters which were consequential to it lose their significance. That is because the label or description which the parties themselves give to their arrangement cannot be conclusive of the position under the FW Act. The principles applied in the cases concerning the characterisation of a contract as a contract of service are apposite in this respect. In those cases, the label which the parties themselves place on their relationship is relevant but not conclusive. The parties cannot deem the character of their relationship to be something it is not: Hollis v Vabu Pty Limited [2001] HCA 44, (2001) 207 CLR 21 at [58]; ACE Insurance Ltd v Trifunovski [2013] FCAFC 3, (2013) 209 FCR 146 at [11], [28]. It is only when the competing indicia are reasonably evenly balanced that the parties’ own understanding of their relationship may be decisive: Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385 at 389.

591    I do not consider that the inferences arising in the present case are reasonably evenly balanced. That being so, I do not consider it appropriate to give effect to the parties’ own description of their relationship.

592    In these circumstances, WorkPac’s submission that the requisite “firm advance commitment” was absent from the first contract cannot be sustained. Considering the position on the basis most favourable to WorkPac, I would find that Mr Rossato was not a casual employee for the duration of the first contract. This conclusion is appropriate even without regard to the post-contractual conduct to which Mr Rossato, the CFMMEU and Mr Petersen referred. However, if one did have regard to that conduct, it would only add to the confidence with which that conclusion is reached.

The second and third contracts

593    WorkPac’s submissions concerning the status of Mr Rossato’s employment under the second and third contracts relied on the same matters upon which it had relied in respect of the first contract. It is accordingly unnecessary to address them again in detail. The submissions fail for the same reasons that they did in relation to the first contract.

594    However, there are some further aspects of the factual matrix known to both parties which are pertinent. The first is that it was Ms Jones, a WorkPac Recruitment Coordinator, who telephoned Mr Rossato on 27 May 2015 (the first day in a period of rostered days off) to tell him about “the roles at Newlands”. Ms Jones suggested “strongly” to Mr Rossato that he “take the redeployment” (emphasis added). Ms John, another Recruitment Coordinator, gave Mr Rossato the same recommendation “strongly” in another telephone call later the same day. Later on 27 May 2015, Mr Rossato informed Ms Jones that he would take the Newlands offer because he did not wish to be “without a role”. In short, WorkPac encouraged Mr Rossato to take the position at Newlands in, it may be inferred, both its and Mr Rossato’s interests and Mr Rossato eventually agreed to do so because of the additional security he believed it to offer. These circumstances bespeak an expectation of continuity by both parties.

595    A second matter known to both parties is that the Newlands Mine was just over two hours’ drive from the respondent’s home and therefore, compared with Collinsville, required approximately an additional hours driving time to and fro at the start and end of each swing of shifts. That circumstance made it even more impractical for Mr Rossato to drive to and fro each day and, sensible for him to stay at the Mine site during each swing of shifts.

596    Ms John sent the Second NOCE to Mr Rossato under cover of an email of 29 May 2015. In it she said that she was providing “the confirmation for your induction and start at Newlands Mine” and attached:

•    A map of the Township of Glenden with the camp and mess hall marked as well as contact details for the office

•    A map for the training rooms

•    2015 site roster

•    The induction itinerary for Monday

•    Notice of offer

•    Induction verification form – to be taken to site and signed off and returned to WorkPac.

•    Hazard Register – to give you an idea

•    Bowen Time Sheet

597    The attached roster (entitled “Surface Operations Roster 2015”) contained details for four shift Crews (A, B, C and D) for the period 1 January 2015 to 31 January 2016. It indicated when each Crew would be rostered on and when each Crew would be working a day shift or a night shift.

598    Again, the format of the roster conveyed an established scheme of work at the Newlands Mine and indicated that Mr Rossato would be working in an organised, predictable structure of shifts. This was an important part of the factual matrix known to both parties at the time that the second contract was made. It indicates that both parties knew the pattern of work which was contemplated and which Mr Rossato would, in accordance with the offer, be required to work.

599    With respect to the third contract of employment, an important part of the factual matrix known to both parties was contained in the letter from WorkPac to Mr Rossato of 11 February 2016. By that letter, WorkPac explained the reduction in the hourly rate from $49 to $43.05. The letter explained that, in the economic conditions then prevailing, WorkPac felt obliged to “reduce our current rates to our clients as an alternative to losing our commercial contracts, and consequently loss of employment for our employees”. The letter said:

•    Our main priority is to maintain your job and to keep our workers in employment;

•    Due to significant commercial market pressures, WorkPac has no other option than to reduce hourly rates;

•    …

•    The decision to remain in employment under these new terms is completely up to you, however WorkPac need to be informed before the 25th of February if this circumstance now means you can no longer continue in your current role on site;

•    Should you choose to reject the offer of employment on the basis of the wage change, then WorkPac will attempt to find you work elsewhere (however this cannot be guaranteed); and

•    …

(Emphasis added)

600    As is apparent, this letter made it plain that the rationale for the wage reduction was the maintaining of Mr Rossato’s employment. WorkPac conveyed that it would be able to maintain Mr Rossato’s employment if he accepted the wage reduction but that, if he did not, its ability to do so was uncertain. Both parties knew that the nature of the employment sought to be maintained, namely, the regular, continual employment in accordance with the prevailing shift structure at Newlands. Related to this aspect of the matrix is that, with the exception of the reduction of the hourly rate, the Third NOCE contemplated Mr Rossato continuing to work at the Newlands Mine in the same way as he had been. Both parties knew the pattern of employment by reason that Mr Rossato had been working at the Newlands Mine at that time for approximately eight months. It was a well-established pattern.

601    Another part of the known factual matrix was the object of providing greater security of employment.

602    It is true that WorkPac did not provide a roster with the Third NOCE. Nor did WorkPac provide again the documents accompanying the Second NOCE. There was no need for it do so. Both WorkPac and Mr Rossato knew the shift and other arrangements in place at Newlands as Mr Rossato had been working under them for approximately eight months. Plainly, it was expected by both that Mr Rossato would continue working pursuant to those arrangements.

603    Having regard to all these circumstances, I would find that Mr Rossato was not a casual employee during the periods of the second and third contracts.

The fourth contract

604    WorkPac emphasised that the terms of the Fourth, Fifth and Sixth NOCEs were different from those of the first three. The differences made it plainer, it submitted, that there was an absence of the requisite firm advance commitment. It noted that these NOCEs contained no statement concerning the length of the assignment; that they stated expressly that the hours which Mr Rossato, as a casual, may be required to work may vary from day to day and from week to week; that they stated Mr Rossato’s ability to refuse and cancel shifts; that they indicated that the number of hours he would work would be dependent on his availability, WorkPac’s own business needs, and the client’s needs; and that they stipulated that, while there may be some regularity in Mr Rossato’s shifts, that would not change the fact that he was a casual employee. WorkPac emphasised again that Mr Rossato was paid at an hourly rate of pay and that the hourly rate included a casual loading.

605    WorkPac accepted that Mr Rossato had been provided with a “start up” roster when he resumed work at Collinsville pursuant to the fourth contract but said that it had never received a copy of that roster itself. Instead, the roster had been provided to Mr Rossato by a representative of Glencore. WorkPac submitted that the provision of the roster was of no contractual significance, for the same reasons it had submitted in respect of the 2015 roster provided to Mr Rossato at the end of 2014.

606    Many of the matters to which I referred in relation to the first contract are apposite here as well. In particular, each of the terms of the General Conditions to which I referred remained applicable to Mr Rossato’s employment as WorkPac had not sought to revoke or modify any of them.

607    Moreover, part of the factual matrix known to both parties at the time they entered into the fourth contract was the way in which work had been undertaken at the Collinsville Mine during Mr Rossato’s first period of employment. Both parties knew the system under which production operators worked and, in particular, of the shift structure providing continuity, regularity and predictability of the work.

608    In this respect, it is appropriate to refer again to the timesheets which WorkPac required Mr Rossato to provide. As noted, the timesheets in respect of Mr Rossato’s work at Collinsville were pre-populated by WorkPac, a fact which indicated WorkPac’s own knowledge of the shift structure and the shift times. The parties provided as part of the Statement of Agreed Facts a helpful summary of the timesheets in spreadsheet form. The summary indicates starkly the regularity and constancy of Mr Rossato’s employment throughout the entire period of his employment at Collinsville. The description by Mr Rossato’s counsel of the times recorded in the timesheets as being “practically metronomic” is apt.

609    The shared knowledge of the shift structure and the shift times, together with WorkPac’s practice of pre-populating the timesheets, formed part of the factual matrix in which the terms of the subsequent employment contracts, in particular the fourth, fifth and sixth contracts, are to be construed. They indicated a mutual understanding that Mr Rossato’s employment would be regular and predictable. This being so, the fact that WorkPac had never received a copy of the roster under which Mr Rossato was to work pursuant to the fourth contract seems immaterial.

610    It is the fact that WorkPac did not provide any roster to Mr Rossato with the Fourth NOCE. There was accordingly no roster to which cl 7.4 in the General Conditions could attach. It could be said therefore that this makes the analysis with respect to the first and second contracts inapplicable.

611    It was not clear whether WorkPac sought to distinguish the first and second contracts in this way. However, to the extent that it did, the distinction does not assist it. Instead, the absence of provision of a roster tends to give force to the submissions of Mr Rossato, the CFMMEU and Mr Petersen that the employment contract was not wholly in writing. In that circumstance, it would be necessary either to imply a term (as a matter of fact) that Mr Rossato was to work in accordance with the roster implemented by Glencore or, alternatively, it would be necessary to have regard to post-contractual performance with a view to identifying this particular term in the contract. To my mind, it is not helpful to engage in an analysis of these alternatives because, on any view, it was obvious to all that Mr Rossato was to work as a competent operator in the shift structure implemented by Glencore.

612    It is the case that, unlike the First and Second NOCEs, the Fourth NOCE contained no reference to the duration of the employment. However, to my mind that tends to confirm that the employment offered was of indefinite duration. In this respect, the employment offered was similar to the usual forms of “permanent” employment with the contemplated employment continuing indefinitely but subject to termination by either party on notice or for cause.

613    At first blush, there appears to be some force in the WorkPac submission that Mr Rossato’s ability to refuse or to cancel a shift points to his employment being casual. When the employment is of a permanent kind, an employee cannot refuse or cancel a shift at his or her own election without being in breach of the contract: Shop, Distributive & Allied Employees’ Association v Harris Scarfe at [26]. Accordingly, this could be an indicator in favour of the employment being casual. However, there are other aspects of the terminology in the Fourth NOCE which tends to confirm that it contemplated ongoing employment.

614    The Fourth NOCE stated that Mr Rossato had the ability to “refuse and cancel” shifts or terminate the assignment. That suggested that the refusal or cancellation could occur while the assignment subsisted. The NOCEs went on to tell Mr Rossato that if he terminated his employment before a shift he was to do so in accordance with the terms of the “Industrial Instrument” (defined earlier in the NOCE as the FW Act and the General Conditions). It then provided separately for the procedure to be adopted by Mr Rossato if he wished to cancel shifts. First, he was required to contact WorkPac and Glencore’s Supervisor as soon as possible before the start of the shift to be cancelled. It was then emphasised that he had to speak “directly” with his “WorkPac Contact Person” and with Glencore’s Supervisor to confirm that he would not be working the shift. In other words, the NOCE contemplated ongoing performance of work by Mr Rossato in accordance with the shift arrangements. That was the default position. It was only if he wished to cancel a shift that he had to inform both WorkPac and Glencore of that position.

615    Moreover, Mr Rossato’s ability to refuse or cancel a shift was not unconstrained. If he did so, he thereby became liable to a damages claim by WorkPac – see cl 5.4 of the General Conditions. It is pertinent that the Fourth NOCE did not relieve him of that liability. The full extent of the liability which Mr Rossato may incur under cl 5.4 was not the subject of any detailed submissions and it is unclear. Clause 5.4 serves to indicate, however, that the “right” which the Fourth NOCE purported to bestow on Mr Rossato may, in practice, have been limited.

616    Further still, this submission of WorkPac did not sit comfortably with cl 14 of the 2012 EA concerning the hours of work for flat rate FTMs. That clause provides (relevantly):

…

14.2    The ordinary hours of work for flat rate FTMs shall be a standard work week. FTMs will be required to work reasonable additional hours prescribed in Schedules 3, 4, 5, 6 and 7 averaged over the particular work cycle being worked.

14.3    A flat rate FTM shall be employed on either day work or shift work and work hours as rostered by the Company to meet business operational needs. The shift work definitions in clause 15.4 shall be applied to determine if work is shift work.

14.4     Ordinary hours of work for FTMs will be a maximum of ten (10) per day and can be worked on any day Monday to Sunday inclusive.

14.5    Work shall be performed in accordance with the following work patterns [various shift patterns were then specified]:

…

14.7    FTMs are required to work reasonable additional hours (beyond rostered hours) where the company deems it necessary.

…

617    As is apparent, cl 14 operates as a specification of the ordinary hours of work for all flat rate FTMs. Plainly, it is specifying the hours which FTMs are required to work.

618    The effect of cl 14 in indicating the hours which Mr Rossato was required to work is reinforced by cl 6.2 of the 2012 EA which requires FTMs to “follow all reasonable and lawful directions, that are within the FTM’s ability” and stipulated that a refusal to comply with any reasonable and lawful direction may result in disciplinary action, including termination of employment.

619    In my view, these matters indicate that the indicated ability of Mr Rossato to “refuse and cancel” shifts do not count significantly against the other indicia which point strongly against Mr Rossato’s employment being casual.

620    I would conclude that Mr Rossato’s employment under the fourth contract was not casual employment.

The fifth and sixth contracts

621    It is not necessary to address the fifth and sixth contracts separately. The matters to which I have referred in relation to the earlier contracts indicate that these contracts too did not provide for casual employment.

An overall characterisation approach

622    It is appropriate to refer briefly to the alternative way in which the characterisation of Mr Rossato’s employment may be made. The submissions on Mr Rossato’s behalf relied in part on this alternative approach.

623    As noted earlier, the Full Court in Skene held, at [180], that it was appropriate to adopt the same approach to characterisation of employment as casual or otherwise as is adopted in the cases concerning the characterisation of a contract as one of employment. That is the “totality of the relationship” approach which involves having regard to the overall relationship, to the conduct of the parties and to the real substance, practical reality and true nature of the relationship. The Full Court referred to multiple authorities in support of that proposition, including Hollis v Vabu. Their Honours also referred to multiple authorities supporting the view that the same approach is appropriate to the characterisation of employment as casual or otherwise.

624    For the reasons given earlier, this Court would depart from the decision in Skene only if satisfied that it is plainly wrong. That is a reasonably high threshold.

625    WorkPac submitted that the threshold had been reached. It noted the reliance in both Skene and in Trifunovski at [107] (Buchanan J with whom Lander and Robertson JJ agreed) on the following passage in Hollis v Vabu:

[24]    … It should be added that the relationship between the parties, for the purposes of this litigation, is to be found not merely from these contractual terms. The system which was operated thereunder and the work practices imposed by Vabu go to establishing “the totality of the relationship” between the parties; it is this which is to be considered …

(Citation omitted)

626    WorkPac submitted that this passage in Hollis v Vabu should be understood as directed to the contract then under consideration by the High Court. That was a contract which was only partly written with the consequence that extrinsic materials, including post-contractual conduct, were relevant in ascertaining its terms. It submitted that this had been overlooked by Buchanan J in Trifunovski when he held, by reference to this passage in Hollis v Vabu, that “it now seems established in Australian law that all the circumstances should be taken into account”. WorkPac attributed the same error to the Full Court in Skene. It also emphasised in this respect the passage from the judgment of Gleeson CJ in Connelly v Wells at 74 set out earlier in these reasons.

627    Part of WorkPac’s submission was that, if Hollis v Vabu stands for the proposition stated by Buchanan J in Trifunovski, it “cannot survive” the later decision of the High Court in Gardiner in which Gummow, Hayne and Kiefel JJ, forming a majority of the Court, endorsed the general principle that “it is not legitimate to use as an aid in the construction of [a] contract anything which the parties said or did after it was made”.

628    As to the issue of whether the principle stated in Hollis v Vabu should be applied only in contracts which are not wholly in writing, the fact of the matter is that two recent Full Courts of this Court have not thought that distinction relevant. At the time WorkPac commenced these proceedings, the ink in the judgment in Skene was barely dry. Whether all the matters now advanced were considered in Trifunovski and Skene is not the point. They were considered judgments and it is desirable that their effect should stand beyond the rising of the Court. It would be a very significant matter for this Court to hold that those decisions were plainly wrong. I am not persuaded that this is the case and, in any event, that is a matter which, if it is to be considered, should be addressed by a Court of five.

629    WorkPac’s submission that [24] in Hollis v Vabu can no longer stand in the light of the later decision in Gardiner is not a matter properly for this Court. It is instead for the High Court: Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia [2012] HCA 25, (2012) 249 CLR 398 at [21]; Public Service Association of South Australia Inc v Industrial Relations Commission of SA [2011] SASCFC 14, (2011) 109 SASR 223 at [6] and the authorities cited therein; North Australian Aboriginal Legal Aid Service Inc v Bradley [2002] FCAFC 297, (2002) 122 FCR 204 at [131].

630    For these reasons, I would not accede to the submission of WorkPac that this Court should find that this aspect of the reasoning in Skene and in Trifunovski was wrong.

631    Were it necessary to approach the matter on the basis of a general characterisation test rather than on the basis of the postulated firm advance commitment, the same matters to which I have referred in relation to the latter indicate that it would not be appropriate to characterise any of Mr Rossato’s employments as casual. Moreover, the manner in which the contracts were performed points strongly against a characterisation of Mr Rossato’s employments as casual.

Variation of the contracts

632    Mr Rossato submitted that, if regard may not be had to the rosters in determining the arrangement at the time of commencement of each contract, then their provision supported the view that the contracts had been varied during their currency. Counsel referred in this respect to Ledger in which Buchanan J said:

[62]    It must be accepted that, over time, repetition of a particular working arrangement may become so predictable and expected that, at some point, it may be possible to say that what began as discrete and separate periods of employment has become, upon the tacit understanding of the parties, a regular ongoing engagement (for an example of historical interest, see Cameron v Durning [1959] AR (NSW) 142).

633    The dynamic nature of employment contracts in this respect was recognised in Romero v Farstad Shipping (Indian Pacific) Pty Ltd (No 3) [2017] FCAFC 102 in which the Full Court (Allsop CJ, Rares and McKerracher JJ) said:

[64]    Often in employment contracts, the parties, over the course of their relationship will add or vary the original terms, including, as occurs routinely, by changing the remuneration payable to the employee. In general, the relationship will evolve harmoniously by introducing such changes into a contract as variations or additions to the terms of the original contract …

(Citations omitted)

634    A number of the authorities concerning the variation of a contract of employment during its subsistence, including Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567, were reviewed by Buchanan J in Wittenberg at [239]-[262].

635    Given that I would find that Mr Rossato was a casual employee throughout his employment, it is not necessary to consider this alternative submission. Nor is it necessary to refer to the authorities reviewed by Buchanan J in Wittenberg.

636    It is apparent, however, that the submission concerning variation does face some difficulties in the circumstances of this case. First, on my findings, in the period of just on four years during which Mr Rossato was employed, his employment was subject to six different contracts. That by itself diminishes the possibility of there having been a development over the course of each contract which could be characterised as a variation. Secondly, and independently, the evidence does not support the view that there was in fact any change in the working arrangements during the course of each contract so that it can be said that, over time, the working arrangement became “predictable and expected”. On the contrary, there was remarkable constancy in Mr Rossato’s employment from the very commencement of each contract.

Was Mr Rossato a “casual FTM” under the 2012 Enterprise Agreement?

637    There was no significant difference between the parties as to the appropriate principles to be adopted in construing the 2012 EA and it is, accordingly, unnecessary to refer to the authorities in any detail. The proper approach was discussed in Skene at [197] and summarised in Qube Ports at [65].

638    It is, however, appropriate to note one submission of WorkPac. It contended that, with respect to the matters within the scope of the 2012 EA, the parties were, subject to the operation of the FW Act, governed exclusively by its terms. WorkPac did not identify any authority for that proposition. It seems that it was made by reference to cl 1.5.1 of the 2012 EA which provided:

1.5.1    This Agreement to the extent allowed under the Fair Work Act 2009, applies to the exclusion of any and all Awards and Agreements, and is a complete Agreement covering all minimum terms and conditions of employment.

639    Two matters may be noted about the operation of cl 1.5.1. First, the agreement operates only to the extent allowed under the FW Act itself and, as previously noted, the NES cannot be excluded. Secondly, cl 1.5.1 does not have the effect of excluding or negating the effect of the terms in the parties’ underlying contract of employment, only terms located in an Award or in an Agreement (the capitalisation indicating that it is an agreement made pursuant to Pt 2-4 of the FW Act to which reference is made): cf Qube Ports at [68]-[70]. As to the relationship between a contract of employment and an industrial award or enterprise agreement, see Byrne v Australian Airlines at 420-1; Soliman v University of Technology at [19]-[24].

640    WorkPac contended that Mr Rossato did not have entitlements under the 2012 EA to payments in respect of the forms of leave he claimed or to payment on public holidays because he was a “Casual FTM”. That was so, it contended, because he had been “engaged and designated as such”, and therefore had only the rights and entitlements of a casual FTM for which the 2012 EA provided.

641    WorkPac’s alternative submission was that if, as it contended, Mr Rossato was a casual employee for the purposes of the FW Act, that status “carried through” to the 2012 EA.

642    The Court’s determination of whether Mr Rossato was other than a “casual FTM” for the purposes of the 2012 EA is pertinent because the entitlements to annual leave and PC leave for which it provides are superior to those of the NES. By cl 19.2 of the 2012 EA, if Mr Rossato was not a casual employee, he had an entitlement to five or six weeks of annual leave for each year of employment, to superior PC leave and to two days of paid compassionate leave in each year. In addition, he would be entitled to be paid for public holidays, irrespective of whether he actually worked on those days. I have said that the entitlement to annual leave was five or six weeks because there was some disagreement in the submissions on that topic. The Court was not asked to resolve that dispute.

643    In support of its primary submission, WorkPac emphasised that cl 6.4.1 of the 2012 EA provided that:

FTMs under this agreement will be employed in one or more of the following categories:

(a)    full-time FTMs; or

(b)    part-time FTMs; or

(c)    casual FTMs; or

(d)    limited term or assignment FTMs; or

(e)    FTMs employed for a specific project/site or workplace related task.

644    WorkPac submitted that these types of employment were foundational to the structure of the 2012 EA. That was because later provisions provided for some rights and obligations to attach to all of the categories of employment and for particular rights and obligations to attach only to a specified category or categories. Relevantly for present purposes, WorkPac emphasised that the right to paid annual leave (cl 19.3) and the right to paid PC leave (cl 19.7) was given to every category of employee except, expressly, casual FTMs. The right to payment for public holidays (cl 20.3) was given to all “base rate FTMs” except, expressly, casual FTMs.

645    Clause 6.4.2 contemplated a further categorisation of all FTMs as either a “base rate FTM” or a “flat rate FTM”. The base rate FTMs were those “engaged and paid the base rate of pay” (cl 6.4.3) and flat rate FTMs were those “engaged and paid the flat rate of pay” (cl 6.4.4).

646    Clause 6.4.2 specified that the method of remuneration for base rate and flat rate FTMs was that set out in cl 9.1.1.

647    For convenience, I will repeat the content of cl 9.1.1. It provided, under the heading “Ordinary hourly wage rate”:

At the election of the Company an FTM will be paid either:

Base Rate FTMs

(a)    The base rate as prescribed in Schedule 2 for each classification. Base rate FTMs are also entitled to allowances (except as specifically incorporated), overtime and any other entitlements as set out in this Agreement.

Flat Rate FTMs

(b)    The flat rate of pay as prescribed in Schedules 3, 4, 5, 6 and 7 for each classification. Flat rates are provided as compensation for all work (including overtime, weekend penalties, public holiday loadings, shift penalties, annual leave loading (where applicable), casual loading (where applicable), any industry and special allowances that apply to all FTMs covered by this Agreement and any industry and special allowances specifically incorporated that may not apply to all FTMs covered by this Agreement). Flat Rate FTMs shall also be entitled to any applicable allowances (which have not already been specifically incorporated) provided for by this Agreement unless such allowance is identified as applying only to Base Rate FTMs.

(Emphasis added)

648    The election to which the opening line of cl 9.1.1 refers is the decision of WorkPac as to the category of employment in which it employs a FTM. It reflects the opening sentence in cl 6.4.2 (“FTMs engaged in each of the [cl 6.4.1] categories will be engaged as either a base rate FTM or a flat rate FTM”).

649    As is apparent, cl 9.1.1(a) contemplated that base rate FTMs were also entitled to payment of the allowances set out in the 2012 EA (other than those specifically incorporated into the base rate) and to payment of overtime and other entitlements for which the Agreement provided. In contrast, cl 9.1.1(b) provided that the flat rate of pay for flat rate FTMs was “compensation for all work” including a diverse range of penalties, loadings and allowances. These included the “casual loading (where applicable)” as well as allowances which were applicable only to some FTMs.

650    Clauses 6.4.2 and 6.4.5 provided, in effect, that both base rate FTMs and flat rate FTMs may be employed as casuals:

6.4.5    Casual FTMs will be (sic) for a minimum of four (4) hours:

(a)    A person engaged as a base rate casual, as defined in clause 9.1.1, will be paid a casual loading of 25% on the rates prescribed herein. The casual loading is in lieu of all paid leave entitlements (with the exception of long service leave).

(b)    A person engaged as a flat rate casual, as defined in clause 9.1.1, will not be paid an additional amount as the casual loading has been incorporated into the flat rate of pay.

651    Clause 6.4.5 indicated that cl 9.1.1 contained definitions of the two terms “base rate casual” and “flat rate casual” but in fact it does not. As just noted, cl 9.1.1 specifies instead the wage rates for “Base Rate FTMs” and “Flat Rate FTMs”.

652    As is apparent, cl 6.4.5(a) provided that a base rate casual would be paid a casual loading of 25% on the prescribed rate, with that loading being paid “in lieu of all paid leave entitlements (with the exception of long service leave)”.

653    Clause 6.4.5(b) provided that a “person engaged as a flat rate casual” would not be paid any additional amount as “the casual loading” had been incorporated into the flat rate of pay. There is an issue about the identification of the casual loading in cl 6.4.5(b) to which it will be necessary to return.

654    As previously noted, cl 6.4.6 contained a specification of the composition of the casual loading of 25%.

655    Clause 6.5 distinguished between casual FTMs and all other FTMs by specifying that, in the case of the former, no notice was required on either side for termination of the employment, whereas in the case of the latter, notice periods varying according to length of service and age of the employee were required.

656    WorkPac noted that cl 6.4.7 of the 2012 EA had required it to inform FTMs, at the time of their engagement, of the status and terms of their engagement. It did not claim to have given any such notice to Mr Rossato, other than in the NOCEs themselves. However, those documents made no reference to “Field Team Members” or to “FTMs”. It was not suggested that the incorporation by reference of cll 6.4.5 and 6.4.6 into the contracts had achieved the same effect.

657    In Skene, WorkPac had argued that cl 5.5.6 of the 2007 EA (the counterpart of cl 6.4.7 in the 2012 EA) indicated that the category of FTM in which each employee was engaged was that accorded to that employee in the notice provided pursuant to that clause. The Full Court rejected that contention, saying:

[220]    As cl 12.2 of the clause considered in South Jin demonstrates, a clause requiring an employer to inform an employee at the time of engagement of the nature of the employment is not uncommon. Generally speaking, the purpose of a clause of that kind is likely to be to confirm and provide some record of the nature of the employment that has been agreed to between the employee and the employer and the terms of engagement that are applicable. The purpose is simply to give clarity to the engagement. Contrary to Mr Skene’s contention, we do not accept that cl 5.5.6 is a clause that requires WorkPac to accurately inform the employee of his or her employment status in accordance with the reality of the employment relationship on an ongoing basis. All that is required to be communicated by cl 5.5.6 is what is understood as at the time of engagement.

[221]    However, we do not accept the primary judge’s conclusion that by cl 5.5.6 the Agreement intends that the employer’s subjective understanding or intent be dispositive of the “status” of the employee under the Agreement. As indicated already, one aspect of “status”, that dealt with in cl 5.5.2 and whether an employee is a “base rate FTM” or a “flat rate FTM” is at the election of WorkPac. In contrast, there is nothing in the terms of the Agreement or their context to support the proposition that other aspects of “status” and in particular whether an employee is full-time, part-time or a casual is left to the election of WorkPac.

[222]    Having not defined any of the categories listed in cl 5.5.1 and not otherwise provided a designational mechanism, the Agreement should be presumed to intend that the categories listed have their ordinary meaning or usual connotation with any adjustment as might be indicated by the Agreement itself.

658    In the present hearing, WorkPac did not seek to maintain the position which it had advanced in Skene. It accepted instead that cl 6.4.7 had “only an adjectival, or procedural significance”. It accepted that the notice contemplated by cl 6.4.7 was not the act by which a particular status for the purposes of the 2012 EA was conferred on the employee.

659    Clause 6.1(a) provided that each new FTM would be engaged initially on a qualifying period of six months, during which time the FTM’s performance would be monitored. The clause went on to say that the FTM’s “employment status” would be confirmed following completion of a satisfactory probation period. The parties’ Statement of Agreed Facts did not indicate one way or another whether WorkPac had provided the confirmation contemplated by this clause.

660    The 2012 EA referred to other categories of FTMs without providing any definition or explanation of the terms, for example, “permanent FTMs” or “permanent full-time FTMs” (cll 6.5.1, 11(b), 12, 19.1, 19.7, 19.12.1, 19.12.14 and 20.6); a “limited term or assignment FTM” (cll 6.4.1 and 6.5.4); “an FTM employed for a project, site or workplace specific task” (cll 6.4.1 and 6.5.4); “qualifying FTMs” (cl 12.4(b)); and “the relevant FTMs” (cl 21(c)). It was not suggested that anything turned on these differences in terminology for present purposes. Permanent FTMs were entitled to paid annual leave.

661    WorkPac submitted that, by offering employment to Mr Rossato as a casual FTM, it had accepted the obligations under the 2012 EA attaching to his classification, including the obligation to pay the higher rate of pay. For his part, by accepting employment as a casual FTM, Mr Rossato had chosen to take the benefit of the higher rate of pay and not to have an entitlement to paid annual leave, paid PC leave or paid public holidays.

662    WorkPac’s submission, in short, was that Mr Rossato was a casual FTM because he had been “employed and engaged as such”. The submissions focussed on cl 6.4.1. WorkPac submitted that the word “employed” in the chapeau to cl 6.4.1 described the act by which the employee entered into employment with it.

663    WorkPac submitted that cl 6.4.1 should not be regarded simply as a statement of the various categories of employment available under the enterprise agreement. That was so, it was said, because such a construction of the clause would mean that the assignment of an employee to any single category would be “an ambulatory matter”.

664    This submission seemed to conflate an identification of the available categories of employment under the 2012 EA with the manner by which the category to which an employee belongs is to be made. Clause 6.4.1 seems more naturally addressed to the former rather than the latter. It indicates how FTMs generally will be categorised rather than indicating the process, means or manner by which an individual will become an employee in one or other of those categories. Clause 6.4.2 is also concerned with categorisation. Clause 6.4.7 may possibly have been understood as addressing the issue of the identification of the category in which an individual is employed but, as noted, such an approach was rejected in Skene and was disavowed by WorkPac in the present case.

665    Although it is evident that a definition of casual employee as a person “employed and engaged as such” has in the past been commonly used in awards and industrial agreements (Telum Civil (Qld) Pty Ltd v Construction, Forestry, Mining and Energy Union [2013] FWCFB 2434, (2013) 230 IR 30 at [38]; Loves Bus and Taxi Service v Zucchiatti [2006] WAIRC 05758, (2006) 157 IR 348 at [45]; Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 at [136]), that is not the term used in the 2012 EA. This case does not provide the occasion to consider the proper construction of that provision: cf Devine Marine at [141]-[146].

666    One contextual matter which may support WorkPac’s construction of the 2012 EA is the repeated use in cl 6.4 of the expression “a person engaged as a base rate casual” or a cognate – see cll 6.4.2-6.4.5. That may support the conclusion that the focus of all these provisions is on the terms of the initial engagement giving rise to the employment relationship: cf CPSU at [4]-[5]. However, even that is not a strong indicator as the clauses may refer to the terms of the engagement as they stand from time to time, taking into account the possibility of post-contractual variation. As was noted by Doyle CJ in TransAdelaide v Leddy (No 2) (1998) 71 SASR 413 at 417, in respect of a similarly worded clause, “[i]t would be artificial to exclude from consideration events that occur after the initial engagement and during the term of employment”.

667    WorkPac’s submissions seemed to amount to this: by the General Conditions and by each of the NOCEs, it had informed Mr Rossato that it was offering casual employment; by accepting the offer, Mr Rossato should be taken to have accepted employment on that basis; and, accordingly, he had been engaged as a casual FTM for the purposes of the 2012 EA.

668    There are difficulties with that analysis. First, the issue is one of construction of the 2012 EA as well as characterisation of the parties’ conduct.

669    Secondly, with the exception of the provisions concerning the casual loading, there is no indication in the 2012 EA that the notion of casual employment was used with a meaning different from that in the FW Act. For example, cl 14, which concerns the hours of work of flat rate FTMs, makes no distinction between casual flat rate FTMs and full-time flat rate FTMs. It provides, without differentiating between casual and permanent FTMs that “[t]he ordinary hours of work for flat rate FTMs shall be a standard work week” (cl 14.2). Both casual and permanent FTMs are to “work hours as rostered by the Company to meet business operational needs” (cl 14.3). The terms in which cl 14 is expressed are inconsistent with work by casual FTMs being optional.

670    Thirdly, if one does have regard to the engagement, it is apparent that WorkPac was offering Mr Rossato regular predictable work of indefinite duration, regardless of whatever label it sought to put on that employment.

671    The provisions of the 2007 EA considered in Skene were substantially similar to, albeit not identical with, the provisions in cl 6 of the 2012 EA. It was not suggested in the present hearing that the differences were material.

672    The Full Court reasoned that Mr Skene was not a casual FTM for the purposes of the 2007 EA as follows:

(a)    the 2007 EA envisaged that employees would be grouped according to the nature of their employment, that is, whether it is full-time, part-time, casual, etc and provided that different terms may attach to each category, at [200];

(b)    as the various types of employment were undefined, it ought to be presumed that the terms were intended to have their ordinary meaning, at [202], with the consequence that it should be taken that the term “casual FTM” was intended to mean a casual employee in its legal sense, at [202]-[203];

(c)    that being so, Mr Skene should not be found to be a casual employee for the same reasons which the Full Court had given in relation to WorkPac’s appeal under the FW Act, at [204];

(d)    the 2007 EA should not be construed as having provided the “machinery” for a categorisation process in which WorkPac could determine, at its election, which of the employment categories is applicable to a particular employee. That was so because:

(i)    in the absence of clear language, it ought not to be presumed that the 2007 EA gave WorkPac the capacity unilaterally to determine the category into which an employee should be classified, especially given the potential for arbitrary and capricious results, at [206];

(ii)    this was especially so as there were some instances in which the 2007 EA did give WorkPac the power to make such a unilateral election, at [207]-[212];

(iii)    it made no practical sense to understand the 2007 EA as intending that the nature of the employment be forever fixed by a designation given at its commencement. This was so because the nature of an employment may and often does change over time, at [213];

(iv)    consistency with the terms of the WR Act under which the 2007 EA had been made, at [214];

(e)    the reference in the 2007 EA to engagement by the hour (which does not have a counterpart in the 2012 EA) did not warrant any different approach.

673    The submissions of WorkPac on the present hearing did not identify any respect in which the reasoning in Skene should be distinguished. WorkPac relied instead on the claim that Mr Rossato had been employed (I understand in the sense of engaged) as a casual FTM. Nor did the submissions identify a basis upon which this Court could find that the reasoning of the Full Court in Skene was plainly wrong and therefore decline to follow it: cf, Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15, (1993) 177 CLR 485 at 492; Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22, (2007) 230 CLR 89 at [135]; CAL No 14 Pty Ltd v Motor Accidents Insurance Board [2009] HCA 47, (2009) 239 CLR 390 at [49].

674    In these circumstances, I consider that this Court should apply the same approach as was adopted in Skene and conclude that Mr Rossato was not a “casual FTM” for the purposes of the 2012 EA.

675    It is unnecessary to consider WorkPac’s alternative submission, given my conclusion that Mr Rossato was not a casual employee for the purpose of the FW Act provisions. I note, however, that WorkPac’s reasoning also works in reverse, that is, the conclusion that Mr Rossato was not a casual for the purposes of the FW Act provides some support for the conclusion that he was not a casual FTM for the purposes of the 2012 EA.

Conclusion on the liability issues

676    For the reasons given above, I would make declarations to the effect that, throughout his employment Mr Rossato was not a casual employee for the purposes of the FW Act and a permanent FTM and (not a casual FTM) for the purposes of the 2012 EA. I would also declare that Mr Rossato is entitled, pursuant to s 90(2) of the FW Act, to payment in respect of his accrued entitlement to annual leave and, pursuant to ss 97 and 106 of the FW Act and cll 19.7-19.9 and 19.12 of the 2012 EA, to payment in respect of his absences from work for which he should have been paid PC leave and compassionate leave. Finally, I would make a declaration that Mr Rossato was entitled, pursuant to s 116 of the FW Act and cl 20 of the 2012 EA, to payment in respect of those public holidays on which he was rostered off work during the period of the Christmas shutdowns.

677    The Court was not asked to quantify Mr Rossato’s entitlements. That is because, as previously noted, WorkPac had agreed that, in the event that declarations to the effect outlined above were made, it would, without further order but subject to its claim for a set off, pay to Mr Rossato the agreed amounts of his entitlements.

678    It is WorkPac’s claims to restitution and set off to which I now turn.

The claim for restitution

679    By [12] of its Amended Originating Application, WorkPac seeks a declaration that it is entitled to restitution of part of the remuneration which it paid to Mr Rossato, being:

(i)    the difference between the amount payable to a flat rate ‘Permanent [FTM]’ and a flat rate ‘Casual [FTM]’ under the [2012 EA] or, in the alternative;

(ii)    the Casual Loading incorporated into the Flat Rate of a flat rate ‘Casual [FTM]’ under the 2012 EA.

680    WorkPac pursued only the second of these alternatives. It identified the casual loading for which it sought restitution as 25% of the rate of pay for a non-casual base rate FTM in Mr Rossato’s classification.

681    WorkPac contended that it was entitled to restitution of the casual loading because it had paid it on the basis of mistake and/or because of a failure of consideration in respect of that part of Mr Rossato’s remuneration.

682    It is convenient to consider these two bases for WorkPac’s claim to restitution separately before addressing a matter which bears fundamentally on WorkPac’s claim, namely, the fact that it is seeking restitution of amounts paid pursuant to fully executed contracts without seeking rescission or other setting aside of those contracts.

WorkPac’s claim of mistake

683    WorkPac submitted that it had paid the casual loading to Mr Rossato on the express basis that he was a casual FTM under the 2012 EA. It then submitted that a finding by this Court that Mr Rossato was not a casual FTM would mean that it had been mistaken as to the proper characterisation of his employment under the 2012 EA. It necessarily followed, it submitted, that “the position that [it] was required by law to pay Mr Rossato the casual loading, or that he was entitled to receive it, or that the payment of the casual loading would satisfy [its] legal obligations to Mr Rossato, was a mistake” (emphasis added). WorkPac then submitted that, if Mr Rossato is permitted to retain the amount of the casual loading paid pursuant to the mistake, he will have been enriched at its expense and that that enrichment is prima facie unjust.

684    The parties made their submissions with respect to restitution on the basis of mistake by reference principally to David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68, (2001) 208 CLR 516; Equuscorp Pty Ltd v Haxton [2012] HCA 7, (2012) 246 CLR 498; and Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14, (2014) 253 CLR 560 (AFSL v Hills). During the period in which this judgment was reserved, the High Court delivered judgment in Mann v Paterson Constructions Pty Ltd [2019] HCA 32; (2019) 373 ALR 1 which also involved consideration of restitutionary principles.

685    The overarching principles were summarised in Equuscorp by French CJ, Crennan and Kiefel JJ at [30]:

•    recovery depends upon enrichment of the defendant by reason of one or more recognised classes of "qualifying or vitiating" factors;

•    the category of case must involve a qualifying or vitiating factor such as mistake, duress, illegality or failure of consideration, by reason of which the enrichment of the defendant is treated by the law as unjust;

•    unjust enrichment so identified gives rise to a prima facie obligation to make restitution;

•    the prima facie liability can be displaced by circumstances which the law recognises would make an order for restitution unjust.

686    As noted earlier, the Minister supported WorkPac’s claim to restitution. In relation to the claimed mistake, counsel for the Minister submitted:

(a)    irrespective of whether the mistake is one of fact or of law, a payer will prima facie be entitled to recover monies paid if it appears that the monies were paid in the mistaken belief that it was under a legal obligation to pay the monies or that the payee was legally entitled to payment of the monies (David Securities at 378);

(b)    such a mistake would be causative of the payment (David Securities at 378);

(c)    the test for mistake is subjective so that consideration of what a reasonable person in the payer’s position would have done or believed is not relevant (North Adelaide Service Partnership v Retail Employees Superannuation Pty Ltd [2019] SASC 5 at [103]);

(d)    upon a causative mistake being established, the onus is on the payee to point to circumstances which the law recognises would make an order for restitution unjust (David Securities at 379, 384). In AFSL v Hills, Gageler J said of this proposition, at [106]:

… The fact that a payment is caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the recipient to make restitution. That is because causative mistake is a circumstance which the law recognises to be prima facie sufficient to make the recipient’s receipt, and retention, of the payment unjust. To displace that prima facie obligation, the recipient must establish some other circumstance which the law recognises would make an order for restitution unjust …

(Emphasis added)

(e)    the making of a payment based on an understanding of the law (however reasonable and widely shared at the time) which is falsified by a subsequent decision of the Courts may be treated as having been made by mistake (Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2006] UKHL 49; [2007] 1 AC 558);

(f)    a mistake as to the state of law giving rise to an entitlement to restitution includes both “cases of sheer ignorance” as well as “cases of positive but incorrect belief” (David Securities at 374); and

(g)    a payment would have been made involuntarily for the purposes of a claim of restitution if the will of the payer was affected by a mistake, so long as the mistake causes the person to make the payment upon a false assumption which, if the truth were known, would have resulted in no payment being made, nor any desire to pay (Hookway v Racing Victoria Ltd [2005] VSCA 310; (2005) 13 VR 444 at [22]-[23]).

687    The matters identified in the Minister’s submissions as justifying the claimed entitlement to restitution for mistake were these:

(a)    the hourly rates of pay in the 2012 EA for casual FTMs were higher than those for permanent FTMs;

(b)    Mr Rossato had been put on notice that WorkPac would pay him an hourly rate on the basis that he was a casual employee and, further, that the hourly rate would incorporate a casual loading in lieu of him having entitlements to paid leave;

(c)    WorkPac did in fact pay the higher hourly rate incorporating the casual loadings;

(d)    if this Court determined that Mr Rossato was not a casual FTM, WorkPac’s belief as to the characterisation of his employment relationship as casual will be found to have been mistaken; and

(e)    in those circumstances, WorkPac’s payment to Mr Rossato of the casual loading was caused by mistake so that WorkPac is, prima facie, entitled to restitution.

688    Of these propositions, only the first is non-controversial or does not require qualification. As to (b), Mr Rossato had been put on notice that he would be paid an hourly rate and that he would be a casual employee, but not that he would be paid an hourly rate “on the basis” that he was a casual employee, and the Fourth, Fifth and Sixth NOCEs did not indicate that the hourly rate incorporated a casual loading in lieu of entitlements to annual leave. As to (c), WorkPac did pay a higher hourly rate but that was the rate fixed by the contracts themselves and not the rates for casual flat rate FTMs fixed by the 2012 EA. As to (d) and (e), there are issues as to the nature of WorkPac’s mistake and as to the causative effect alleged which will be addressed below.

Did WorkPac pay an identifiable casual loading?

689    Mr Rossato, the CFMMEU and Mr Petersen disputed the premise on which WorkPac’s claim was made, namely, the claim that it had paid an identifiable severable casual loading of 25% which could be the subject of an order for restitution. The submissions proceeded as follows:

(a)    Mr Rossato had not received any loading as he had been paid a flat hourly rate;

(b)    that Mr Rossato was not to receive any separate identifiable casual loading is indicated in the First and Second NOCEs in the provision (the Composition Provision):

Your flat rate of pay includes the payment of overtime, weekend penalties, public holiday loadings, shift penalties, casual loading (refer to Schedule 2 for more information on your casual loading) and any industry and special allowances that may apply.

        It was also said to be evident in cl 14.9 of the 2012 EA:

Flat rate FTMs do not receive any additional payment for overtime loadings, weekend penalty rates, shift penalties, annual leave loading, casual loading (where applicable), public holiday rates or time worked outside the spread of hours as these have been incorporated into the flat rate.

(Emphasis added)

(c)    neither the NOCEs nor the 2012 EA identified the way in which account had been taken of the components specified in cll 9.1.1(b) and 14.9 in the calculation of the flat rate;

(d)    while it is apparent that the hourly rates for casual base rate FTMs in Sch 2 had a loading of 25% on the rates for permanent base rate FTMs, the differences between the rates for permanent and casual flat rate FTMs in Schs 3-7 were less than 25%, ranging between 7.5% and 16%, so that it is unclear what loading had been incorporated in the rates for casual flat rate FTMs;

(e)    a comparison of the rates for permanent flat rate employees and those for casual flat rate employees indicated that the latter did not provide the monetary equivalent of the entitlement of the former in some permutations of work patterns;

(f)    the casual flat rates in the 2012 EA indicated an hourly rate as one “indivisible sum, from which it is not possible to reverse engineer the amount of the [casual] loading”;

(g)    WorkPac’s inability to identify the amount of the loading as a separate entitlement is evidenced by its omission to keep records and to provide pay slips (as required by ss 535 and 536 of the FW Act and regs 3.33(3)(c) and 3.46(1)(g) of the Fair Work Regulations 2009 (Cth) (the FW Regulations)) which identified the amount of any loading; and

(h)    WorkPac’s submissions assumed, inappropriately, that the casual loading applicable to a casual flat rate FTM was the same as the 25% loading applicable to a casual base rate FTM.

690    The CFMMEU also submitted that it was pertinent that the breakdown of the contractual rates for which WorkPac now contends had not been conveyed or explained to Mr Rossato. This submission may be sound at the factual level, but it does not have the consequence for which the CFMMEU contended. That is because the assessment of the composition of the payments is to be made both objectively and by reference to the whole of the evidence.

691    As indicated, Mr Rossato emphasised that none of the 182 pay slips issued by WorkPac identified a separate amount for a casual loading. He submitted that WorkPac’s omission to identify a separate amount as the casual loading constituted contraventions of s 536 of the FW Act and reg 3.46 of the FW Regulations and meant that WorkPac is “estopped by representation from now claiming that the Casual Flat Rates can be separated into separately identifiable entitlements”.

692    The submission to this effect was not developed and did not rise above bare assertion. That being so, it can be addressed briefly. I consider that there is no basis for the alleged estoppel because there is nothing in the evidence upon which the Court could find detrimental reliance by Mr Rossato on the representation alleged: Legione v Hateley (1983) 152 CLR 406 at 437 (Mason and Deane JJ). The evidence did not even establish that he was aware of the content of the FW Regulations, let alone that he relied upon the absence of any mention in his pay slips of a casual loading.

693    A related submission of Mr Rossato was that the absence of “a separately identifiable amount for a casual loading” in the pay slips amounted to a concession by WorkPac that there was no such separately identifiable entitlement. I would reject that contention, especially given the apparent care taken in the First, Second and Third NOCEs to stipulate the components of the casual loading and the identification of those same components in cl 6.4.6 of the 2012 EA.

694    Having addressed those particular matters, the submissions of Mr Rossato, the CFMMEU and Mr Petersen raise two questions. Is there a casual loading in the rates for casual flat rate FTMs under the 2012 EA which is both identifiable and severable and did Mr Rossato’s contracts of employment provide for a casual loading which is both identifiable and severable? The resolution of these questions involves the construction of the 2012 EA and of Mr Rossato’s contracts.

The casual loading and the 2012 EA

695    It is necessary first to say a little more about the structure of the 2012 EA. As previously noted, it provided that FTMs would be engaged as either a base rate or a flat rate FTM (cl 6.4.2).

696    Base rate FTMs were to be paid the rate prescribed in Sch 2 for the applicable classification. They were also entitled to payment of allowances, overtime and any other entitlements set out in the 2012 EA (cl 9.1.1(a)). The range of allowances specified in cl 10 was extensive. They included allowances for shaft work, dirty work, confined spaces work, underground work, work clothes and safety boots, tools, meals and numerous other matters. Because of the diverse nature of the allowances and the circumstances in which they were payable, it is obvious that not all allowances would be applicable to all FTMs in all work. Their application in any individual case would depend on the particular duties of the FTM and the particular circumstances in which the FTM carried out the work.

697    The 2012 EA also provided that base rate FTMs were entitled to shift penalties and weekend penalties.

698    Clause 9.1.1(b) provided for the rate of pay for flat rate FTMs. It specified that the flat rate of pay was prescribed in Schs 3-7 for each classification. Clause 9.1.1(b) did not itself distinguish between permanent and casual flat rate FTMs. That distinction was made in the Schedules, which provided separate rates for permanent and casual flat rate FTMs.

699    Schedules 3-7 provided rates for different periods: Sch 3 being applicable at the time the 2012 EA was lodged with the FWC for approval (the evidence did not indicate when that was but it was probably in or about June 2012). The subsequent Schedules related to each 12 month period thereafter (commencing on 1 July 2012 and concluding with the period commencing on 1 July 2015). In addition to distinguishing between permanent and casual FTMs, Schs 3-7 provided for rates which varied according to the classification of the FTM, the nature of the shift being worked and the number and spread of the days required to be worked on each shift.

700    The evident intention of cl 9.1.1(b) was that there be a single rate encompassing so far as practical the various penalties and allowances which would be payable to the employee if the employee was a base rate FTM. No doubt that provided certainty as to the amount which would be paid and facilitated the weekly quantification of employees’ wage entitlements.

701    Clause 9.1.1(b) gave effect to this intention by describing the flat rates as “compensation” for all the identified matters. Clause 6.4.5(b) supplemented this by confirming that a flat rate casual would not be paid an additional amount by way of the casual loading, it having been “incorporated” into the casual flat rate of pay. Clause 14.9 also supplemented the position established by cl 9.1.1(b) by confirming that no additional amount would be paid in respect of the entitlements otherwise payable under the 2012 EA because they too had been “incorporated” into the flat rate.

702    The references to the casual loading and other entitlements having been “incorporated” into the flat rate and to that rate being “compensation” for all the identified elements allows the possibility that the flat rate provided for each of the elements, including the casual loading, in some undifferentiated way, with each having lost its separate identity. In particular, the use in cl 9.1.1(b) of the term “provided as compensation” allows the possibility that, instead of a casual loading actually being paid within the flat rate, a different form of payment was being made in its place. It could also be said that the very notion of incorporation of an entitlement into a larger rate has the effect that that entitlement loses its separate character.

703    However, in my view, such a construction would not be appropriate when the EA is read as a whole and considered in accordance with the principles to which reference was made earlier. First, it is significant that Schs 3-7 provided separate rates for permanent and casual flat rate FTMs. The latter were higher than the former (although it cannot be said that there was uniformity in the difference). The only apparent reason for the Schedules to differentiate between the permanent and casual rates is that the latter included a loading because of the casual nature of the work.

704    Secondly, subparas (a) and (b) in cl 6.4.5 should be read together. Clause 6.4.5(a) provided that a base rate casual FTM would be paid a casual loading of 25% on the rates prescribed in cl 9.1.1, that is, the base rate prescribed in Sch 2 for each classification. In relation to flat rate casuals, cl 6.4.5(b) specified that the casual loading had been incorporated into the flat rate of pay and that a casual flat rate FTM would not be paid any additional amount. It did so without indicating a percentage for the loading or the rate to which the percentage was to be applied, but did indicate that the (and not just a) loading has been incorporated. A natural reading of cl 6.4.5(b) is that the casual loading to which it referred was the 25% loading specified in cl 6.4.5(a) calculated on the applicable base rate. There does not seem to be any basis on which to suppose that cl 6.4.5(b) was referring to any other loading or to any other amount. Clause 6.4.6 referred to “your casual loading” without differentiating between base rate and flat rate casuals. It repeated that the casual loading was 25% and then identified the components of the loading. It is not a natural reading to understand cl 6.4.6 as stating the position only for the purpose of cl 6.4.5(a). To my mind, cl 6.4.5 indicated that a casual loading of 25% of the applicable rate for a base rate casual had been incorporated into the flat rate of pay.

705    Thirdly, if this construction not be appropriate, it would mean that the 2012 EA had left unspecified the nature of the casual loading incorporated into the casual flat rate. It seems improbable that those responsible for the negotiation of the 2012 EA would have intended that result.

706    In my view, the fact that several of the casual flat rates in Schs 3-7 of the 2012 EA were not 25% above the comparable rate for permanent flat rate FTMs on the same roster is not a sufficient reason to doubt that the casual loading of 25% to which cl 6.4.5(b) refers had been incorporated into the rate of pay for casual flat rate FTMs. That circumstance is consistent with the 25% loading having been calculated on the rates applicable to permanent base rate FTMs and then allowance made (perhaps in different ways) for the other elements to which cl 9.1.1(b) refers or calculated on rates which did not include all of the elements reflected in the flat rates for permanent FTMs. It is to be noted that, of the various elements specified in cll 9.1.1(b) and 14.9, the casual loading was applicable to every hour worked by a casual employee whereas that may not have been the case with respect to several of the other elements, whether in the case of casual or permanent flat rate FTMs. This makes it likely that the manner of incorporation of the casual loading into the flat rate was different from the manner in which the other elements were incorporated.

707    It is the case, as Mr Rossato submitted, that cl 9.1.1(b) provided that the flat rates to which it referred were compensation for several elements without indicating the manner in which account had been taken of those elements. Likewise, cl 14.9 provided that the payment for the specified elements (which did not include the industry and special allowances) had been incorporated into the flat rate without indicating how that was done. However, the fact that there was no separate identification of the amounts attributable to each of the elements is not a reason to doubt that they were incorporated. Nor is it sufficient reason to doubt that the one loading whose amount had been identified in cll 6.4.5 and 6.4.6 had been included.

708    It is pertinent that the CFMMEU (then the CFMEU) was involved as a bargaining representative for the 2012 EA. This provides some assurance that the rates did in fact include the casual loading identified in cll 6.4.5(b) and 6.4.6.

709    In my opinion, WorkPac has established that there is an identifiable amount of casual loading in the hourly rates applicable to Mr Rossato under the 2012 EA, namely, a loading of 25% of the hourly rate applicable from time to time for a base rate FTM. However, for reasons to be given shortly, I do not consider that the casual loading in the rate actually paid to Mr Rossato can be regarded as severable.

The casual loading and the contracts of employment

710    In my view, it should also be concluded that the hourly rates in the first, second and third contracts included an identifiable casual loading.

711    The First and Second NOCEs may be considered together as there were no material differences between them. The Composition Provision which is relevant to this issue has been set out earlier. I note again that Sch 2 to which the Composition Provision refers had the effect of incorporating by reference cll 6.4.5 and 6.4.6 of the 2012 EA.

712    Prima facie, the Composition Provision, taken together with cll 6.4.5 and 6.4.6, indicates that the hourly rate for which the two NOCEs provided did comprise a casual loading of 25% calculated on the rate for base rate FTMs. That is the natural meaning of the word “includes”.

713    However, the concluding words “that may apply” do allow some uncertainty, as they could possibly be understood as qualifying each of the components which precede them. If so, the First and Second NOCEs would provide that the flat hourly rate would include payment of a casual loading that may apply, thereby requiring a further enquiry as to whether a casual loading did apply. It would also allow for the possibility that there may be no casual loading incorporated in the hourly rate.

714    An alternative construction is that the concluding words “that may apply” qualify only the last of the specified components, namely, “any industry and special allowances”. In my view, that is the preferable construction.

715    First, it does not seem natural to suppose that these NOCEs contemplated that the elements other than “any industry and special allowances” may not be applicable. For example, the contract provided expressly that Mr Rossato would be performing work on alternating shifts. That necessarily attracted the payment of the shift penalties to which cl 15.4.2 of the 2012 EA provided. The shift structure at Collinsville, which formed part of the factual matrix known to both parties at the time they entered into the first contract, meant that the performance of overtime and weekend work was a necessary incident of the employment. That too made it evident that there was no need for the concluding qualifying words in relation to weekend penalties. The same can be said with respect to the casual loading.

716    Secondly, the Composition Provision seems to have been derived from cl 9.1.1(b) of the 2012 EA. Although there is some infelicity in the manner of expression in cl 9.1.1(b), a reading of that clause suggests the flat rate is compensation for all the specified entitlements and, in addition, for “any industry and special allowances” that may be applicable.

717    Thirdly, the apparent purpose of the Composition Provision is to provide some certainty as to Mr Rossato’s entitlements. Understanding the concluding words “that may apply” as qualifying all of the components has the potential to undermine that certainty.

718    Fourthly, the reference in the Composition Provision to Sch 2, and the content of Sch 2 itself, points to an understanding that a casual loading was applicable. That being so, the qualifying words do not seem apt as a reference to the casual loading.

719    Accordingly, I would not regard the concluding words “that may apply” as indicating uncertainty about whether a casual loading was applicable.

720    I add that, even if that understanding of the provision be incorrect, the effect of Sch 2 in the context of the first two NOCEs, read as a whole, is to indicate an understanding that the casual loading (identifiable by reference to the 2012 EA) was applicable.

721    The Third NOCE did not contain the Composition Provision nor a counterpart. That creates greater room for uncertainty as to whether the hourly rate did include a casual loading. However, the statement in the Third NOCE referring Mr Rossato to Sch 2 for more information on his casual loading and the content of Sch 2 itself indicates, in my view, that the hourly rate in the contract which resulted did include a casual loading.

722    The Fourth, Fifth and Sixth NOCEs stand differently. They did not incorporate cll 6.4.5 and 6.4.6 of the 2012 EA by reference and did not include the Composition Provision. The Fifth and Sixth NOCEs indicated only that the rate of pay may include the payment of “overtime, weekend penalties, public holiday loadings, shift penalties, casual loading and any industry and special allowances that may apply”. That allowed that the hourly rates may, or may not, include payment for those entitlements. The position under the Fourth NOCE is even plainer as it did not include any reference to a casual loading, or any indication of the composition of the flat hourly rate.

723    In these circumstances, it cannot be concluded that the fourth, fifth and sixth contracts provided an identifiable casual loading.

724    In my view, once it be accepted that, on the proper construction of cll 6.4.5 and 6.4.6, the casual loading is 25% of the base rate, WorkPac’s submission that it is possible, by a process of deduction, to identify components in the hourly rates in each of the first three employment contract should be accepted. Using the rate in the first contract by way of example, and adopting for this purpose the methodology proposed by WorkPac, these components were:

725    I will set out similar analyses with respect to the hourly rates in the second and third contracts later in these reasons.

726    I accept that the steps in table are not explicit in the 2012 EA and involve a process of deconstruction. However, I consider it to follow from a natural reading of cll 6.4.5 and 6.4.6 and of those contracts.

727    Accordingly, I conclude that a casual loading is identifiable in the contract hourly rates under the first three contracts. Again, for reasons to be given shortly, this loading cannot be regarded as severable.

Was there an operative mistake?

728    The party asserting the mistake has the onus of proving both the mistake upon which it relies and that it was that mistake which caused it to make the payment: Holt v Markham [1923] 1 KB 504 at 511.

729    It is not every payment made pursuant to a mistake which will found a claim for restitution. The authorities suggests that a reasonably broad view of the kind of mistake which is necessary is appropriate. A critical matter is that the payment made pursuant to the claimed mistake was not voluntary. In this context, the term “voluntary payment” refers to a payment made in satisfaction of an honest claim, rather than a payment not made under any form of compulsion or undue influence: David Securities at 374. Earlier, the plurality had noted at 373-4 that a payment is:

voluntary or there is an election if the plaintiff chooses to make the payment even though he or she believes a particular law or contractual provision requiring the payment is, or may be, invalid, or is not concerned to query whether payment is legally required; he or she is prepared to assume the validity of the obligation, or is prepared to make the payment irrespective of the validity or invalidity of the obligation, rather than contest the claim for payment.

730    In Hookway v Racing Victoria, Ormiston JA considered at length the distinction between a payment made voluntarily and a payment made by mistake. This included a review in some detail of the reasons in David Securities. His Honour concluded:

[44]    … The term “voluntary” payment had been defined in terms of one made in satisfaction of an honest claim which connoted, beyond mere payment, an effective closure of the transaction … [I]n order to satisfy the term “voluntary” there must otherwise be a conscious choice to make a payment notwithstanding any possible defects in the claim. To this end there must be an assumption as to the validity of the obligation, notwithstanding that ultimately it may turn out that there is no obligation in law … In my opinion, as worked out by the majority in David Securities, it was not intended that a person, who makes a payment in ignorance of a basis of invalidity for denying liability, can thereby be treated, without more, as having intended voluntarily to pay the sum regardless of what might be shown to have been a mistake of law. It was intended only to restrict claims by those who consciously decided to pay regardless of what might arise in the future, as well as those who were otherwise bound by accord and satisfaction or any other compromise, or by submission to judgment, each of which will amount to satisfaction of the payee’s claim. These may be said, in general terms, to be paid in satisfaction of honest claims.

(Citations omitted, italics emphasis in the original and bold italics emphasis added)

731    Earlier, at [41], Ormiston JA had identified five categories of voluntary payment, being:

(a)    payments where the payer believes a particular law or contractual obligations is invalid but chooses to pay;

(b)    payments where the payer believes that the law or obligation may be invalid but chooses to pay;

(c)    payments where the payer pays but is not concerned to query whether the payment is required at law;

(d)    payments where the payer is prepared to assume the validity of the obligation and therefore pays; and

(e)    payments where the payer in making payment is prepared to do so “irrespective of the validity or invalidity of the obligation” and chooses not to contest the claim for payment.

(Emphasis in the original)

732    As Ormiston JA noted in the passage which followed, this classification “clearly concentrates on the mind and intention of the person making payment”.

733    Mistakes of the requisite kind are to be distinguished from mispredictions or mistaken expectations which do not negative the voluntary nature of the payment: Strang Patrick Stevedoring Pty Ltd v The Owners of the Motor Vessel “Sletter” (1992) 38 FCR 501 at 523-4; Hookway v Victoria Racing at [61]-[62].

734    Mr Rossato submitted, in effect, that WorkPac’s payments in the present case should be characterised as those in category (d) (and, possibly in categories (b) and (e)) in the analysis of Ormiston JA. He referred to Queensland Alumina Ltd v Alinta DQP Pty Ltd [2007] QCA 387, in which the Court of Appeal considered the voluntariness of periodic payments which the payer had continued making after it had received advice from its in-house legal counsel that the amounts being charged were invalid. Holmes JA, with whom Fryberg J agreed, held that, on the receipt of the advice from the in-house counsel, the payer had not been labouring under a positive belief as to the efficacy of the clause on which the payee relied and had not been in a state of sheer ignorance. Her Honour held that the payer had chosen to make the payments despite its belief that the contractual provision might be invalid and, accordingly, that the payments were voluntary and not caused by a mistaken belief as to the legal position, at [72].

735    Mr Rossato also referred to Halgido Pty Ltd v DG Capital Company Ltd (1996) 34 ATR 582. That case concerned the recovery of payments of taxation pursuant to a contractual clause found to be void. Tamberlin J was not satisfied that any of the payments had been made under the operative effect of a mistake in law. That was so because both the language of the contractual clause and a solicitor’s letter supported the inference that the payer had made the payment even though it knew that the clause may be invalid and that it had been prepared to assume the validity of the obligation and to make the payment irrespective of its validity, at 592.

736    Mr Rossato submitted that a similar conclusion should be reached in the present case because of the agreed facts that:

(a)    WorkPac had been aware from 20 May 2014 (that is, before he had first been employed) that Mr Skene, who was employed by it in similar circumstances, was challenging its characterisation of him as a casual employee; and

(b)    from the delivery of judgment by the Federal Circuit Court (the FCC) on 24 November 2016 in Skene (FCCA), WorkPac had known that Mr Skene had been found to be other than a casual employee for the purposes of the FW Act.

737    This meant, Mr Rossato submitted, that WorkPac had been aware that its characterisation of the flat rate FTMs employed by it on similar arrangements as casual may be “invalid” so that, from the very commencement of his employment on 28 July 2014 or, alternatively, from the delivery of judgment at first instance in Skene (FCCA) on 24 November 2016, it had made the casual payments knowing that they may be inappropriate.

738    In a related submission, Mr Rossato contended that WorkPac had not, in any event, shown that, without its mistaken characterisation of Mr Rossato as a casual employee, it would not have paid him the rate it did.

739    WorkPac did not lead evidence from any responsible employee concerning a state of mind which could be attributed to it on the question of whether the claimed mistake had been operative. Instead, it relied on inferences from the facts which it had agreed with Mr Rossato. These were that each NOCE had been expressed as an offer of casual employment; the First, Second and Third NOCEs provided expressly for payment of a casual loading; all of the FTMs which it had provided to Glencore at the Collinsville and Newlands Mines had been designated as casual employees; Mr Rossato had always been paid a rate which exceeded the rate for casual flat rate FTMs under the 2012 EA; and Mr Rossato had not been given and, until 2 October 2018, had not claimed, the entitlements which he now claims.

740    WorkPac also referred to the statement of the FCC Judge in Skene v WorkPac Pty Ltd [2018] FCCA 3628 at [28] (the Skene Penalty Judgment) that “the work practice adopted by WorkPac in respect of [Mr Skene] was one which had been widely regarded as lawful under the [FW Act] prior to the judgment of the Full Court in Skene”. Insofar as WorkPac sought to rely on that finding as evidence of fact, it could not do so – see s 91 of the Evidence Act 1995 (Cth).

741    WorkPac submitted that, having regard to the identified matters, it should be concluded that, “as a matter of commercial and practical sense, [it] would not have paid Mr Rossato a substantial amount above what he was in fact entitled to, in circumstances where the amount was specifically designated to be in lieu of entitlements that he would have received had [it] not been operating under a mistake” (emphasis added). It was implicit in this submission that WorkPac would not have paid Mr Rossato more than it had to at any time.

742    In my view, the inference that WorkPac was operating under the view that it had employed Mr Rossato as a casual employee is open and should be accepted. The payments which it made were pursuant to contractual arrangements in which the employment had been nominated as casual; it employed all the FTMs it supplied to Glencore on the same basis; and both it, and for that matter, Mr Rossato, had conducted themselves on the basis that the employment was casual.

743    While the fact that Mr Skene had commenced litigation in the FCC challenging the characterisation of his employment may also have raised a question about the correct characterisation of Mr Rossato’s employment, the fact of the matter was that WorkPac was defending that litigation and seeking vindication of its position. It would be unreasonable to hold that, while seeking that vindication, WorkPac should nevertheless not have commenced, or later have abandoned, its contractual arrangements with Mr Rossato. Presumably, if it had done that, it would also have had to change its contractual arrangements with all other employees in the same position. In effect, WorkPac would have been required to concede the very matter in respect of which it was seeking vindication. In my opinion, it is preferable to regard the circumstance as one in which, while there may have been a question about the correct characterisation of Mr Rossato’s employment, WorkPac was, in effect, seeking vindication of its belief: see Unjust Enrichment, Edelman and Bant, Second Edition 2016, Hart Publishing at 178-9.

744    However, with the delivery of the FCC judgment on 24 November 2016, the position changed. Although WorkPac succeeded at first instance with respect to Mr Skene’s claim to entitlements under the 2007 EA, Mr Skene’s claim for leave entitlements under the FW Act on the basis that he was not a casual employee succeeded. The circumstances of Mr Skene’s employment are not identical with those of Mr Rossato, but they are sufficiently similar to have raised a real question as to whether Mr Rossato was properly characterised as a casual employee. Moreover, by reason of the FCC Judge’s reference in his judgment to the decisions at first instance in Williams (FMCA) and on appeal in Williams v MacMahon Mining Services Pty Ltd [2010] FCA 1321, WorkPac must also have been aware of the similarities between Mr Williams’ employment and that of Mr Rossato. True it is that WorkPac appealed against the first instance decision in Skene, but it could not disregard the effect of that judgment. It was a considered judgment of a court and could not be regarded as being in some way provisional or ineffective until confirmed on appeal.

745    It could also be surmised that the changes in the terms of the NOCEs provided by WorkPac, commencing with the Fourth provided on 27 September 2016, reflected some concern on WorkPac’s part that Mr Rossato may not in law be a casual employee and an attempt to strengthen its position in that respect. Those changes created some differences between Mr Rossato’s contracts and those of Mr Skene, but, as the underlying work arrangement did not change, WorkPac could not have had any confidence as to their efficacy.

746    It is noteworthy that WorkPac had the opportunity to review its employment arrangements with Mr Rossato after 24 November 2016 and, in fact, did so by sending him the Sixth NOCE on 21 December 2016.

747    If it be pertinent, there is no indication in the evidence that Mr Rossato would have been resistant to a change in the employment arrangements. On the contrary, the evidence indicates that he had told both Glencore and Mr Rossato’s supervisors that he wanted paid sick and annual leave benefits. This occurred in August 2017 but there is no reason to suppose that it did not also reflect Mr Rossato’s attitude at earlier times.

748    If the trial had proceeded in a more conventional way, these matters may have been the subject of detailed oral evidence. In particular, the Court may have had oral evidence from a responsible WorkPac employee as to the basis on which WorkPac proceeded in the light of these events.

749    The state of the evidence means that one cannot be dogmatic but, in my view, it should be concluded that, as from 24 November 2016 or very shortly thereafter, WorkPac must have known (and did know) that there was significant doubt about the legitimacy of its employment arrangements with Mr Rossato, but chose to persist with them in any event. That being so, I do not consider that it should be concluded that WorkPac was proceeding under any operative mistake from (or shortly after) 24 November 2016.

750    However, I would accept that WorkPac was operating under a mistaken view (in the relevant sense) until 24 November 2016.

751    That conclusion makes it necessary to address some further matters relating to the element of causation.

752    Consideration of whether the mistake of WorkPac was an operative cause of its payments should take account of two matters. The first is that, throughout his employment, WorkPac paid Mr Rossato hourly rates which were in excess of those required by the 2012 EA, that is, which exceeded the aggregate of the rates for a permanent base rate employee, the 25% casual loading, and the amount for the elements identified in cll 9.1.1(b) and 14.9. I will refer to the excess amounts as the “Over-EA Payments”. The second is that WorkPac did not seek to prove that the amount of the casual loading had played any part in its determination of the contract hourly rate. The evidence is just as consistent with WorkPac having determined, independently, a rate which it considered appropriate and only then considering whether the rate so determined was sufficient to discharge its obligation under the 2012 EA.

753    Earlier in these reasons, I accepted WorkPac’s submission as to the manner in which the hourly rates paid Mr Rossato under the first three contracts could be deconstructed. I used the hourly rates payable under the first contract as the example. The following table identifies the Over-EA Payments for the whole of Mr Rossato’s employment (using WorkPac’s own methodology and the calculations it provided). The breakdown for the fourth, fifth and sixth contracts is provided for completeness only.

754    As is apparent, the effect of the Over-EA Payment is that, throughout Mr Rossato’s employment, WorkPac paid a contract hourly rate which exceeded the amount it was otherwise required by the 2012 EA to pay, even with the casual loading of 25% included.

755    With limited exceptions, the Statement of Agreed Facts and the Annexures did not provide any explanation of why that was so or of the manner by which WorkPac fixed the contract hourly rate. One exception is WorkPac’s letter to Mr Rossato of 11 February 2016 by which it justified the reduction in the hourly rate from $49 to $43.05. That letter described the Over-EA Payment as “an additional over award component” or “Flex Up amount” and said that it was paid “in line with” the Flexible Reward Scheme payment provisions of the 2012 EA. Clause 13 of the 2012 EA provided for the Flexible Reward Scheme. Clause 13(b) provided that there may be an amount paid pursuant to the Scheme “as an hourly supplement” to classification wages or as a weekly or one-off lump sum amount. Clause 13(c) provided that the Scheme could be withdrawn or varied at any time. Although the letter of 11 February 2016 did not say so expressly, it implied that the reduction in the hourly rate was being effected by a reduction in the amount payable under the “Flexible Reward Scheme”.

756    The Fourth and Sixth NOCEs indicated that the contract hourly rate included amounts of $1.01 and $5.28 respectively under the Flexible Reward Scheme. Those amounts do not match the amount of the Over-EA Payments in the table set out above. The Second, Third and Fifth NOCEs indicated that a “Performance Incentive Bonus” of $6.40, $0.01 and $0.01 respectively was included in the hourly rate. The evidence did not explain that “bonus”, but cl 13(e) of the 2012 EA provided that, for “current FTMs” (presumably those employed at the commencement of the 2012 EA), cl 13 replaced “the Performance Incentive Bonus Provisions as detailed in your existing Letter of Offer”.

757    WorkPac did not adduce any evidence about the Flexible Reward Scheme or about how it determined the payments pursuant to that Scheme. This meant that the Court did not have evidence of the way in which WorkPac fixed the contract hourly rates at figures which exceeded those payable under the 2012 EA.

758    The strong impression one has is that the Over-EA Payments were paid at the discretion of WorkPac so as to ensure that the contract hourly rates paid to Mr Rossato were “market” or “prevailing” rates. This impression is confirmed by two matters. First, as the CFMMEU submitted, it appears that the contract hourly rates were independent of Mr Rossato’s place of work and shift pattern in that there were times when the hourly rate remained the same despite a change in the place of work and in the shift pattern. Further, the contract hourly rate changed at other times despite there being no change in Mr Rossato’s crew, place of work or shift pattern. Secondly, WorkPac’s own submission implying that it would not have paid Mr Rossato more than it had to from time to time suggests that it felt some necessity to pay the Over-EA Payments.

759    I should add that the evidence supports the conclusion that it was WorkPac alone which determined the contract hourly rates. There is no suggestion of any negotiation between Workpac and Mr Rossato with respect to those hourly rates.

760    WorkPac’s payment of the Over-EA Payments suggests that the contract hourly rates were the amounts which it had to pay, independently of the 2012 EA, in order to attract and retain Mr Rossato as an employee in the available market. If that be right, two matters follow. First, the identifiable casual loading cannot be regarded as severable as it was subsumed into the rate which WorkPac considered it necessary to pay. Secondly, it cannot be concluded that WorkPac’s mistake was the cause (whether in a “but for” sense or in the sense of a material factor) of its payment of the amount of the casual loading for which it now seeks restitution. It would mean that WorkPac had decided to, and did, pay that amount in any event.

761    There is of course some inherent uncertainty in the notion of a “market” rate. What is the market and are the comparisons being made like for like? Might there be more than one market rate depending on whether the assumption is made that the employer does not have to provide any forms of paid leave in addition to the contracted rate?

762    Issues of this kind point up the significance of the absence of evidence concerning the fixation of the contract hourly rates. Despite having the onus of proof, WorkPac did not lead evidence about these matters. The position is therefore uncertain and the Court should not have to speculate. It is left with the position in which the contract hourly rates seem to have been fixed by reference to some consideration other than an aggregation of the amounts required to be paid under the 2012 EA, including the casual loading. Contrary to the submissions of counsel for the Minister, this is not a case in which the circumstantial evidence is sufficient to establish proof by inference: cf Transport Industries Insurance Co. Ltd. v Longmuir [1997] 1 VR 125 at 128-9, 141. That is because, as previously noted, the position is just as consistent with WorkPac having determined an appropriate hourly rate, independently of the casual loading, and only then satisfying itself that the rate so determined was sufficient to discharge its liability under the 2012 EA. The Composition Provision is also consistent with WorkPac wishing to make it clear that Mr Rossato was not entitled to a casual loading in addition to that rate and that he was not entitled to the various forms of paid leave. In that circumstance, it should be concluded that WorkPac has not discharged its onus of proof with respect to causation.

763    This can be put more succinctly by saying that WorkPac does not prove that its mistake was a cause of the payments it made when it does not provide by evidence any explanation for it having paid voluntarily hourly rates which exceed the amounts it was required to pay under the 2012 EA. Nor does it prove that the casual loading is both identifiable and severable.

764    These matters are sufficient by themselves to indicate that WorkPac’s claim to restitution on the basis of mistake must fail.

Failure of consideration of a distinct and severable part of Mr Rossato’s remuneration

765    WorkPac submitted in the alternative that, if Mr Rossato was not a casual FTM, the casual loading paid to him formed a distinct and severable part of his remuneration in respect of which there had been a failure of consideration. Accordingly, it sought restitution on that alternative basis.

766    Failure of consideration is a recognised basis for the remedy of restitution: Roxborough at [14]-[15] (Gleeson CJ, Gaudron and Hayne JJ), at [62] (Gummow J). The failure of the consideration need not be total, as the plurality in Roxborough explained:

[17]    … But there are cases, of which the present is an example, where it is possible, both to identify that part of the final agreed sum which is attributable to a cost component, and to conclude that an alteration in circumstances, perhaps involving a failure to incur an expense, has resulted in a failure of a severable part of the consideration …

(Emphasis added)

767    The term “consideration” in this context is not used in its contractual sense: Equuscorp at [32]. It encompasses circumstances in which a payment has been made for a purpose which has failed, a condition not fulfilled, and a contemplated state of affairs has disappeared or failed: Roxborough at [16], [101]-[104].

768    WorkPac submitted that, if it be found that Mr Rossato was not a casual employee, the basis for its payment of the casual loading had failed. That was because the consideration provided by Mr Rossato under the contracts was not just the provision of his services but his acceptance of the casual loading in discharging any obligations in relation to annual or PC leave or the other entitlements of permanent employees under the 2012 EA. WorkPac emphasised the two-fold nature of its obligation to pay Mr Rossato the casual loading, namely, the obligation imposed by s 50 of the FW Act not to contravene the 2012 EA, and the obligations it had assumed pursuant to its contracts with Mr Rossato.

769    Mr Rossato provided his services pursuant to the employment contracts and WorkPac makes no complaint about the manner in which he did so. It is an agreed fact that, by reason of Mr Rossato’s performance of his obligations under the contracts, WorkPac was able to meet its obligation to provide to Glencore an employee of whom it approved and, further, was relieved of the necessity to find a replacement employee to fulfil those obligations.

770    In addition to Mr Rossato’s provision of his services under the contracts, WorkPac received the additional benefit before 9 April 2018 of him continuing to work at times when he would otherwise have been entitled to take paid annual leave or paid PC leave. It is an agreed fact that there were a number of occasions during the course of his employment when Mr Rossato would have made use of accrued leave entitlements if they had been available to him. WorkPac received a benefit from Mr Rossato not doing so, because it continued to be able to meet its obligations to Glencore by providing his services, without having to find a replacement employee. These matters indicate that WorkPac received in full the services from Mr Rossato for which it had bargained.

771    Mr Rossato, the CFMMEU and Mr Petersen again contested WorkPac’s claim that the casual loading formed an identifiable severable part of Mr Rossato’s hourly rate. For the reasons given earlier, I think that one can identify the amount of the casual loading under the first three contracts and in the 2012 EA.

772    However, WorkPac must show not only that there was an identifiable portion in the hourly rates payable under the contracts but that that portion was severable. WorkPac’s agreement to pay Mr Rossato more than was required under the 2012 EA and its omission to prove that the contractual hourly rate was determined having regard to the amount of the casual loading means that it cannot do so. I note again that there is no evidence that the amount of the casual loading was an integer in the manner of quantification of the contract hourly rate which WorkPac agreed to pay Mr Rossato. As indicated, so far as the evidence shows, that rate appears instead to have been WorkPac’s own assessment of the overall amount which it had to pay in order to recruit and retain Mr Rossato as an employee. As that amount exceeded the total it was obliged to pay under the 2012 EA, the casual loading was thereby subsumed, and lost independent significance.

773    WorkPac sought to avoid this result by a submission that its promise to pay an amount in excess of its obligations under the 2012 EA was, in substance, a promise to pay the applicable enterprise agreement rate plus the difference to make up the full contractual consideration. This submission cannot be sustained at the factual level. It has no basis in any of the six contracts and appears instead, to be founded on a reconstruction of those contracts advanced only for the purposes of this litigation.

774    In these circumstances, I consider that WorkPac has not established an identifiable severable portion of its payments which can found a claim to restitution by reason of a partial failure of consideration.

775    The same considerations indicate that it is not unjust for Mr Rossato to retain the payments made to him in consideration of the provision of his services. WorkPac intended that he should have the whole of the amounts paid to him in any event: cf Barclays Bank Ltd v W.J. Simms Son & Cooke (Southern) Ltd [1980] QB 677 at 695.

776    Accordingly, this alternative basis for WorkPac’s claim to restitution, when considered by itself, also fails.

Restitution in the context of completed contracts

777    The submissions of WorkPac addressed so far paid little regard to the fact that the payments for which it seeks restitution were made pursuant to fully executed contracts which are not void and which have not been rescinded. Moreover, the services required of Mr Rossato under the contracts were provided in full.

778    The proposition stated in Mason & Carter’s Restitution Law in Australia, 3rd Edition, LexisNexis Butterworths 2016 at [215], that “[o]nly rarely will the law of restitution operate in the context of an effective contract” is borne out by the authorities. In Mann v Paterson Constructions, Kiefel CJ, Bell and Keane JJ commenced their review of the authorities under the heading “Contract and the subsidiarity of restitutionary claims” at [14] with the proposition:

Restitutionary claims must respect contractual regimes and the allocations of risk made under those regimes.

(Citations omitted)

779    Likewise, in Trimis v Mina [1999] NSWCA 140, Mason P, in the judgment of the Court of Appeal of the Supreme Court of New South Wales, said:

[54]    … Restitution respects the sanctity of the transaction, and the subsisting contractual regime chosen by the parties as the framework for settling disputes. This ensures that the law does not countenance two conflicting sets of legal obligations subsisting concurrently …

780    Goff J stated the same principle in Barclays Bank Ltd v W.J. Simms Son at 695:

[I]f the money was due under a contract between the payer and the payee, there can be no recovery on this ground unless the contract itself is held void for mistake … or is rescinded by the plaintiff.

In David Securities, the plurality referred to this passage with apparent approval at 376.

781    In Pan Ocean Shipping Co. Ltd v Creditcorp Ltd [1994] 1 WLR 161 at 166, Lord Goff of Chieveley said:

[I]t is always recognised that serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract.

This passage was cited by Gleeson CJ in Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635 at [47].

782    WorkPac did not advance any claim for rescission of the contracts, whether on the basis of mutual or unilateral mistake. A claim of that kind would have been difficult to sustain.

783    There are some circumstances, as Edelman and Bant indicate in Unjust Enrichment, Second Edition, at 149-50, in which restitution will be ordered despite the continued existence of a valid contractual obligation. Roxborough was such a case. However, the contracts between the retailers and the wholesalers under consideration in Roxborough had a number of distinctive features:

(i)    there was a direct nexus between the respective liabilities of the retailer and the wholesaler for the tobacco licence fee, in that the fee to be paid by the retailer was reduced by the amount paid by the wholesaler in respect of the same tobacco, at [4]-[5], [39]-[40] and [184]-[185], so that the retailer had a direct interest in the wholesaler renewing its licence and passing on the fee which it had paid;

(ii)    it was the common intention of the retailer and the wholesaler that the amounts paid by the retailer to the wholesaler would be paid to the revenue, at [17]; and

(iii)    the liability in respect of which the retailer had paid the licence fees was not, in the light of the finding of the invalidity of the licence fee, incurred, at [17].

784    Gleeson CJ, Gaudron and Hayne JJ identified these and other features as indicating that, in the particular circumstances then being considered, restitution would not interfere with the contractual rights:

[21]    It accords with the basis of dealing, and contractual arrangements, between the appellants and the respondent to regard that part of the net total amount of each invoice referable to the "tobacco licence fees" as a severable part of the consideration, which has failed. There is no conceptual objection to this. For the reasons already given, the tax component of the net total wholesale cost was treated as a distinct and separate element by the parties. It was externally imposed. It was not agreed by negotiation. It was not like the discounts, which might differ between retailers, just as the wholesale list price would vary from time to time in accordance with market conditions. To permit recovery of the tax component would not result in confusion between rights of compensation and restitution, or between enforcing a contract and claiming a right by reason of events which have occurred in relation to a contract.

(Emphasis added and citation omitted)

785    This case has its own distinctive features which distinguish it from Roxborough. It is agreed that:

(a)    Mr Rossato had believed and relied on WorkPac’s representations to him that he was a casual employee and had relied on WorkPac’s offers of employment as being in accordance with the existing laws;

(b)    Mr Rossato had believed that the monies paid to him on each pay slip were paid in consideration of the performance of his obligations under his contracts; and

(c)    Mr Rossato had relied on the representations of each pay slip as being an amount paid to him by WorkPac to which he was entitled and which he could use as he pleased.

786    Moreover, the parties did advert to the possibility that the contract arrangements may be inconsistent with binding obligations. Clause 1 in the General Conditions stated:

Should this Agreement provide for rates or conditions which are less beneficial to the employee than the [NES], the terms and conditions outlined in the [NES] shall apply in lieu of the terms and conditions in this Agreement.

787    Clause 2 had the effect of identifying the 2012 EA as the “Relevant Industrial Instrument”. It then provided:

Where the terms and conditions of this document differ to those in the Relevant Industrial Instrument, those in the Relevant Industrial Instrument will apply in their entirety to the complete exclusion of those in this document.

788    Clause 8 had the effect of denying Mr Rossato, while characterised as a casual employee, any entitlement to annual leave.

789    It was an agreed fact that, throughout the period from 28 July 2014 to 9 April 2018, WorkPac was aware of several provisions in the FW Act. These included s 50 (the prohibition on contraventions of a term in an enterprise agreement), s 55 (which, amongst other things, prohibits a term in an enterprise agreement from excluding any provision in the NES), and s 56 (which provides that the term of a modern award or enterprise agreement has no effect to the extent that it contravenes s 55). It was also an agreed fact that WorkPac was aware of ss 92 and 100 which contained the restrictions on the cashing out of annual leave and PC leave entitlements.

790    Although the General Conditions adverted to the possibility of inconsistency between its terms and those in the 2012 EA or in the NES, it made no provision for adjustment of the agreed remuneration in the event that that circumstance was realised. It was not suggested that any such term could be implied: cf, Pan Ocean Shipping v Creditcorp at 164 (Lord Goff).

791    I mention for completeness in this context, cl 7.9 of the General Conditions:

7.9    WorkPac endeavours to accurately determine the employee’s wages each week. Very occasionally however, over or under payments may occur.

If an underpayment comes to WorkPac’s notice the amount of the identified wage shortfall will be paid to the employee in the next normal pay run.

In the event of an overpayment of wages, the employee agrees that WorkPac may recover the overpayment from any wages or entitlements owing to the employee. If an amount remains outstanding at the conclusion of employment or an assignment, then WorkPac may recover the outstanding amount from any monies then owing including wages or accumulated leave.

Overpayments will be deducted over a maximum period of up to twelve (12) weeks unless otherwise agreed.

792    WorkPac did not seek to rely on this clause. It appears to be directed to underpayments and overpayments of an arithmetical or administrative kind. In any event, WorkPac paid the amounts which it had agreed in the contracts to pay, so that that there was no overpayment which it could claim.

793    In this case, the contractual bargain was that WorkPac would pay Mr Rossato a higher hourly rate than it was obliged to pay under the 2012 EA (even on the basis that he was a casual flat rate FTM), seemingly in order to attract and retain him as an employee. As between WorkPac and Mr Rossato, it was the former that took the risk that the method of remuneration it proposed in exchange for Mr Rossato’s provision of services may not be sufficient to discharge all its statutory obligations. It is immaterial that Mr Rossato did not object to the arrangements. WorkPac may have agreed to pay Mr Rossato more for the performance of his work than was necessary but any adjustment in that respect should be determined by the law of contract, and not by restitutionary principles. In the circumstance that WorkPac carried the contractual risk, it cannot invoke resitutionary principles to accommodate the fact that its payments were insufficient to discharge its statutory obligations.

794    WorkPac cannot contend that it had agreed that, in consideration of the provision by Mr Rosssato of his services, it would pay the hourly rates on the basis that they also discharged its obligations with respect to paid leave. Given the terms of ss 92 and 100 of the FW Act, neither it nor Mr Rossato could contract lawfully on that basis: Jeld-Wen Glass at [18]-[21].

Illegality and an undermining of the policy of the Fair Work Act

795    It is appropriate to refer briefly to “defences” raised by Mr Rossato: illegality, estoppel and change of position.

796    In relation to the first, Mr Rossato submitted that restitution should be refused because its grant would undermine the policy of the FW Act that employees other than casuals should have entitlements to paid annual leave and to paid PC and other leave. Further, that such an approach is necessary in order to maintain coherence in the law. Mr Rossato relied in this respect on Equuscorp at [23], [45] (French CJ, Crennan and Kiefel JJ) and at [111] (Gummow and Bell JJ).

797    Mr Rossato’s submission was based on the prohibitions in ss 92 and 100 in the FW Act on the “cashing out” or “pre-paying” of annual and PC entitlements to which I have referred earlier. In relation to ss 100 and 101, Gray J held in Jeld-Wen Glass that the term “cash out” meant “to take in monetary form”, at [18]. His Honour also rejected an argument that the s 100 prohibition on leave being cashed out was limited to entitlements that had accrued, holding that the prohibition was equally capable of application to entitlements yet to be accrued:

[20]    … The mere fact that money was paid in advance would not render the payment any less a payment in substitution for the entitlement than if the payment were made after the entitlement had accrued …

798    It is evident that Gray J was referring in this passage to a form of pre-payment of PC leave. It meant that the employer could not substitute a monetary payment, whether in weekly payments or otherwise, for the employee’s entitlement to PC leave, with the consequence that a clause in the employment contract providing for a weekly payment on account of such leave was, by virtue of s 61(1) of the FW Act, unenforceable, at [21].

799    Mr Rossato emphasised that the FW Act contemplates the provision of leave, whether annual or PC, which is paid and the employer’s obligation to make the payment arising at or about the time the leave is taken. He referred in this respect to decisions of the Fair Work Commission: Canavan Building Pty Ltd [2014] FWCFB 3202; Construction, Forestry, Mining and Energy Union v CSRP Pty Ltd [2017] FWCFB 2101.

800    I repeat the view stated earlier in these reasons that this characterisation of the NES entitlements with respect to annual leave and PC leave is appropriate. Moreover, the FW Act does not contemplate there being a choice between the way employees are remunerated: by wage and provision of the specified leave entitlements or payment of an all-in rate. The latter is permitted only in relation to casual employees.

801    The principle that the parties cannot contract out of award or enterprise agreement obligations is well established. French J referred to the principle in Metropolitan Health Service Board v Australian Nursing Federation [2000] FCA 784; (2000) 99 FCR 85:

[17]    The rights conferred and the obligations imposed upon persons and organisations bound by industrial awards are statutory in origin. In the case of awards under the Industrial Relations Act, as with its predecessor the Conciliation and Arbitration Act 1904 (Cth) and its successor by amendment the Workplace Relations Act, the awards are not themselves laws of the Commonwealth. But, once made, their provisions are given the force of laws of the Commonwealth by the terms of the Act … It is the Act itself which renders an award made by the Commission binding on parties to the relevant industrial dispute and other organisations and persons specified in the Act (s 149 of the Industrial Relations Act and s 149 of the Workplace Relations Act).

…

[20]    The inability to contract out of an award by virtue of its statutory operation militates against the proposition that parties may be estopped from enforcing its provisions or may waive its benefits in a way that is legally enforceable. The effect of the statutory provisions which give awards their binding force are at least as powerful against the common law and equitable principles of estoppel and waiver as they are against the common law of contract. There is nothing novel in the general proposition that statutes which preclude contracting out of the rights and obligations they confer will defeat the application of estoppel and waiver to like effect …

(Citations omitted)

802    Mr Rossato submitted that, by seeking restitution, WorkPac is, in practical effect, seeking recognition by the Court of its “cash-out” or “pre-payment” of his entitlements to annual and PC leave, despite such payments being prohibited.

803    The parties’ submissions did not canvas all the issues which arise in relation to the form of illegality for which Mr Rossato contends. In that circumstance, and because a decision concerning it is not necessary for the disposition of the case, I would prefer to defer a concluded view until a case in which it is necessary to do so.

Estoppel by representation and change of position

804    Mr Rossato relied on two inter-related defences: estoppel by representation and the defence of change of position. He submitted that, while the two defences are similar, each operated independently to defeat WorkPac’s claim to restitution.

805    The principles relevant to these defences were not in issue. The latter defence was discussed in some detail in AFSL v Hills.

806    In National Mutual Life Association of Australasia Ltd v Walsh (1987) 8 NSWLR 585 (NMLAA v Walsh) at 596, Clarke J, although concluding that the defence of position was not available in the case then before him, described that defence as “practically speaking, an estoppel without the representation”. In TRA Global Pty Ltd v Kebakoska [2011] VSC 480; (2011) 209 IR 453 at [58], Osborn J held that estoppel by representation was not coextensive with the defence of change of position because the former involved the additional element of a representation. Both defences require detrimental reliance on the person asserting the estoppel or the defence.

807    In David Securities, the plurality said, at 385, that a defence of change of position is necessary to ensure that enrichment of the recipient of the payment is prevented only in circumstances in which it would be unjust. Their Honours went on to say that the defence was relevant because “its central element is that the defendant has acted to his or her detriment on the faith of the receipt” (emphasis in the original).

808    In AFSL v Hills at [77], the plurality (Hayne, Crennan, Kiefel, Bell and Keane JJ) referred to the extra-judicial statement of Gummow J that a change of position is a species of the genus “inequitable”, and not a synonym for it. Their Honours went on to say that “[o]ne category of case in which it would be inequitable to require a recipient to repay is where the recipient has so far altered its position in relation to the receipt that it would be a detriment to it if it were now required to repay”. At [81], the plurality referred to an inquiry as to whether it would be unconscionable for the recipient to retain the money.

809    The representations of WorkPac on which Mr Rossato relied were said to have been made in the weekly pay slips, totalling 182, provided to him. These were of conventional kind recording for each weekly period the hours worked by Mr Rossato, the applicable hourly rate, the deduction of taxation, the manner of calculation of the net wages and year to date summary of the wages paid to him. Mr Rossato submitted that, by issuing the pay slips and by paying the monies to which each referred into his bank account, WorkPac thereby represented to him that the monies were attributable to his performance of work and that he was entitled to keep the money. He relied in this respect on NMLAA v Walsh and the authorities to which Clarke J referred at 597-8.

810    As I understood it, WorkPac did not dispute that the pay slips had constituted a representation to Mr Rossato. It was an agreed fact that Mr Rossato had “relied on the representation of each payslip as being an amount that had been paid to him by [WorkPac] to which he was entitled and which he could use as he pleased”. There were further agreed facts:

    Mr Rossato would habitually check his pay slip each week through the email on his mobile telephone;

    Mr Rossato had believed that WorkPac had all the information and expertise with which to make lawful payments to him for his performance of work as displayed on the pay slips; and

    Mr Rossato had believed that the monies paid to him shown on each pay slip were paid in consideration of the performance by him of his obligations under the contracts of employment with Workpac.

811    A number of the agreed facts support Mr Rossato’s claim that he did alter his position to his detriment in a relevant way:

(a)    he used the amounts paid by WorkPac for his general living expenses, but cf Palmer v Blue Circle Southern Cement Ltd [1999] NSWSC 697 at [23];

(b)    he did not take periods of paid leave and was therefore deprived of the benefit of the rest and recreation which annual leave is intended to provide;

(c)    in particular, Mr Rossato did not seek leave from work to attend the funeral of a good friend in 2016 and to attend a sporting function which he had won as a prize, because of his belief that he was not entitled to paid leave;

(d)    it was an agreed fact that Mr Rossato’s partner suffers from a chronic disease which has necessitated her hospitalisation or attendance at medical appointments on numerous occasions. It was also agreed that Mr Rossato had wished to take leave to care for his partner from time to time but had not done so because of his understanding that he did not have an entitlement to paid PC leave;

(e)    Mr Rossato says, and WorkPac does not dispute, that, had he had access to paid PC leave in March and April 2018 which he could use to care for his partner, he would not then have made the decision to retire from work;

(f)    Mr Rossato used the monies received from WorkPac to make several significant expenditures, including the purchase of a car, a boat and the carrying out of substantial renovations to his home; and

(g)    Mr Rossato retired from his employment with WorkPac on 9 April 2018 when he was 59 years old and therefore seven years before he would become eligible for the Australian Government Age Pension in the belief that he could, in the interim, rely on the monies he had saved from his employment with WorkPac. In particular, he had not anticipated that he could be required to repay any of those monies.

812    In relation to the last of these matters, it is established that the defence of change of position may be established by the payee showing action to his her detriment by forgoing an income-generating opportunity: Palmer v Blue Circle Southern Cement at [34]; Scottish Equitable plc v Derby [2001] EWCA Civ 369; [2001] 3 All ER 818 at [32]-[33]; Jones v Commerzbank AG [2003] EWCA Civ 1663 at [71]-[72].

813    WorkPac’s sole answer to these submissions was to contend that they were based on a false premise, namely, that restitution of the amount of casual loading would operate to Mr Rossato’s detriment. That premise was false, it was said, because restitution would not mean that Mr Rossato was paid less, only that he was not paid twice. This was so because it would not seek that Mr Rossato pay anything back to it, only that the amounts in his pay be set off against any liability it has to pay those amounts for a second time.

814    In my view, there are some difficulties with this submission. First, it seems to conflate matters bearing on the existence of the entitlement, on the one hand, and the manner in which effect would be given to the entitlement if it be found to exist, on the other.

815    Secondly, WorkPac seemed in this submission to be using the term “set off” in its conventional sense, that is, as a defence to a claim. It did so despite being the applicant in the proceedings. It also made the submission by bare assertion and without reference to relevant authority.

816    Again, I consider it inappropriate to express concluded views concerning Mr Rossato’s defence of estoppel by representation and defence of change of position. First, it is not necessary to do so for the disposition of the proceedings. Secondly, given my view that WorkPac has not established a right to restitution, it is difficult to engage, in the abstract, in the assessment of whether it would be inequitable or unconscionable for Mr Rossato to retain the benefit of the payments made to him during the course of his employment. Thirdly, the parties’ submissions, particularly those of WorkPac, did not address all the issues which arise. I also note that the fact that the trial proceeded on agreed facts means that the matters relevant to the defences have been settled, should it become necessary that the defences be considered in an appeal.

Conclusion on the claim to restitution

817    WorkPac’s claim to restitution fails.

WorkPac’s set off claim

818    The circumstance that the minimum entitlements for which awards and enterprise agreements provide are payable as a matter of law, irrespective of the parties’ agreement, can give rise to difficulties when the parties structure remuneration arrangements without regard to the award or enterprise agreement entitlements or on the basis that an award or enterprise agreement is inapplicable. The same difficulties arise when the NES are overlooked or are thought to be inapplicable. In circumstances of these kinds, it is not uncommon for an employer, faced with a claim for payment of a relevant benefit, to seek to rely on payments made other than in the purported discharge of the liability to pay the benefit in question. The circumstances in which this may occur are diverse.

819    In this case, Workpac submitted that, because it had, during each of Mr Rossato’s six periods of employment, paid him more than the rate required under the 2012 EA with the intention that he would not have any entitlement to paid annual, PC and compassionate leave, nor the entitlements of permanent FTMs with respect to public holidays, it was entitled to “set off” the amount of the overpayment against any entitlement which Mr Rossato may be found to have in respect of those forms of leave and in respect of public holidays.

820    Although the term “set off” is commonly used in this context, it is strictly speaking a question of whether certain payments made by the employer can be regarded as having satisfied its obligations under the award or enterprise agreement: Poulos v Waltons Stores (Interstate) Ltd (1986) 10 FCR 429 at 453; James Turner Roofing Pty Ltd v Peters [2003] WASCA 28, (2003) 132 IR 122 at [18]. One of Mr Petersen’s submissions (to the effect that it was not open to WorkPac to claim a set off because it is the applicant in the proceedings) seemed to overlook this character of the set off presently in question.

821    WorkPac contended that, in the event that the Court finds that Mr Rossato was not a casual FTM for the purposes of the 2012 EA, it should be entitled to set off one or other of two amounts. The first was that it should be entitled to set off the whole or, in the alternative, a substantial part of the amount it had paid to Mr Rossato which exceeded the rate applicable to a permanent FTM. I will identify later the amounts which WorkPac identified as being the difference between the hourly rates payable to a permanent FTM of the same classification as Mr Rossato and the actual rates paid to him (which WorkPac described as the “Contractual Overpayment”).

822    WorkPac’s alternative claim was that it should be entitled to set off the following portions of the identified casual loading against Mr Rossato’s entitlements:

(a)    eleven percentage points of the 25% casual loading (ie, 44% of the total casual loading); and

(b)    five percentage points of the 25% causal loading (ie, 20% of the total casual loading).

823    For these submissions, WorkPac relied on the common law rights to “set off” recognised in a number of employment cases and on reg 2.03A of the FW Regulations. It is convenient to consider the common law rights first.

The common law rights - general

824    The entitlement of an employer to set off payments in circumstances akin to the present was before the Full Court of this Court most recently in Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate [2015] FCAFC 99; (2015) 240 FCR 578. The reasons of the majority (North and Bromberg JJ) contain at [40]-[67] an extensive review of several of the authorities. In that circumstance, I will attempt to confine the review which follows to that which is necessary to identify the principles and the manner of their application.

825    The seminal case is Ray v Radano [1967] AR (NSW) 471, a decision of the Industrial Commission of New South Wales in Court Session. In that case, a chef who had been paid a fixed weekly wage plus a travelling allowance for working six days a week, sought, after the termination of his employment, payment of the overtime required by the applicable award. Neither party had adverted to the award obligations during the currency of the employment. All members of the Full Bench agreed that the amount of wages paid should be brought into account, but there was a difference in the reasons of Richards and Sheehy JJ and Sheldon J. As the reasons of Sheldon J have been preferred in the later authorities (Pacific Publications Pty Ltd v Cantlon (1983) 4 IR 415 at 419; Poletti v Ecob (No 2) (1989) 31 IR 321 at 332-333; TransAdelaide v Leddy at 420; and Australian and New Zealand Banking Group Limited v Finance Sector Union of Australia [2001] FCA 1785; (2001) 111 IR 227 (ANZ v FSU) at [47]), it is sufficient for present purposes to refer only to those reasons.

826    Two initial points may be made in Ray v Radano. First, the jurisdiction being exercised by the Industrial Commission was confined by s 92 of the Industrial Arbitration Act 1940 (NSW) to claims made under awards. Secondly, the only (presently relevant) question before the Court was whether all of the amounts paid under the employment contract for the hours worked could be brought into account in satisfaction of the employee’s claim to overtime. Thus, the decision concerned the use to be made of payments for time worked in respect of a particular kind of time worked and not whether amounts paid in respect of time worked could be brought into account in partial satisfaction of service related entitlements such as annual leave.

827    The reasons of Sheldon J include these propositions at 478-9:

[W]here a complainant has been employed by a defendant on work covered by an award, he is entitled under s.92(2) to claim any balance due to him between his award entitlement for his work and any payment made to him by the employer which is properly attributable to that award entitlement. If no more appears than that (a) work was done; (b) the work was covered by an award; (c) a wage was paid; then the whole of that wage can be set-off against the award entitlement for the work whether it arises as ordinary time, overtime, week-end penalty rates or any other monetary right under the award. Prima facie, a weekly sum paid by an employer to his employee is an appropriation by the employer (the debtor) to the payment due for that week … I see no logic in a rule that a periodical sum so paid is deemed to be referable only to ordinary time worked unless it is specifically allocated also to other award rights … [I]f by contract, express or implied, the whole or part of the payment made to the complainant has been made in respect of matters which are outside the award entitlement, the payment to that extent cannot be set-off. This may include amounts allocated, say, for fares or as a uniform allowance where there is no award entitlement in respect of such matters … [T]he employer cannot allocate to one subject matter what he has already paid in pursuance of a promise related to another subject matter. That would be approbating and reprobating.

(Emphasis added)

828    Sheldon J illustrated these propositions by examples to which it is unnecessary to refer presently. The conclusion in Ray v Radano was that the employer was entitled to bring into account all of the wages paid to the employee for his work (other than the travel allowance) in the assessment of its liability for the claimed overtime.

829    It is implicit in the principles stated by Sheldon J that an employer is not entitled to set off a payment which is not properly attributable to the award entitlement.

830    The Industrial Commission of New Wales in Court Session considered the matter again in Pacific Publications. The employee, who had been retrenched, sought payment of the award entitlement to payment in lieu of notice on termination of his employment. The employer considered the award entitlement to be inapplicable but made a payment of $4,000 on the termination which it described as “special gratuity”. It argued that that payment satisfied in part the employee’s claim for payment of the award entitlement. The Full Bench held that the special gratuity could not be brought into account because the employer had, at the time of the payment, appropriated it as a special gratuity and not as a payment in respect of the award obligation, at 421. It characterised the special gratuity as a “concessional amount independent of and in excess of [the] award entitlements on termination”, at 421.

831    The principles concerning set off in circumstances like the present have been considered in this Court in several cases. In Lynch v Buckley Sawmills Pty Ltd (1984) 3 FCR 503, the principal question was whether workers were employees or independent contractors. The employer contended that, if the workers were found to be employees, it could set off against the claimed award underpayments in some weeks, the amounts paid in excess of award entitlements in other weeks. Keely J did not refer to Ray v Radano, but rejected that submission, at 509. His Honour found that none of the amounts had been paid to the workers on the express or implied basis that it was an amount to which the worker was “entitled under (the) award” by reason of an underpayment of the award entitlements in an earlier period. This also meant that the employer could not bring into account the award overpayment in satisfaction of the employees’ claims to annual leave.

832    In Poulos v Waltons Stores, it was held that an employer who had remunerated its employee by both a wage and commission was not entitled to set off the commission payments against its liability to pay the award rate. The separate reasons of the Full Court (Smithers, Keely and Gray JJ) do not contain a detailed consideration of the issue but it seems that there were two reasons for the conclusion: first, the award required the wages to be paid in addition to commissions and there was no evidence as to the terms on which the commission had been paid.

833    The availability of set off was considered in more detail in Poletti v Ecob (Keely, Ryan and Gray JJ). The employee claimed payments of wages, overtime, annual leave and public holiday entitlements under an award. One issue in the case was whether the wages paid to him, which included a cash payment without deduction of income tax, could be brought into account. The Court held that it was appropriate to apply the principles discussed by Sheldon J in Ray v Radano and by the Industrial Commission in Pacific Publications, at 333. Their Honours identified these principles, at 332-333:

It is to be noted that there are two separate situations dealt with in the passage from the judgment of Sheldon J which has been quoted and in the reasoning of the Commission in Pacific Publications. The first situation is that in which the parties to a contract of employment have agreed that a sum or sums of money will be paid and received for specific purposes, over and above or extraneous to award entitlements. In that situation, the contract between the parties prevents the employer afterwards claiming that payments made pursuant to the contractual obligation can be relied on in satisfaction of award entitlements arising outside the agreed purpose of the payments. The second situation is that in which there are outstanding award entitlements, and a sum of money is paid by the employer to the employee. If that sum is designated by the employer as being for a purpose other than the satisfaction of the award entitlements, the employer cannot afterwards claim to have satisfied the award entitlements by means of the payment. The former situation is a question of contract. The latter situation is an application of the common law rules governing payments by a debtor to a creditor. In the absence of a contractual obligation to pay and apply moneys to a particular obligation, where a debtor has more than one obligation to a creditor, it is open to the debtor, either before or at the time of making a payment, to appropriate it to a particular obligation. If no such appropriation is made, then the creditor may apply the payment to whichever obligation or obligations he or she wishes. See Halsbury’s Laws of England, 4th ed, vol 9, paras 505 and 506.

(Emphasis added)

834    As can be seen, the Court identified two principles. Under the first, the parties’ positive agreement that the payment be made for a non-award entitlement or as an addition to an award entitlement precludes the employer later from seeking to rely on the payment as discharging some other liability. Under the second, it is the employer’s own conduct as debtor in designating the payment as discharging one debt to the employee, rather than discharging the award obligation, which precludes the payment being regarded as discharging the latter. Both were stated as principles of preclusion.

835    Applying these principles, the Court rejected the employer’s claim that he was “entitled to aggregate all the amounts due under the award and set against the total all the amounts actually paid”, at 329. However, it held that effect should be given to the parties’ agreement that the weekly cash payment was part of the remuneration for the hours worked, with the consequence that those payments should be regarded as satisfying the employer’s obligations in respect of wages for ordinary time worked, at 335. The Court also held that the employer had specifically appropriated some of the cash payments as payments “for” annual leave and that it should recognise his right to have done so. That meant that the employee’s claim for annual leave had been wholly satisfied. The report of the case does not identify the means by which the employer had been able to satisfy obligations with respect to annual leave by the additional cash payments. Nor is this made evident in the report of the first instance decision: Ecob v Poletti (1989) 31 AILR 308.

836    The two principles identified in Poletti v Ecob have been influential in later decisions.

837    In Logan v Otis Elevator Co Pty Ltd [1999] IRCA 4; (1999) 94 IR 218, the question was whether the amount of the salary paid to an employee which exceeded the minimum wage to which he was entitled under an award could be brought into account in satisfaction of the award entitlement to payment for overtime and call-backs. The parties had not attempted, when making their contract, to identify the amounts allowed in the excess for overtime and call-backs and it was apparent that the excess had also been paid on account of duties of the employee which were additional to those attaching to the award classification.

838    The Industrial Relations Court (Wilcox CJ, Marshall and Madgwick JJ) noted that the decisions subsequent to Ray v Radano had focused on “the matter of designation and appropriation rather than the nature of the outstanding obligation”, at [29].

839    The Court considered that the payments were not within the first Poletti v Ecob principle because the parties had not agreed that the difference between the amount that would be due under the award and the amount actually paid would “be paid and received for specific purposes over and above or extraneous to award entitlements”, at [30]. That approach seems to be the obverse of the first Poletti v Ecob principle.

840    The Court also held that the employer could not rely on the second Poletti v Ecob principle:

[30]    [N]either party sought to designate or appropriate the excess, or any part of it, to any particular obligation owed by Otis to Mr Logan. The whole of the excess was paid and received as an amount appropriate to reflect the difference between the position of a local representative, with all that entails, and an ordinary electrician special class. It is not open to Otis now to change that situation by asking the Court to make a retrospective designation between the various elements that differentiate the situation of a local representative and an ordinary electrician special class. Without such a designation, none of the excess can be reasonably identified as a payment on account of overtime and call-backs and, accordingly, set-off against the overtime and call-back payments due to Mr Logan under the 1989 award.

841    One can identify in that passage elements of both the first and second Poletti v Ecob principles.

842    In ANZ v FSU, the question was whether a retirement/severance allowance paid to managers under a Retirement/Severance Allowance Scheme (the Scheme) could be set off against award entitlements to long service leave. In relation to the first Poletti v Ecob principle, the Full Court (Black CJ, Wilcox and von Doussa JJ) said, at [48], that the “critical question [was] whether the relevant award entitlements arose outside the contractually agreed purpose”. In answering that question in favour of ANZ, the Court:

(a)    said that the passage from Poletti v Ecob quoted above was an accurate analysis of the judgment of Sheldon J in Ray v Radano and enunciated the relevant principle, at [47];

(b)    noted that the Scheme provided that the payment made under it or the award should be that which is more advantageous to the employee, at [50];

(c)    noted that the Scheme payment was directly related to the amount of the long service leave taken by the employee during the employment, so that the allowance, like the award entitlement, could properly be regarded as a monetary benefit in respect of untaken long service leave, at [50]; and

(d)    said that, accordingly, both the award entitlement and the Scheme payment arose out of the same agreed purpose, at [51].

843    With respect to the first Poletti v Ecob principle, the Court concluded:

[48]    The first situation noted in the passage [in Poletti v Ecob] is one where “the parties to a contract of employment have agreed that a sum or sums of money will be paid and received for specific purposes, over and above or extraneous to award requirements”. In that situation, the Full Court said, “the contract between the parties prevents the employer afterwards claiming that payments made pursuant to the contractual obligation can be relied on in satisfaction of award entitlements arising outside the agreed purpose of the payments.” [Emphasis added]. So the critical question is whether the relevant award entitlements arose outside the contractually agreed purpose.

…

[50]    In the present situation it is important to consider what it is the parties agreed, in relation to payment of the Retirement/Severance Allowance …

[51]    In this situation, it seems to us accurate to say that both the award entitlement and the contractual payment arose out of the same agreed purpose.  The situation is akin to a conditional agreement for an over-award wages payment.  By way of variation of the above example, assume it was expected that the award wages to which an employee would become entitled over the forthcoming two years would not reach $1,000 per week, but the employer promised to pay the employee $1,000 per week anyway during that time, or the award wages, whichever was the higher.  In that situation, it seems to us, it cannot be said the contract between the parties prevents the employer claiming the $1,000 per week is paid in satisfaction of the award obligation.

[52]    It is inherent in this approach that there must be a close correlation between the nature of the contractual obligation and the nature of the award obligations.  But it is not necessary that the same label be used.  In the present case, both the award obligation and the obligation imposed by cl 43.5 may aptly be described as obligations to make money payments in respect of untaken long service leave.

[53]    We do not think this case falls within the first situation discussed in Poletti v Ecob.

(Bold emphasis in the original and italicised emphasis added)

844    Some of the later authorities have taken the emphasised passage in [52] to indicate that the closeness of the requisite correlation relates to the respective obligations under the award and the contract. I doubt that that is correct. On my understanding, the Court was elaborating its reasons for concluding in [51] that both the award entitlement and the contractual payment arose out of the same agreed purpose. That is consistent with their Honours’ endorsement, at [47], of the analysis in Poletti v Ecob of the reasons of Sheldon J in Ray v Radano and with their own comparison of the award entitlement and the contractually agreed purpose, at [48]-[49]. In these circumstances, it is not readily to be assumed, in my view, that the Court was intending to modify the focus on the purpose of the employer’s appropriation in comparison with the award obligation.

845    The Court also rejected a submission based on the second Poletti v Ecob principle that ANZ could not bring the allowance into account by reason that its notice accompanying the payment to the employees had broken the total payment into “long service leave” and “Retiring Allowance Eligible Termination Payment”. That had been done, the Court found, only because of the different tax rates which were applicable, at [55]. The true character of the payment turned on an objective assessment of the terms of the Scheme. Their Honours referred to a clause in the Scheme document which made evident the intention that the retirement/severance allowance would subsume any lesser obligation to make payment under the award in respect of untaken long service leave. In consequence, there had been no designation by the ANZ of the payment to a particular purpose from which it was seeking to resile.

846    The Court endorsed the statement in Logan v Otis Elevator that the decisions subsequent to Ray v Radano had focused on the matter of designation and appropriation rather than the nature of the outstanding obligation, at [56], but emphasised that designation and appropriation are matters to be determined by reference to the whole of the evidence.

847    In Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd [2002] FCA 1406; (2002) 121 IR 250, Goldberg J refused an employer’s claim to be entitled to set off against award underpayment in some weeks the amounts paid to the employees in other weeks which exceeded the award entitlements. Having reviewed the authorities, Goldberg J said:

[60]     These authorities make it clear that where a payment is made to an employee in discharge of an award obligation, which payment is in fact in excess of the amount of the obligation, the amount of the excess cannot be set-off against a claim in respect of a different award obligation unless at the time of the payment of the excess the employer designates that the excess is payable in respect of a purpose or an obligation different from the purpose for which the initial payment is made.

[61]    Put shortly, where there is a payment made for, or in respect of, ordinary hours of work which is in excess of the award obligation, the excess cannot be set-off against a claim for underpayment of overtime unless at the time of the payment of the excess, the employer designates that that excess over the amount of the award obligation is paid for the purpose of satisfying any entitlement to overtime payments. 

…

[64]    Neither the employees nor Mr Deon Givoni turned their minds to the issue of award entitlements for overtime.  Certainly there was no express designation that any excess of remuneration over award entitlements for ordinary hours worked was to be appropriated to overtime award entitlements.  The respondent submitted that nevertheless there can be a reasonable designation other than an express designation and that that designation can be extracted from the circumstances and context of the discussion which led to the arrangement.  I took the respondent’s reference to a “reasonable designation” to be a reference to an implied designation.

[65]    However, I am not satisfied that there was such an implied designation, or even a reasonable designation in a more general sense, in the present circumstances.  I am not satisfied that Mr Deon Givoni or the employees turned their minds to whether the payments under the arrangement complied with the Clothing Trades Award.  The respondent said that in determining the amount payable under the arrangement, Mr Deon Givoni looked at what the employees had earned in the past applying the Clothing Trades Award and averaged out those amounts into the future.  He was not purporting to satisfy an obligation to pay overtime but was rather concerned to achieve a level of remuneration for the employees which would be consistent, regardless of the hours of overtime worked from Monday through Friday.

848    In Fair Work Ombudsman v Transpetrol TM AS [2019] FCA 400, the question was whether the remuneration paid to seafarers by a shipping company which included payments for differently described entitlements under contracts of employment made outside Australia and/or payments for entitlements under the laws of countries other than Australia could be set off against their entitlements under the Seagoing Industry Award 2010. In three cases, the question was also whether the payments could be set off against the seafarers’ entitlements under cl 4.3 of the National Minimum Wage Order 2014. Rares J allowed the set off. After referring to Poletti v Ecob, ANZ v FSU, James Turner and Linkhill, his Honour said:

[113]    … [T]here is no inflexible principle that precludes a creditor, who has appeared to designate or appropriate a payment to discharge a specific liability, from relying on all of the circumstances to demonstrate that the true character of the payment is, in fact, different or, alternatively, to justify the use of that payment as a set off to a different liability. And this is so even in respect of wholly domestic situations involving Australian industrial agreements and legislative instruments, such as awards … In addition, the application of the principle, in a case like the present, must accommodate the differing industrial relationships that arise under, and must comply with, the laws of one or more sovereign nations or under international treaties …

[114]    Here, the true character of Transpetrol’s total payments to the crew members of Turmoil was, first, to satisfy all contractual and relevant national law liabilities of any particular crew member, secondly, to ensure that all crew members received the same wage for same rank and work, regardless of the relevant national laws, by topping up their payments under a common arrangement, namely the wage scale and, thirdly, to ensure that Turmoil had both a “blue certificate” and a maritime labour certificate so that she could freely trade worldwide…

[115]    On the evidence, Transpetrol intended to pay each crew member an overall sum to cover, first, all of their contractual and statutory entitlements under the relevant national laws, secondly, its obligations under the Maritime Labour Convention and, thirdly, a top up payment in accordance with its policy of providing a common wage scale for the same ranks and work throughout the Transpetrol group’s fleet regardless of the requirements of any relevant national law. In that context, the breakdown of payments that the Turmoil ITF agreement required, can be seen as informing the crew member that he or she had been paid everything due under the employment contract and the relevant national law, as well as identifying any top up amount.

[116]    However, the character of Transpetrol’s total payment to the crew member was that it wished to pay a common lump sum, in addition to the requirements of the differing relevant national laws applicable to any particular crew member, according to the wage scale that would be more than sufficient to meet all contractual and statutory liabilities (even if overlapping) that it had to the crew member. Accordingly, the gross total payment that Transpetrol made (before the Ombudsman’s investigation) to each crew member is the relevant one for the purposes of assessing its liabilities under the Fair Work Act while Turmoil sailed on each of the ten voyages in Australian regulated waters.

[117]    For those reasons, I am of opinion that Transpetrol is entitled to set off fully the total wages it paid earlier to the official crew members to reduce the sum of its liabilities in respect of each of the ordinary time, overtime or NMWO contraventions …

(Emphasis in the original and citations omitted)

849    If the statement of Rares J that there is no inflexible principle precluding a payment being used as a set off against a different liability is taken literally, then there appears to be some tension between it and the previous decisions, including the decisions of Full Courts.

850    The issue of set off has also been considered in other jurisdictions. In James Turner, the question before the Western Australian Industrial Appeal Court was whether “all-in” hourly rates paid on the basis that the employee was an independent contractor could be brought into account in satisfaction of some or all of the employee’s entitlements under an applicable award. At [21], Anderson J said that the following principles could be extracted from Ray v Radano, Pacific Publications, Poletti v Ecob, Logan v Otis Elevator and ANZ v FSU:

1.    If no more appears than that (a) work was done; (b) the work was covered by an award; (c) a wage was paid for that work; then the whole of the amount paid can be credited against the award entitlement for the work whether it arises as ordinary time, overtime, weekend penalty rates or any other monetary entitlement under the award.

2.    However, if the whole or any part of the payment is appropriated by the employer to a particular incident of employment the employer cannot later claim to have that payment applied in satisfaction of his obligation arising under some other incident of the employment. So a payment made specifically for ordinary time worked cannot be applied in satisfaction of an obligation to make a payment in respect to some other incident of employment such as overtime, holiday pay, clothing or the like even if the payment made for ordinary time was more than the amount due under the award in respect of that ordinary time.

3.    Appropriation of a money payment to a particular incident of employment may be express or implied and may be by unilateral act of the employer debtor or by agreement express or implied.

4.    A periodic sum paid to an employee as wages is prima facie an appropriation by the employer to all of the wages due for the period whether for ordinary time, overtime, weekend penalty rates or any other monetary entitlement in respect of the time worked. The sum is not deemed to be referable only to ordinary time worked unless specifically allocated to other obligations arising within the employer/employee relationship.

5.    Each case depends on its own facts and is to be resolved according to general principles relating to contracts and to debtors and creditors.

851    His Honour held that the lower courts had been wrong in proceeding on the basis that an employer had no right to rely upon a payment to an employee unless there was an express or implied allocation of that payment to obligations arising under the award:

[44]    There is nothing in the cases referred to which is to the effect that, where payments are made pursuant to a contractual arrangement without regard for award obligations, they are to be completely ignored and left out of account in looking to see whether an obligation imposed by the award has been satisfied. At their highest they are authority for the proposition that if an employer impliedly or expressly appropriates a payment of money to a particular obligation arising in the employment relationship (ie to a particular incident of employment) the employer is to be held to that appropriation and cannot seek later to reappropriate or "reprobate". The cases are not authority for the proposition (upon which the judgments below seem to have proceeded) that unless there is an express appropriation to a particular award entitlement the sums paid by the employer to the employee are to be ignored or treated as referable only to ordinary time worked.

…

[45]    The payment of an amount as wages for hours worked in a period can be relied on by the employer in satisfaction of an award obligation to pay wages for that period whether in relation to wages for ordinary time, overtime, weekend penalty rates, holidays worked or any other like monetary entitlement under the award. This is so, whether the payment of the wages is made in contemplation of the obligations arising under the award or without regard for the award. However, if a payment is made expressly or impliedly to cover a particular obligation (whether for ordinary time, overtime, weekend penalty rates, fares, clothing or any other entitlement whether arising under the award or pursuant to the contract of employment) the payment cannot be claimed as a set off against monies payable to cover some other incident of employment. A payment made on account of say ordinary time worked cannot be used in discharge of an obligation arising on some other account such as a claim for overtime. Whether or not the payment was for a particular incident of employment will be a question of fact in every case.

(Emphasis added)

852    The Court did not then engage in an application of these principles to the circumstances of the case as the matter was remitted to the Industrial Magistrate. Anderson J did note, however, that it may not be open to the employer to rely upon its “all-in” payment as satisfying some of the award obligations, for example, the obligation to pay long service leave, at [48].

853    TransAdelaide v Leddy is a case with some similarities to the present. An employee who had been treated as a permanent part-time employee (PPTE) had become, on working a minimum number of weeks in a year, a full-time employee and accordingly entitled to payment for 38 hours each week even though he had not worked all those hours. As a PPTE, he had received a loading of 20% on the hourly rate otherwise applicable, which was stated to be “in lieu of sick and annual leave entitlements and public holidays”. The question was whether TransAdelaide was entitled to “set off” the 20% loading paid during the period in which the employee should have been recognised as a full-time employee against its liability for wages on the basis that the employee was a full-time employee.

854    The Full Court of the Supreme Court of South Australia held that TransAdelaide was so entitled (at 420-421 per Doyle CJ, with whom Lander J agreed, and at 432 per Olsson J), saying that the fact that the employee’s wages were to be calculated differently did not mean that the amounts previously paid for wages should not be brought into account. Doyle CJ reasoned as follows at 419-421:

Under the EBA Mr Leddy had no entitlement to sick leave, annual leave or to payment for public holidays. The 20 per cent loading is paid in substitution for those entitlements. In my opinion it cannot be said that it is a payment for public holidays, or for annual leave or for sick leave. It replaces the payments that would otherwise be made in that respect. The loading is paid because there is no such entitlement.

In my opinion the amount paid to Mr Leddy, in respect of each hour worked as a part-time employee, is simply the wage to which he was entitled under the EBA. The manner in which his entitlement is calculated is neither here nor there. It does not alter the nature of the entitlement. His entitlement remained an entitlement to receive a specified hourly rate.

…

The wage actually paid to Mr Leddy was paid as such. The money paid to him was never attributed by either party to anything other than his entitlement under the EBA to wages. Now that it appears that his monetary entitlement, by way of wages, is to be calculated differently, in my opinion there is no reason why the amount actually paid to him by way of wages should not be set-off against the yet to be calculated entitlement. The amount already paid, and the yet to be calculated entitlement, are both a wage rate payable under the EBA in respect of hours worked. There is no question of, for example, a payment for sick leave now being attributed to an entitlement in respect of hours worked.

(Emphasis added)

855    However, as the payments had been paid as wages with respect to the time worked by the employee, they could not be brought into account to reduce TransAdelaide’s separate obligations with respect to annual leave and sick leave.

856    In Discount Lounge Centre v Wakefield [2007] SAIRC 15, a retail worker had been paid an “all-in” weekly wage as a casual employee on the express understanding that he did not have an entitlement to annual leave or sick leave. After his employment ended, the employee claimed successfully that his true status had been that of a full-time employee so that he had been entitled to those forms of leave. There was then a question of whether his “all-in” weekly wage of $740 per week could be brought into account with the effect that the amount which exceeded the minimum award wage could be applied to off set the employer’s liability with respect to all award entitlements. The Full Bench of the South Australian Industrial Relations Court upheld the first instance finding that, as the sum of $740 had been paid as the weekly wage for the hours worked, it could not be brought into account in satisfaction of the employer’s liability for annual leave and sick leave.

857    However, the Magistrate recognised that there may be difficulties in identifying a portion of the casual loading as attributable to annual leave and said that he would hear further submissions on that topic if the parties could not agree.

858    In Williams(FMCA), Mr Williams had been paid as a casual employee and had received a loading. He was found not to have been a casual employee and so had an entitlement to payment of his accrued annual leave on the termination of his employment, pursuant to s 235(2) of the WR Act. Initially, the Federal Magistrate considered that the employer’s claim for set off should succeed:

[75]    The evidence of Mr Williams discloses that he agreed to be paid a loading in lieu of paid leave entitlements, including annual leave. That is reinforced by the Contract of Employment. There is no doubt, on the evidence, that the employer intended that the loading to be paid would be paid in lieu of paid leave entitlements, including annual leave. Thus, the parties appear to have turned their minds as to whether or not the payment to be made to Mr Williams might include remuneration allocatable to annual leave. If not expressly, then certainly impliedly, the parties have allocated remuneration to cover annual leave entitlements, and which are capable, at least on their face, of being appropriated to the statutorily guaranteed entitlement to be paid accrued annual leave on termination. The arrangement appears to have been entered into for the purpose of discharging Macmahon Mining’s obligations in respect of paid leave entitlements, including annual leave. Thus, there appear to have been monies which the employer has either impliedly or expressly appropriated to meet a particular incident of the employment relationship, namely annual leave, and which can now be used by way of set-off against any entitlement that Mr Williams has to be paid annual leave.

[76]    There will therefore be a declaration that Macmahon Mining is entitled to set-off any sum of money appropriated from the casual loading paid to Mr Williams in lieu of annual leave.

(Citations omitted)

859    The parties did not reach agreement and the Magistrate did consider the matter further: Williams v MacMahon Mining Services Pty Ltd (No. 2) [2009] FMCA 763. The Magistrate then held that the employer’s claim to set off the loading failed for two reasons. First, s 173 of the WR Act had the effect that the parties’ agreement that the loading be paid in lieu of leave entitlements was of no effect. Secondly, the Magistrate held that, as the 20% loading paid to him could not be disaggregated into amounts for annual leave, sick leave and public holidays, the employer could not have it brought into account in reduction of its liability for annual leave.

The decision in Linkhill

860    Although Linkhill involved a review of the principles and of several of the authorities, the way in which the issue arose meant that the decision did not require their application. At first instance, Linkhill had been found to have engaged several persons under contracts of employment, rather than contracts for service as it had claimed, and not to have paid them their entitlements under applicable awards. It was ordered to pay the amounts of the underpayments to the employees. On its appeal, Linkhill sought to advance for the first time the contention that it should be entitled to set off against the assessed underpayment of award entitlements the whole of the amounts which it had paid to the employees during their respective engagements. The respondent contended, amongst other things, that it would be prejudiced if Linkhill was permitted to advance the new ground by reason that it had not led all the available evidence had the contention been advanced at first instance.

861    The Court reviewed the authorities concerning set off in analogous circumstances as part of its consideration of whether Linkhill should be permitted to advance the new ground and found that it should not be permitted to do so.

862    However, while recognising that it was unnecessary to do so, North and Bromberg JJ did address briefly some of Linkhill’s contentions concerning the issue of set off, without expressing a concluded view.

863    In my separate reasons, I referred to the authorities only for the purpose of determining whether Linkhill should be permitted to advance the new contention. Having found that Linkhill should not be permitted to do so, I did not address the application of the principles in the circumstances then before the Court.

864    Both the majority and I noted that many of the leading authorities concerned circumstances in which the parties had recognised at the time of the events giving rise to the claim that they were in an employment relationship. We cautioned that the application of the principles developed in authorities of that kind may require further consideration in those cases in which the parties had attempted to enter into a contract for services but had in fact created an employment relationship – see [99]-[100] and [123]-[131] respectively. WorkPac sought to rely on the dicta in the majority reasons by contending that the present case involved an analogous circumstance: the parties had sought to establish casual employment but (on the alternative being considered) had failed to do so.

Summary of the applicable principles

865    For the purposes of the resolution of the present case, the authorities reviewed above may be taken to stand for the following propositions concerning the entitlement of an employer to set off in analogous circumstances:

(a)    the issue may require the application of the parties’ contract: Poletti v Ecob at 332. If they agree that a sum of money is paid and received for a specific purpose which is over and above or extraneous to an award entitlement, the contract precludes the employer from later seeking to rely on the payment as satisfying an award obligation which is outside the agreed purpose of the payment: ibid. If the payment was made for the purpose of satisfying the kind of award obligation sought to be satisfied, it may be brought into account as satisfaction or part satisfaction of that obligation. If it was paid for some other purpose, then the employer cannot bring the payment into account: Discount Lounge Centre at [23]. Stated more generally, an employer cannot later reallocate an amount agreed to be paid to an employee in respect of subject A (for example, ordinary hours of work) to meet a claim in respect of subject B (for example, overtime): Ray v Radano at 478-9 (Sheldon J); Pacific Publications at 419; Discount Lounge Centre at [57]. The focus is on the purpose of the payment. If it arises out of the same purpose as the award obligation, it can be set off: ANZ v FSU at [48]-[52]. I will refer to this as the “Contractual Principle”;

(b)    the issue may involve application of the common law principles concerning payment by a debtor to a creditor: Poletti v Ecob at 332-3. When there are outstanding award or enterprise agreement entitlements, a payment designated by the employer as being for a purpose other than satisfaction of the award entitlement cannot be regarded as having satisfied the award or enterprise agreement: ibid. I will refer to this as the “Designation Principle”;

(c)    close regard must be had to the character of the payment on which the employer relies for the claimed set off and the purpose (usually, the agreed purpose) for which it was made; and

(d)    the purpose for which a payment was made will be a question of fact in each case. It may be express or may be implied from the parties’ agreement or from the employer’s conduct: James Turner at [21(3)]. The “designation and appropriation” are matters to be determined by reference to the whole of the evidence: ANZ v FSU at [56].

866    As was noted in Poletti v Ecob, the Designation Principle is derived from the law of debtor and creditor. The common law principle assumes the existence of two or more liabilities, so that the debtor has a choice as to the debt which the payment will discharge or reduce. In Cory Brothers & Company Limited v The Owners of the Turkish Steamship “Mecca” [1897] AC 286 at 293, Lord Macnaghten said:

When a debtor is making a payment to his creditor he may appropriate the money as he pleases, and the creditor must apply it accordingly. If the debtor does not make any appropriation at the time when he makes the payment the right of application devolves on the creditor.

867    In Moree Plains Shire Council v Goater [2016] FCAFC 135, the Full Court (Rares, Katzmann and Markovic JJ) elaborated aspects of the application of the principle:

[59]    [A] mere intention to appropriate a payment that the debtor does not communicate to the creditor is not sufficient, and the creditor is free to apply the money, when received, as it chooses … [T]he debtor’s intention to appropriate a payment can be inferred from all of the circumstances, even though the debtor does not expressly state that intention at the time of making the payment …

(Citations omitted)

868    The Contractual and Designation Principles may not be an exhaustive statement of the circumstances in which set off may or may not be appropriate. The parties’ contractual arrangement and the principles of estoppel may be applicable in some circumstances. It is possible that the principles may require some adaptation, at least in the manner of expression, in some circumstances, for example, when the payments are made in compliance (or purported compliance) with statutory or regulatory obligations and not pursuant to the parties’ agreement.

869    The authorities have expressed the required connection between the purpose with which the payment was made and the award/enterprise agreement in question in various ways. Expressions such as “properly attributable” and “close correlation” have been used and, in Pacific Publications, the payment was described as “independent” of the award entitlement. In Transpetrol, Rares J suggested that these relationships could be determined flexibly.

870    None of the authorities, with the exception of Williams v MacMahon Mining (No. 2), have addressed the significance, if any, to be attached to the unlawfulness of the payments on which the employer relies for the claimed set off, when that unlawfulness is made apparent by an subsequent finding of the Court.

871    Subject to the matter to be considered next, WorkPac did not contend for the application of any principles other than the Contractual and Designation Principles in this case.

Are the Contractual and Designation Principles inapplicable?

872    WorkPac’s first submission, supported by the Minister, was that the Contractual and Designation Principles are inapplicable in this case because they were developed in authorities concerning circumstances in which the parties had intended all along that their relationship be an employment relationship. It characterised these as instances of parties succeeding in creating the type of relationship which, subjectively, they had intended to make. That contrasted with the present case, WorkPac submitted, because both it and Mr Rossato had intended to create a relationship of casual employment but (on the hypothesis being addressed) had failed to achieve that intention. In particular, neither it nor Mr Rossato had intended to provide for entitlements payable to a permanent employee under the FW Act or under the 2012 EA. They had instead “disavowed the relevance of such entitlements”. This had two effects, WorkPac submitted: first, that their purpose or intention in relation to the payment was irrelevant; and, secondly, that the entire amount exceeding the rate applicable to a Permanent FTM, regardless of its agreed purpose or designation, was available to set off Mr Rossato’s entitlements.

873    WorkPac referred to three authorities in support of these submissions: Linkhill at [99]; James Turner at [21]; and Transpetrol at [113]-[115]. In my view, these submissions of WorkPac face a number of difficulties.

874    In Linkhill, North and Bromberg JJ said at [99]:

… Given that the purpose or intent of the parties in relation to a particular payment is central to the application of those principles, it may be that the principles do not translate well to a situation where the parties have created a relationship different to that which, subjectively, they had set out to make. Those principles may not apply to the circumstances in which the parties did not intend to provide for award entitlements at all because they did not advert to or had disavowed the relevance of such entitlements.

(Emphasis added)

875    As is immediately apparent, this dicta does not support the proposition that the purpose and intention of the parties in relation to the payments made are irrelevant. Instead, as I understand it, their Honours were raising the possibility that the Poletti v Ecob principles may require some flexibility in the manner of their application when the parties had in mind a different kind of relationship. The Minister recognised this understanding in his submission:

[When] the parties have created a relationship different to that which, subjectively, they had set out to make, the purpose or intent of the parties in relation to particular payments may be affected by the fact that they were purporting to deal with a relationship differently from the one they actually created.

(Emphasis added)

876    Even if my understanding of [99] in Linkhill be incorrect, the statement cannot reasonably be understood as supporting WorkPac’s submission that the purpose for which the payment is made in the postulated circumstances becomes irrelevant. It is pertinent that it was not necessary for North and Bromberg JJ to identify an underlying principle as to whether payments in those circumstances could be brought into account, and their Honours did not purport to do so.

877    Paragraph [21] in the reasons of Anderson J in James Turner to which WorkPac referred is set out earlier in these reasons. WorkPac did not identify the particular principle in his Honour’s summary on which it relied. However it may have been the first.

878    In my view, the statement of the principles in James Turner cannot reasonably be regarded as supporting WorkPac’s submission. First, as North and Bromberg JJ noted in Linkhill at [98], there is an issue about the appropriateness of principles 1 and 4 stated by Anderson J, if taken literally:

… If principle 1 (and it would follow, principle 4 also set out at [21]) was intended by the Court to mean that any monetary payment for work done could be set off against monetary entitlements provided in an award, then those principles so stated would be inconsistent with the approach taken in Poletti v Ecob and ANZ v FSU …

879    It is apparent that the principles stated by Anderson J, in particular the first and second, were derived from Ray v Radano which, as previously noted, concerned the use which could be made of payments for time worked in respect of award entitlements for time worked more generally. However, Anderson J did not replicate exactly the passage from Ray v Radano at 478. Instead, his Honour substituted the word “amount” for the word “wage”, thereby implying that any amount paid could be credited against the award entitlement. This appears to have been unintended. The manner in which his Honour intended the principle to apply is apparent in [45] of his reasons, set out earlier. In this later elaboration, Anderson J was confining the proposition summarised in [21(1)] to wages paid for hours worked in a period.

880    Two other matters are pertinent in understanding the passage in James Turner on which WorkPac relied. The first is that Anderson J’s reasons indicated that he was intending to apply the reasoning of the Full Court in this Court in ANZ v FSU, which is not consistent with WorkPac’s present contention. The second is that, at [48], Anderson J expressly acknowledged that the amounts paid to the employee may not be capable of being brought into account in satisfying some of the award entitlements. The example which his Honour gave was the obligation with respect to payment of untaken long service leave, at [48]. Accordingly, the reasons of Anderson J in James Turner cannot reasonably be understood as providing support for the submission now made by WorkPac.

881    The third difficulty with WorkPac’s submission relying on [99] in Linkhill is that the premise on which it is made is unsound. Contrary to WorkPac’s submission, the parties in this case did succeed in establishing the kind of relationship which they intended. That was an employment relationship with a firm advance commitment as to the duration of the employment and the days and hours Mr Rossato would work. That immediately distinguishes the present case from those in which the parties had thought they were creating a relationship of a different kind. The matter on which their subjective intention failed was the manner by which Mr Rossato was to be remunerated. By giving the description “casual” to the relationship, WorkPac thought that it had certain obligations under the FW Act and the 2012 EA and that it did not have others. It acted in accordance with that understanding and made the payments to Mr Rossato with a particular intention. It would not be reasonable in this circumstance to suppose that WorkPac’s failure to appreciate its true liabilities meant that its intention with respect to the payments became irrelevant. At the very least, WorkPac’s designation of the payments remains pertinent.

882    Fourthly, it is difficult to see how, as a matter of ordinary principle, the agreed purpose or intention of the parties in relation to a payment can be irrelevant in relation to a claimed entitlement to set off. Were it otherwise, in any case in which the parties intended subjectively to create a contractual relationship which was different from that which they did in fact create, the employer could set off any payment against any award or enterprise agreement entitlement, irrespective of the intention with which the payment was made or the designation given to it.

883    Fifthly, contrary to WorkPac’s submission, this is not a case in which the parties “had not adverted to” the entitlements under the FW Act and the 2012 EA. Nor is it a case in which they had “disavowed the relevance of the entitlements” under the FW Act and the 2012 EA, or had not intended to provide for those entitlements. Plainly, in the first, second and third contracts at the least, they did advert to the entitlements and, plainly, they did intend to make provision with respect to them. The issue presently before the Court arises because WorkPac, having adverted to the entitlements, sought to provide for them in a way which was not permitted.

884    Sixthly, courts have thought it appropriate to apply the Poletti v Ecob Principles in a number of cases which, on WorkPac’s approach, would be characterised as instances of the parties not succeeding in establishing the kind of relationship which they had intended, subjectively, to create. These include James Turner; Lynch v Buckley Sawmills; Logan v Otis Elevator, Givoni, TransAdelaide v Leddy; Discount Lounge Centre and Williams v MacMahon Mining (No. 2). Generally, the courts have done so by focusing on the purpose (whether agreed or otherwise) for the payment.

885    Part of the problem in this submission of WorkPac is that it seeks to deploy a high level characterisation of particular circumstances (an employer not succeeding in establishing the kind of employment relationship which it had subjectively intended) as a proxy for determining the applicability of the Poletti v Ecob Principles. Such an approach is unsound because it gives greater emphasis to an abstract characterisation of the circumstances and diverts attention from the matters about which the parties did agree, the purpose of the payments, and the designation given to them.

886    Accordingly, this particular submission of WorkPac is rejected. As will be seen, this conclusion means that WorkPac’s claim that it is entitled to set off the difference between the contracted hourly rate and the permanent FTM rate must fail.

887    The balance of WorkPac’s submissions were directed, in the alternative, to the Contractual and Designation Principles.

Identifying the payment sought to be brought into account

888    WorkPac’s first contention was that it is entitled to set off the difference between the hourly rates payable to a Permanent Flat Rate FTM of the same classification as Mr Rossato and the actual rates paid to him. The parties differed as to the quantum of that difference for part of the period in which Mr Rossato worked. Their respective contentions are summarised in the following table:

889    The differences between the parties appear to be attributable to different views as to the way in which the hourly rates contained in the Schedules to the 2012 EA are to be applied. As previously noted, the hourly rates in Schs 3-7 for permanent and casual flat rate FTMs for each classification varied according to the pattern of employment, the nature of the shifts and the number and spread of hours and days worked each week. Schedules 3-7 provided for three different rates according to whether the employee worked five days Monday to Friday, five days Monday to Sunday, or more than five days Monday to Sunday.

890    In its calculation of the hourly rates set out in the table, its seems that WorkPac averaged Mr Rossato’s hours in a way which meant that he was entitled to a lower rate under the 2012 EA. Mr Rossato’s calculations on the other hand were based on Mr Rossato being entitled to the higher rate in those weeks in which he did in fact work the hours and days attracting those rates.

891    The Court did not receive oral submissions on the differences and I did not understand that the Court was asked to resolve the issue. It was not suggested that the resolution was material to the Court’s decision. To the extent that it may be necessary for the Court to express a view, the approach of Mr Rossato appears to be correct. I emphasise, however, that that is not a concluded view.

892    On its first alternative, WorkPac seeks to set off the difference between the contract and permanent flat rate FTM hourly rates for the whole of Mr Rossato’s employment, being those set out in the table.

893    On its second alternative, Workpac sought to set off portions of the casual loadings, being 44% of the total casual loading on account of annual leave, and 20% of the total casual loading on account of PC leave. The amounts are identified in the following table.

Setting off the difference between the hourly contract and permanent flat rate FTM rates

894    WorkPac’s claim to this set off was based on the Court accepting its submission that the parties had failed to create the type of relationship which they had intended, with the consequence that their purpose and intention in relation to the Contractual Overpayment is irrelevant. It submitted that this had the further consequence that the entire difference between the contract hourly rate and the permanent FTM rate then became available for set off. My earlier rejection of WorkPac’s submission concerning the effect of the relationship which the parties had intended to create means that this submission must fail. It is accordingly unnecessary to address other apparent difficulties in the logic of the submission, including the difficulty arising from WorkPac making voluntarily the Over-EA Payments.

The claim to set off portion of the casual loading

895    In seeking set off of portions of the casual loading, WorkPac sought to rely on both the Contractual Principle and the Designation Principle. It is fair to say, however, that its principal reliance was on the Contractual Principle.

896    WorkPac recognised that it is necessary to consider the position under the first, second and third contracts separately from the position under the fourth, fifth and sixth contracts.

897    Earlier in these reasons, I accepted WorkPac’s contention that cll 6.4.5 and 6.4.6 of the 2012 EA had been incorporated by reference into the first three contracts but not with respect to the fourth, fifth and sixth contracts. It is accordingly not necessary to address that part of Workpac’s submissions which rested on the claim that those clauses had been incorporated into the fourth, fifth and sixth contracts.

Setting off the casual loading under the first, second and third contracts - WorkPac’s submissions

898    WorkPac submitted that the agreed purpose and subject matter of the identified portions of the casual loading had a close correlation with the purpose and subject matter of Mr Rossato’s present claims to payment in respect of annual leave under s 90(2) of the FW Act and to payment in respect of the periods of PC leave taken by him, so as to attract the operation of the Contractual Principle. It submitted, in the alternative, that the identified portions of the casual loading had been designated to the satisfaction of these entitlements of Mr Rossato, so as to attract the operation of the Designation Principle.

899    In relation to the Contractual Principle, WorkPac referred to the express statements in the First and Second NOCEs that the flat hourly rate included payment of a casual loading, that Sch 2 contained information on the casual loading, and that Sch 2 identified the components of the casual loading (11% in lieu of annual leave and leave loading entitlements and 5% in lieu of PC leave entitlements). Although the First and Second NOCEs did not stipulate that the casual loading was 25%, they did refer Mr Rossato to the 2012 EA (and, as noted, cl 6.4.6 stated explicitly that the casual loading was 25%).

900    The Third NOCE was differently structured as it did not contain a statement that the hourly rate included payment of a casual loading. It did, however, describe the employment being offered as casual employment, and referred to the pay rate as being “a casual rate”. Further, the same hourly rate was specified as being applicable for normal time, time and a half and double time. Further still, the Third NOCE referred Mr Rossato “to Schedule 2 for more information on your casual loading”. Schedule 2 contained the same breakdown of the components of the casual loading.

901    On the basis of these matters, WorkPac submitted that these contractual provisions indicated a common understanding that portions of Mr Rossato’s pay, at least in so far as required to be paid under the 2012 EA, were directly attributable to the entitlements of annual leave and PC leave. It also submitted that, in making payment of the agreed hourly rate which subsumed the casual loading, it had made an appropriation of monies towards payment of the entitlements now sought to be enforced by Mr Rossato. WorkPac contended further that there was a close correlation between the identified portions of the casual loading and the entitlements now sought to be enforced by Mr Rossato.

Mr Rossato’s submissions

902    Mr Rossato, supported by the CFMMEU and Mr Petersen, opposed WorkPac’s claim to set off with respect to the payments under the first, second and third contracts. They did so on the following bases:

(a)    WorkPac should not be permitted, by set off, to achieve the very same end which the FW Act prohibits, namely, the cashing out or pre-payment of annual and PC leave entitlements;

(b)    as the flat rates paid to Mr Rossato were “indivisible”, it is not possible to identify the amounts paid by way of casual loading;

(c)    set off is permitted only with respect to “like for like” entitlements, with the consequence that a right to time off work cannot be satisfied by the mere payment of money;

(d)    there is not a sufficiently “close correlation” between the nature of the payments on which WorkPac relies and the nature of the entitlements sought to be enforced by Mr Rossato; and

(e)    the purpose of any casual loading paid to Mr Rossato could not have been for entitlements to annual or PC leave because, if Mr Rossato was a casual, he had no such entitlements. The payment of any casual loading had not been to meet a liability for annual leave or PC leave but instead to compensate for the lack of such an entitlement. For this reason, the casual loading had formed part of the remuneration for the hours worked and not compensation for leave entitlements.

903    Given my earlier findings, the second of these contentions cannot be sustained.

904    Mr Rossato did not refer to any authority to support his contention that it is only “like for like” entitlements which can be set off under the Contractual Principle. The true principle, and that which I consider this Court should apply in any event, is that stated in ANZ v FSU, namely, that there must be a sufficiently close correlation between the agreed purpose of the contractual payment and the nature of the award obligation. That is the critical question for determination in this part of the case. On my understanding, the fourth and fifth matters to which Mr Rossato referred are matters which inform the assessment of the requisite correlation. I will address particular submissions of Mr Petersen before turning to that question.

Mr Petersen’s submissions

905    Mr Petersen’s submissions raised two further matters. The first was to characterise WorkPac’s claim as a contention that, because it had paid Mr Rossato more than it would have wished had it known that he was in truth not a casual, it should receive a refund of the additional monies paid. Mr Petersen then submitted that there is no principle which allows a person who regrets the price they have paid for goods or services under a valid contract to obtain a refund. The second of these propositions, if intended to be of universal application, is of dubious validity but, in any event, the premise on which the submission is made involves a mischaracterisation of WorkPac’s claim. That claim is simply that portions of the amounts which it did pay to Mr Rossato were so closely related to the entitlements which he now claims that they can be regarded as having been paid in satisfaction of those claims.

906    The next submission of Mr Petersen was that the Contractual Principle is inapplicable because, “on no construction of [Mr] Rossato’s contract can he be taken to have agreed that the asserted “casual loading” moneys which would be paid from time to time could be used at some indeterminate later time to satisfy WorkPac’s future liability under s 90(2) of the FW Act”. Mr Petersen’s submissions then sought to develop that argument by negativing the possibility of there being either an express or implied term to that effect in the contracts.

907    In my view, this submission is in the nature of a “straw man” argument. Had the parties addressed this topic in their contract, it is unlikely that an issue would have been raised for the Court’s determination. Nearly all, if not all, of the cases which become before the courts in this area do so precisely because the parties have not agreed upon what should happen in the circumstances of an analogous kind. The absence of a contractual provision dealing with the subject matter does not preclude the Court from applying the set off principles.

The correlation between the payments under the first, second and third contracts and the entitlements claimed by Mr Rossato

908    Mr Rossato’s claim with respect to annual leave is made pursuant to s 90(2) of the FW Act which provides:

If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.

909    In this case, the condition on which s 90(2) operates, namely, that at the conclusion of his employment Mr Rossato had a period of untaken annual leave is established. The entitlement which Mr Rossato has in that circumstance is to payment of the amount which would have been payable had he taken the leave during his employment. Mr Rossato is not seeking payment in respect of a period of leave previously taken which was unpaid. Nor, obviously enough, is he seeking paid leave. He makes a purely monetary claim.

910    The First, Second and Third NOCEs informed Mr Rossato that 11% of his casual loading was being paid “in lieu” of “Annual Leave and Leave Loading entitlements”. That manner of expression informed him that, instead of having an entitlement to a period of paid annual leave, he was being paid a weekly amount in its place. This had the consequence that the contracts which resulted addressed the subject matter of annual leave in a way which differed from that required by the FW Act and the 2012 EA. Instead of providing a period of paid absence from work for the purposes of rest and recreation (and with the payment being made at or about the time of the absence), WorkPac was to make a payment in substitution for the FW Act/2012 EA entitlement. The first three contracts identified the means by which that payment was provided and enabled its amount, in dollar terms, to be quantified. It is not easy to identify any purpose for the specification in the contracts of the components of the casual loading other than that it identified the amount being paid in lieu of the entitlement.

911    In these circumstances, there is a sense in which it may be said that the agreed purpose of the payment of the identified portion of the casual loading was that it be a payment in respect of the entitlement to annual leave so that there was a close correlation between the payment and an entitlement. Such an approach puts in focus the degree of specificity required, and the degree of abstraction permitted, in the contractually agreed purpose in the application of the Contractual Principle. Can it be said that the FW Act entitlement arises outside the contractually agreed purpose? Is it sufficient for set off that a payment was intended to provide for a particular subject matter in some way?

912    In addressing those questions in the present case, some features seem particularly important.

913    In the first place, there is a conceptual difficulty in regarding a payment made in lieu of an entitlement as satisfying that very entitlement. Of its very nature, it had a different purpose. In the terminology of Poletti v Ecob, the payments were extraneous to the FW Act/2012 EA obligations. That is particularly so when the FW Act entitlement is not just monetary, but has at its heart an entitlement to be absent from work, while continuing to be paid.

914    The second is that, not only were the payments made in lieu of the entitlement, they were made at a time when the liability to provide paid annual leave under the FW Act and under the 2012 EA had not even arisen. An employee’s entitlement to paid annual leave accrues progressively during the year of service according to the employee’s ordinary hours of work, and accumulates from year to year (s 87(2) of the FW Act) but the liability to make the payment arises only when the employee takes a period of annual leave (ss 88(1) and 90(1) of the FW Act and cll 19.4 and 19.5 of the 2012 EA) or when, on the termination of the employee’s employment, the employee has a period of untaken annual leave (s 90(2) of the FW Act). Thus, WorkPac made the payments before the liability to do so had even arisen. The correlation between the purpose of a payment and the award/enterprise agreement obligation becomes more remote when the latter does not even exist at the time of the payment. In the set off cases reviewed earlier, the award/enterprise agreement obligation had been co-existent with the obligation said to be discharged by the payment.

915    The third is that WorkPac seeks to appropriate a payment for an hour worked towards satisfaction of a service related entitlement. These are distinct forms of entitlement. Related to that is that the payments were designated as the remuneration for the services provided.

916    The fourth is that WorkPac’s payments could not, at the time they were made, have been regarded as discharging lawfully Mr Rossato’s entitlements to annual leave. Section 92 prohibits the cashing out of paid annual leave (save for the limited exceptions in ss 93 and 94). This includes cashing out by pre-payment of the annual leave entitlements: see Jeld-Wen Glass at [18]-[21]. Had Mr Rossato’s employment continued and his entitlement to take periods of paid leave recognised, WorkPac would not have been entitled in that circumstance to bring into account its earlier cash out or prepayment of amounts in respect of annual leave: Jeld-Wen Glass at [18]-[21]. If that be so, it is difficult to see that WorkPac can be in any better position with respect to its liability under s 90(2) on the termination of Mr Rossato’s employment. This is another matter which points to the payments being extraneous to the FW Act and 2012 EA entitlement.

917    In my view, these circumstances indicate that, while there is some correlation between the subject matter of the payment and the entitlement, the requisite closeness of the relationship between the purpose of the payments, on the one hand, and the FW Act/2012 EA entitlement does not exist. This conclusion is consistent with TransAdelaide v Leddy. There are some differences between the two cases but it will be remembered that the Court in that case reasoned that the fact that the 20% loading had been paid because of the absence of an entitlement to annual and sick leave meant that it could not be brought into account to satisfy TransAdelaide’s liabilities with respect to such leave. TransAdelaide v Leddy is a considered judgment of the superior State Court. It is of persuasive authority presently.

918    Accordingly, I would conclude that WorkPac is not entitled, in accordance with the Contractual Principle, to have the portion of the casual loading designated as having been paid in lieu of an entitlement to annual leave brought into account in satisfaction of this liability. The fact that WorkPac sought to deal with the subject matter of the FW Act and 2012 EA entitlement is not sufficient. The manner in which it sought to do so is also critical.

919    I add that the submissions of Mr Rossato, the CFMMEU and Mr Petersen seemed to assume that some form of curial discretion is involved in the decision as to whether the claimed set off should be permitted. None of the authorities to which Mr Rossato and the CFMMEU referred, with the possible exception of Williams v MacMahon Mining, support such an approach, and none has been located. Instead, the matter is to be approached in the manner outlined above, namely, by an evaluation of the relationship between the purpose of the payment and the FW Act and 2012 EA obligation.

920    In my view, the Designation Principle does not assist WorkPac. That is because WorkPac expressly designated in the first, second and third contracts the purpose for which the various portions of the casual loading were made. Having designated expressly that the payments were not made in respect of an entitlement to annual leave but in order to satisfy a contractual obligation, it cannot now seek to have the payments re-designated so as to satisfy that very liability.

921    It follows that WorkPac’s claim to a set off with respect to portions of the casual loading paid under the first, second and third contracts cannot succeed.

922    If my earlier conclusion that the fourth, fifth and sixth contracts did not contain any specification of a casual loading or of the purposes for which particular portions were made be wrong, then WorkPac’s claim to set off the payments made under those contracts should fail for the same reasons which I have given with respect to the first, second and third contracts.

923    The conclusion would be the same in respect of all contracts if one confined consideration to the payments required by the 2012 EA.

The first, second and third contracts and the claim for payment of personal/carer’s leave

924    Mr Rossato’s claim with respect to PC leave is for payment of the leave which he did in fact take. It is a claim for the very entitlement for which ss 96, 97 and 99 provide.

925    The first three contracts provided that 5% of the casual loading was paid in lieu of Personal Leave entitlements. It did not seem to be in issue that the “Personal Leave entitlement” to which the first three contracts referred was the PC leave for which Div 7 of Pt 2-2 of the FW Act and cl 19.7 of the 2012 EA provide.

926    The parties’ submissions did not identify any basis upon which the Court should reach a different view concerning set off of that portion of the casual loading attributable to the PC leave entitlement from that which it reaches with respect to set off of the portion concerned with annual leave. In my view, the reasons set out above are equally applicable. That means that WorkPac’s claim to set off with respect to its liability to pay PC leave must also be rejected.

The first, second and third contracts: the claim for compassionate leave

927    WorkPac did not identify any payment which it had made which could be brought into account in satisfaction of Mr Rossato’s claim to compassionate leave. I observe in this respect that none of the first three NOCEs, nor cl 6.4.6 of the 2012 EA, indicated any amount of the casual loading as having been paid in lieu of the entitlement to compassionate leave.

928    I add that WorkPac did submit that PC leave includes compassionate leave. That submission cannot be accepted as each is a distinct form of leave for which Div 7 of Pt 2-2 of the FW Act provides.

929    WorkPac is not entitled to any set off in relation to this part of Mr Rossato’s claim.

The first, second and third contracts: payment for the public holidays during the period of the Christmas shutdowns

930    WorkPac is not entitled to any set off in respect of this aspect of Mr Rossato’s claims. None of the first three NOCEs nor, for that matter, cl 6.4.6 of the 2012 EA identified any part of the casual loading as having been paid in lieu of this particular entitlement.

931    The Designation Principle does not assist WorkPac in relation to either the claim for compassionate leave or public holidays. The designations of the components of the casual loading indicate that it was paid in lieu of other matters, so that the payments cannot now be reallocated to these entitlements.

Set off and the payments made under the fourth, fifth sixth contracts

932    WorkPac recognised that the terms of the fourth, fifth and sixth contracts are materially different from those in the first, second and third contracts. It accepted that these contracts did not contain an independent express term that a casual loading was to be paid in lieu of entitlements to annual leave, PC leave, compassionate leave and to payment for public holidays at all, let alone identifying the portion of the casual loading allocated as compensation for the absence of those entitlements.

933    WorkPac sought to achieve the same result, however, by its contention that cll 6.4.5 and 6.4.6 of the 2012 EA had been incorporated into Mr Rossato’s contracts of employment. That submission has been rejected, for the reasons given earlier.

934    WorkPac did not identify any other basis on which the Contractual Principle could be invoked in relation to the payments it made under the fourth, fifth and sixth contracts. This means that it is not necessary to address particular submissions made by Mr Rossato concerning the claimed entitlement under the Contractual Principle to set off payments made under these contracts.

935    WorkPac submitted, in the alternative, that it should be entitled in the application of the Designation Principle to set off the component of the casual loading paid under the fourth, fifth and sixth contracts attributable to Mr Rossato’s annual leave entitlement. That was so, WorkPac submitted, because:

… [T]he casual loading component of Mr Rossato’s flat rate of pay nevertheless had been designated or appropriated for the purpose of satisfying the relevant [2012 EA] and statutory entitlements to annual leave and personal leave. The relevant designation had been effected by the express terms of the First, Second and Third Contracts … and also by operation of clauses 6.4.5 and 6.4.6 of the [2012 EA], either of themselves or in combination with the [sic] WorkPac’s express stipulations that Mr Rossato was employed under the [2012 EA].

936    WorkPac faces the same difficulty with this submission which it faced with its invocation of the Designation Principle in relation to the payments under the first, second and third contracts. Looking at the matter at its highest from WorkPac’s point of view, the designation which it gave to the payments was that they were a payment in lieu of the entitlement to annual leave. It is not open to WorkPac now to appropriate payments which it made for one designated purpose to the different purpose for which it now contends.

937    WorkPac did not contend that it was entitled on any other basis to set off amounts paid by way of casual loading paid under the fourth, fifth and sixth contracts against the entitlements Mr Rossato now claims. Neither WorkPac nor the Minister raised any submission to the effect that set off may be available when a party makes a payment for the purpose of discharging a statutory obligation to which it believes it is subject against its liability to discharge a separate but related statutory obligation.

Regulation 2.03A of the Fair Work Regulations

938    WorkPac also sought to invoke reg 2.03A of the FW Regulations. It was inserted into the Regulations by the Fair Work Amendment (Casual Loading Offset) Regulations 2018 (Cth) and commenced on 18 December 2018. By reg 7.03, reg 2.03A is said to apply in relation to employment periods that occur (whether wholly or partly) before, on or after the commencement of the Schedule containing the Regulation.

939    Regulation 2.03A provides:

2.03A  Claims to offset certain amounts

(1)    This regulation applies if:

(a)     a person is employed by an employer on the basis that the person is a casual employee; and

(b)    the employer pays the person an amount (the loading amount) that is clearly identifiable as an amount paid to compensate the person for not having one or more relevant NES entitlements during a period (the employment period); and

(c)    during all or some of the employment period, the person was in fact an employee other than a casual employee for the purposes of the National Employment Standards; and

(d)    the person makes a claim to be paid an amount in lieu of one or more of the relevant NES entitlements.

Note 1:    This regulation is intended to apply if the person has been mistakenly classified as a casual employee during all or some of the employment period.

Note 2:    For the purposes of paragraph (b), examples of where it may be clearly identifiable that an amount is paid to compensate the person for not having one or more relevant NES entitlements include in correspondence, pay slips, contracts and relevant industrial instruments.

(2)     To avoid doubt, the employer may make a claim to have the loading amount taken into account in determining any amount payable by the employer to the person in lieu of one or more relevant NES entitlements.

(3)    This regulation does not affect the matters to which a court may otherwise have regard, at law or in equity, in determining an employer’s claim to have the loading amount taken into account.

(4)    A reference in this regulation to a relevant NES entitlement is a reference to an entitlement under the National Employment Standards that casual employees do not have.

940    The Minister supported WorkPac’s reliance on reg 2.03A.

941    A number of questions arise as to the application of reg 2.03A. These include:

(a)    is it invalid, as the CFMMEU contended?

(b)    is the Regulation only declaratory of the existing law, as the Minister, Mr Rossato, the CFMMEU and Mr Petersen contended?

(c)    does the fact that the employer may make a claim (subreg (2)) to have the “loading amount” taken into account alter the matters to which the Court may have regard in relation to a claim of set off?

942    In my view, it is not necessary for the Court to address these questions. That is because, for an independent reason, reg 2.03A can have no application in the circumstances of the present case.

943    In order for reg 2.03A to apply, the four conditions specified in subreg (1) must exist. The fourth of those conditions is that the person makes a claim to be paid an amount “in lieu of” one or more of the relevant NES entitlements.

944    None of Mr Rossato’s claims to which WorkPac’s proceedings are directed is a claim to be paid an amount “in lieu of” an NES entitlement. To the contrary, Mr Rossato seeks payment of the entitlements conferred by the NES. In respect of the annual leave, his claim is for the NES entitlement bestowed by s 90(2) of the FW Act. With respect to the paid PC leave, Mr Rossato’s claim is for payment in accordance with the NES for which ss 96 and 99 provide for the leave of that character which he took and for which he did not receive payment. Mr Rossato’s claim for payment for the compassionate leave which he took is of the same character, being a claim for the NES entitlement for which ss 104 and 106 provide. With respect to the payment for the public holidays in which he was rostered off, Mr Rossato’s is for the payment for which the NES in s 116 of the FW Act provides. This character of Mr Rossato’s claims is made clear in the letter of demand from his solicitors of 2 October 2018. WorkPac’s submission that Mr Rossato is making a claim to be paid an amount in lieu of the relevant NES entitlements must be rejected.

945    To the extent that Mr Rossato claims entitlements in excess of the NES for which the 2012 EA provides, subreg (1)(d) is still not engaged.

946    Accordingly, the condition contained in reg 2.03A(1)(d) is not satisfied. The Regulation therefore cannot provide a basis for a claim for set off and need not be considered further.

Summary on the set off claims

947    For the reasons set out above, I would reject WorkPac’s claim to set off.

Conclusions

948    For the reasons given above, I would make declarations to the following effect:

(a)    In the period between 28 July 2014 and 9 April 2018, Mr Rossato was employed by WorkPac under six consecutive contracts of employment constituted by his acceptance of the offers of employment dated 17 July 2014, 29 May 2015, 19 February 2016, 27 September 2016, 11 November 2016 and 21 December 2016 respectively;

(b)    In his employment under each of the contracts, Mr Rossato was other than a casual employee for the purposes of ss 86, 95 and 106 of the FW Act and was a “Permanent FTM” and not a “Casual Field Team Member” for the purposes of the 2012 EA;

(c)    Mr Rossato is entitled, pursuant to s 90(2) of the FW Act, to payment in respect of his accrued entitlement to annual leave;

(d)    Mr Rossato is entitled, pursuant to ss 99 and 106 of the FW Act and pursuant to cll 19.7-19.9 and 19.12 of the 2012 EA, to payment in respect of his absences from work for which he should have been paid personal/carer’s leave and compassionate leave; and

(e)    Mr Rossato is entitled, pursuant to s 116 of the FW Act and cl 20 of the 2012 EA, to payment in respect of those public holidays on which, but for the Christmas shutdowns, he would have been rostered to work.

949    I would also order that WorkPac is not entitled to set off against its liabilities under the above declarations any of the payments which it has paid to date under the six contracts of employment or under the 2012 EA. WorkPac’s remaining claims are dismissed.

950    I would hear from the parties as to the final form of the declarations and with respect to any issue of costs. Any submissions concerning costs will have to take account of the agreement between WorkPac and Mr Rossato and s 570 of the FW Act.

Associate:

Dated:    20 May 2020

REASONS FOR JUDGMENT

WHEELAHAN J:

Introduction

951    I have had the privilege of reading in draft the reasons for judgment of Bromberg J and of White J. I gratefully adopt from the reasons of White J the introduction, the summary of the background to this proceeding, the summaries of WorkPac’s claims and the positions of the interveners, and the outlines of the factual setting, and the employment terms.

952    For the reasons given by White J, I agree that Mr Rossato was not a casual employee for the purposes of the relevant provisions of the Fair Work Act 2009 (Cth), and that he was not a “casual FTM” for the purposes of the Enterprise Agreement. Those conclusions leave two questions to be determined –

(a)    is WorkPac entitled to restitution of any portion of the casual loading that it claims it paid to Mr Rossato on the ground that Mr Rossato has been unjustly enriched; and

(b)    is WorkPac entitled to offset any amount that it paid to Mr Rossato as remuneration against the entitlements that he now claims under the Fair Work Act and the Enterprise Agreement?

953    In relation to those questions, I agree with the conclusions of White J that WorkPac is not entitled to restitutionary relief, and that it is not entitled to offset any amounts that it paid Mr Rossato against the entitlements that Mr Rossato seeks. I shall express my own reasons for those conclusions, although in relation to a number of issues I have gratefully adopted the reasons of White J.

Restitution

954    There were two sources of the obligations that were owed by WorkPac to Mr Rossato in connection with their employment relationship. The first source was the statutory obligations that arose under the Fair Work Act. The statutory obligations included the obligation under s 44(1) not to contravene a provision of the National Employment Standards in Part 2-2 of the Act, which under s 61 cannot be displaced. The Standards included the obligation under s 90(2) to pay an amount to Mr Rossato on account of untaken annual leave upon the termination of his employment, the obligation under s 99 to pay an employee for personal/carer’s leave, the obligation under s 106 to pay an employee for compassionate leave, and the obligation under s 116 to pay an employee if absent on a public holiday. The statutory obligations also included the obligation under s 50 of the Act to comply with the Enterprise Agreement.

955    The second source of obligations owed by WorkPac to Mr Rossato was the contractual obligations under the succession of six contracts of employment referred to by White J. The contractual obligations of WorkPac included the obligations to pay Mr Rossato at the agreed flat hourly rates specified in the written notices of offer of casual employment (NOCEs). The contractual obligations were significant in the present case and had independent force because in respect of each of the six periods of employment, the agreed flat hourly rate of pay under the NOCE was higher than that prescribed by the Enterprise Agreement when day and night shifts were averaged, whether for a casual flat rate FTM, or a permanent flat rate FTM, although there was no agreement between the parties as to the extent of all of the differences.

956    In Byrne v Australian Airlines Ltd [1995] HCA 24; 185 CLR 410 at 420-421, Brennan CJ, Dawson and Toohey JJ addressed the distinction between an obligation originating in a statute, and an obligation arising from a contract. While an employment relationship is contractual in origin, it may attract both statutory and contractual obligations. A contract of employment may provide additional benefits, but cannot be effective to derogate from the statute and the benefits that it confers, whether under the National Employment Standards, or under an award or enterprise agreement: Fair Work Act, s 44(1), s 45, s 50, s 61. In Visscher v Giudice [2009] HCA 34; 239 CLR 361 at [13], Gummow J described the employment relationship in issue there as representing a compound of statutory elements and of the common law of contract, where the statutory elements predominated: see also, Heydon, Crennan, Kiefel and Bell JJ at [71]. Because of the dual source of the obligations in an employment relationship, questions often arise, as they do here, as to whether payments made by an employer to an employee in the performance of a contractual obligation may operate to discharge a concurrent statutory obligation: see, Ray v Radano [1967] AR (NSW) 471; Poletti v Ecob (No 2) (1989) 31 IR 321 (Poletti v Ecob); Australian and New Zealand Banking Group Ltd v Finance Sector Union of Australia [2001] FCA 1785; 111 IR 227 (ANZ v FSU); and Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate [2015] FCAFC 99; 240 FCR 578 (Linkhill).

957    WorkPac claims that in the event the Court determines that Mr Rossato was not a casual employee, or a casual FTM, then on two grounds it is entitled to restitution of the casual loading that it claims that it paid to Mr Rossato –

(1)    the casual loading was paid under a mistake, in that WorkPac was mistaken as to Mr Rossato’s proper characterisation under the Enterprise Agreement, and therefore it considered that it was obliged by s 50 of the Fair Work Act to pay Mr Rossato as a “casual FTM” under the Agreement; and

(2)    the casual loading formed a distinct and severable component of Mr Rossato’s remuneration in respect of which there has been a failure of consideration.

958    WorkPac was correct to distinguish between the recovery of money paid under a mistake, and the recovery of money consequent upon a failure of consideration, for they are separate categories of case in which restitutionary relief might be claimed on the ground of unjust enrichment: Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 (Fibrosa) at 61 (Lord Wright); Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; 162 CLR 221 at 256-257 (Deane J); Farah Constructions v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 at [150] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ); Mann v Paterson Constructions Pty Ltd [2019] HCA 32; 373 ALR 1 at [81] (Gageler J) and [213] (Nettle, Gordon and Edelman JJ). I shall consider in turn the two grounds on which WorkPac seeks restitutionary relief.

Money paid under mistake

959    In Mann v Paterson Constructions Pty Ltd at [14], Kiefel CJ, Bell and Keane JJ stated that “[r]estitutionary claims must respect contractual regimes and the allocations of risk made under those regimes”. By paying to Mr Rossato the remuneration specified in the NOCEs, WorkPac discharged its obligations under the contracts of employment into which it entered to pay wages to Mr Rossato at the hourly rates specified in the NOCEs. At all relevant times, those contracts remained on foot, and were relevantly performed by Mr Rossato.

960    There was no relevant mistake by WorkPac in relation to its contractual obligations to pay Mr Rossato his agreed hourly rates. If there was any mistake by WorkPac, its mistake was in framing its offers of employment as being premised on casual employment in circumstances where, for the reasons given by White J, Mr Rossato was not a casual employee for the purpose of relevant provisions of the Fair Work Act. That mistake did not affect its contractual obligations, and could not afford any ground for recovery of remuneration paid to Mr Rossato as money had and received unless the contractual obligations to pay the remuneration could be avoided. In Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] QB 677 at 695, Robert Goff J identified a series of principles relating to the action for money paid under mistake of fact that his Lordship deduced from the authorities, and stated –

Of course, if the money was due under a contract between the payer and the payee, there can be no recovery on this ground unless the contract itself is held void for mistake (as in Norwich Union Fire Insurance Society Ltd. v. Wm. H. Price Ltd. [1934] A.C. 455) or is rescinded by the plaintiff.

961    The above passage was cited in the joint judgment in David Securities Pty Limited v Commonwealth Bank of Australia [1992] HCA 48; 175 CLR 353 (David Securities) at 376. At common law, there are limited circumstances in which a contract may be regarded as void, or may be rescinded on the grounds of common mistake: see Bell v Lever Bros Ltd [1932] AC 161 at 208 (Lord Warrington), at 225-226 (Lord Atkin), and at 235-236 (Lord Thankerton). Generally speaking, it must be shown that the mistake was so fundamental that the basis for the contract wholly failed. Indeed, many common law cases involving mistake and the recovery of monies by way of restitution are instances where there was a contract on foot, but the parties were discharged from further performance upon a total failure of consideration: see Fibrosa at 48 (Viscount Simon LC); McRae v Commonwealth Disposals Commission [1951] HCA 79; 84 CLR 377 at 405-406 (Dixon and Fullagar JJ); Svanosio v McNamara [1956]) HCA 55; 96 CLR 186 at 207-208 (McTiernan, Williams and Webb JJ); Birks, An Introduction to the Law of Restitution (Clarendon Press, Oxford, 1985), at 222-223. Whether in this case there was a failure of consideration will be considered below. For completeness, there is no suggestion here that there could be any scope for relief in equity on the ground of a unilateral mistake by WorkPac.

962    The NOCEs were fully executed contracts of employment. There is no claim by WorkPac that on the ground of mistake the NOCEs were void, or that they were or might be rescinded, or discharged. The parties were therefore bound by the contractual terms and, subject to the predominant statutory regime which also governed the employment relationship, any rights to payment, or restitution, were governed by that contractual regime. There was no express term of the General Conditions, or the NOCEs, providing for Mr Rossato to repay any portion of his agreed remuneration should WorkPac have made an error in characterising the basis of employment, and WorkPac did not claim that any such term could be implied: cf, Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 WLR 161 at 164 (Lord Goff); Roxborough v Rothmans of Pall Mall [2001] HCA 68; 208 CLR 516 (Roxborough) at [20] (Gleeson CJ, Gaudron and Hayne JJ). I do not mean to suggest that there would be scope to imply such a term. Questions would arise as to whether such a term would be inconsistent with the express terms of the employment contracts, and as Mason J stated in Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; 149 CLR 337 at 346 –

For obvious reasons the courts are slow to imply a term. In many cases, what the parties have actually agreed upon represents the totality of their willingness to agree; each may be prepared to take his chance in relation to an eventuality for which no provision is made.

963    In making the assumption of casual employment, WorkPac assumed the risk that its express contractual obligations to pay a flat hourly rate of remuneration operated to discharge its statutory obligations. The existence of that risk is indicated by the third paragraph of clause 1 of the General Conditions of employment, which provided –

The terms and conditions outlined in this Agreement conform with the National Employment Standard (“the Standard”). Should this Agreement provide for rates or conditions which are less beneficial to the employee than the Standard, the terms and conditions outlined in the Standard shall apply in lieu of the terms and conditions in this Agreement.

964    The prospect that WorkPac’s contractual obligations might not meet its statutory obligations is also indicated by the definition of “relevant industrial instrument” in clause 2 of the General Conditions of employment. That definition contemplated that there might be differences between the terms contained in that document and the relevant industrial instrument, being the Enterprise Agreement, and provided –

In this agreement the terms below shall have the following meanings, unless their context otherwise requires:

…

965    No party sought to rely on these terms as affecting the obligations or entitlements under the contracts of employment in relation to Mr Rossato’s remuneration. Moreover, there was no term purporting to provide for the adjustment of agreed remuneration paid under the contracts of employment should any assumptions underlying the contractual obligations prove to be incorrect. The General Conditions did address the topic of overpayment of wages, which is a different issue. The General Conditions contained the following clause relating to the recovery of wages –

Payment of Wages:

…

7.9    WorkPac endeavours to accurately determine the employee’s wages each week. Very occasionally however, over or under payments may occur.

If an underpayment comes to WorkPac’s notice the amount of the identified wage shortfall will be paid to the employee in the next normal pay run.

In the event of an overpayment of wages, the employee agrees that WorkPac may recover the overpayment from any wages or entitlements owing to the employee. If an amount remains outstanding at the conclusion of employment or an assignment, then WorkPac may recover the outstanding amount from any monies then owing including wages or accumulated leave.

Overpayments will be deducted over a maximum period of up to twelve (12) weeks unless otherwise agreed.

966    There was no claim by WorkPac that that there had been any overpayment of wages when calculated in accordance with the flat hourly rates of pay for which the contracts of employment provided. WorkPac did not rely on the above clause, and therefore no question of its application arises.

Failure of consideration

967    WorkPac submitted that the amount of the consideration paid to Mr Rossato which constituted a casual loading was severable, and that on the assumption that Mr Rossato was not a casual employee, the basis for that severable part of the consideration wholly failed.

968    The term “consideration” is a label that bears different meanings that are dependent upon context: Roxborough at [101]-[103] (Gummow J). In Fibrosa, Viscount Simon LC stated at 48, within the setting of the future performance of a contractual obligation, that “when one is considering the law relating to failure of consideration it is, generally speaking, not the promise which is referred to as the consideration, but the performance of the promise”. That statement was cited in Baltic Shipping Company v Dillon [1993] HCA 4; 176 CLR 344 (Baltic Shipping) at 351 (Mason CJ) and at 389 (McHugh J). However, consideration, and its failure, are not limited to the failure of a contractual bargain or purpose. For that reason, failure of consideration has been described as identifying the failure of the state of affairs contemplated as a basis for the payments to sustain itself: Roxborough at [16] (Gleeson CJ, Gaudron and Hayne JJ), and at [104] (Gummow J), drawing upon the work of Birks, An Introduction to the Law of Restitution (Clarendon Press, Oxford, 1985) at 223, which was also cited in the joint judgment in David Securities at 382. See also: Baltic Shipping at 389 and 393 (McHugh J); Equuscorp Pty Ltd v Haxton [2012] HCA 7; 246 CLR 498 (Equuscorp) at [31]-[32] (French CJ, Crennan and Kiefel JJ); and Mann v Paterson Constructions Pty Ltd at [78] (Gageler J) and [168]-[169] (Nettle, Gordon and Edelman JJ).

969    Although a failure of consideration is not limited to a failure of a contractual bargain or purpose, the terms of the relevant contracts of employment in the present case were an objective expression of the state of affairs which formed the basis for the payments of remuneration. Therefore, a useful starting point in determining whether the bargain, or the state of affairs contemplated as the basis for the payment of remuneration failed to sustain itself, is to consider the terms of the contracts of employment. That is because it is necessary to take account of what Mr Rossato promised, and whether there was performance of that promise, in order to determine whether any severable part of the consideration failed: cf, McRae v Commonwealth Disposals Commission at 407-408 (Dixon and Fullagar JJ).

970    As both Bromberg J and White J have held, the terms of the contracts of employment differed between assignments. Common features of the contracts were terms of each of the NOCEs which provided for a flat hourly rate of pay, and which provided that timesheets were to be submitted to WorkPac by Mr Rossato or the host employer each week. The remuneration was paid to Mr Rossato weekly, and was paid on account of his performance of the work for the hours that he claimed. The time that Mr Rossato worked between 28 July 2014 and 5 April 2018 was the subject of the statement of agreed facts, and it was agreed that he worked diligently. Therefore, on the argument advanced by WorkPac, this is not a case where there has been any failure by Mr Rossato to perform a contractual obligation.

971    WorkPac submitted that Mr Rossato’s remuneration included severable components that were attributable to his status as a “casual FTM”, as distinct from a “permanent FTM”. WorkPac submitted that these amounts comprised a “casual loading” and totalled 25% of the base rate of pay for a permanent FTM. WorkPac submitted that upon the Court finding that Mr Rossato was not a casual employee, or a casual FTM, the basis for the payment of a casual loading, which was separate and discrete, failed. WorkPac submitted that the consideration in question was not the service given by Mr Rossato for which he was paid the flat hourly rate, but that a casual loading was accepted by Mr Rossato in discharge of any obligations in relation to annual or personal leave, or any of the other entitlements of permanent employees in issue in the proceedings, and that the basis for this component of the remuneration had failed.

972    In submitting that part of the remuneration that was attributable to a casual loading was recoverable as money had and received on the ground of failure of consideration, WorkPac relied on Roxborough. Like the present case, Roxborough involved contracts. The wholesaler of tobacco products invoiced a retailer in terms which identified separately as subtotals: (1) the wholesale list price of the tobacco; and (2) an ad valorem tobacco licence fee. The State legislation under which the licence fee had been levied on the wholesaler was held to be invalid: Ha v New South Wales [1997] HCA 34; 189 CLR 465. The question in issue was whether the retailer was entitled to recover monies that it had paid to the wholesaler on account of the licence fee which the wholesaler had retained in the period following the declaration of invalidity of the legislation. It was relevant that under the legislation, the scheme of which had some complexity, a retailer was also liable to pay a licence fee, but in calculating the value of tobacco sold by a retailer, the value of tobacco purchased from a holder of a wholesaler’s licence was to be disregarded if the wholesaler had paid or was liable to pay a licence fee in respect of the tobacco: see Gleeson CJ, Gaudron and Hayne at [4] and [6], Gummow J at [39]-[40] and [48]-[53], and Callinan J at [180], [184]-[185]. This had the consequence that the retailer had an interest in the wholesaler renewing its licence and paying its licence fee, for otherwise the retailer bore the full burden of an ad valorem licence fee. The prices charged by the wholesaler to the retailer “involved, in practical effect, payments to the wholesaler in anticipation of licence fees to be incurred at a future time”: Gleeson CJ, Gaudron and Hayne JJ at [4].

973    The Court in Roxborough held by majority that the retailer was entitled to recover the monies paid on account of the licence fees which the wholesaler had retained. It was a feature of Roxborough that the wholesaler was not in breach of any contractual obligation. In the joint judgment of Gleeson CJ, Gaudron and Hayne JJ at [16], their Honours said in relation to the equitable notions that found expression in the common law count for money had and received that, “[i]n the case of money paid pursuant to a contract, it would involve too narrow a view of those ‘general equitable notions’ to limit failure of consideration to failure of contractual performance”. Their Honours referred at [17] to the parties’ common interest in the payment of the licence fees to the revenue authorities by the wholesaler, stating –

… there are cases, of which the present is an example, where it is possible, both to identify that part of the final agreed sum which is attributable to a cost component, and to conclude that an alteration in circumstances, perhaps involving a failure to incur an expense, has resulted in a failure of a severable part of the consideration. Here, the buyers, the retailers, were required to bear, as a component of the total cost to them of the tobacco products, a part of the licence fees which the seller, the wholesaler, was expected to incur at a future time, and which was referable to the products being sold. It was in the common interests of the parties that the fees, when so incurred, would be paid to the revenue authorities by the seller, and it was the common intention of the parties (and the revenue authorities) that the cost of the goods would include the fees. In the events that happened, the anticipated licence fees were not incurred by the seller. The state of affairs, which was within the contemplation of the parties as the basis of their dealings, concerning tax liability, altered. And it did so in circumstances which permitted, and required, severance of part of the total amount paid for the goods.

974    Their Honours held at [19] that the “failure of the tax involved the failure of a severable part of the consideration for which the net total amounts on the invoices were paid”. At [20], their Honours rejected a claim by the retailer that there was an implied agreement under which the unpaid tax could be recovered. Instead, the right of recovery was held to rest upon the basis of a failure of consideration “because, in the circumstances, the law imposes upon the [wholesaler] an obligation to make just restitution for a benefit derived at the expense of the [retailer]”, citing Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 257 (Deane J).

975    Gummow J at [104] referred to the fact that the parties had not intended that the wholesaler should enjoy the benefit of the licence fees. After undertaking a thorough analysis which charted the influence of equitable notions of unconscionability on the applicable common law principles, his Honour framed the issue, and formulated the answer as follows –

Is it unconscionable for [the wholesaler] to enjoy the payments in respect of the tobacco licence fee, in circumstances in which it was not specifically intended or specially provided that [the wholesaler] should so enjoy them? The answer should be in the affirmative. Here, “failure of consideration” identifies the failure to sustain itself of the state of affairs contemplated as a basis for the payments the appellants seek to recover [footnote omitted].

976    The influence of equitable notions on the applicable principles has been referred to in subsequent decisions: Equuscorp at [32] (French CJ, Crennan and Kiefel JJ) and [114] (Heydon J); Australian Financial Services and Leasing Pty Limited v Hills Industries Limited [2014] HCA 14; 253 CLR 560 at [11]-[12] (French CJ), at [68]-[75] (Hayne, Crennan, Kiefel, Bell and Keane JJ), and see the account of Gageler J at [111]-[138].

977    The other member of the majority in Roxborough, Callinan J, held at [196] that the sums paid by the retailer on account of the licence fees were “separate parts of money payable for or on account of a divisible part of a contract”. His Honour held that there had been a failure of consideration, approving at [197] the following passage from the dissenting reasons of Gyles J in the Full Court of the Federal Court –

The contract [here] has been executed in all respects save for payment of the licence fee by the respondent. The licence fee is no longer payable. It cannot and will not be paid by the respondent. That is the end of the matter. Performance is no longer possible. If formal termination by the appellants is necessary, then bringing these proceedings is sufficient.

978    In Mann v Paterson Constructions Pty Ltd at [78], Gageler J described Roxborough as involving “novel circumstances” in which the concept of failure of consideration was invoked to explain the imposition of an obligation to repay money. There are four features that distinguish the present case from the circumstances that arose in Roxborough. First, the object of WorkPac’s agreements to pay remuneration to Mr Rossato at the agreed hourly rates was to secure the performance of work by Mr Rossato. There was no failure of that object, because it was agreed that Mr Rossato performed his role diligently and for long hours for the benefit of WorkPac’s enterprise, and that he worked the hours that are set out in a spreadsheet attached to the parties’ statement of agreed facts. The parties agreed that Mr Rossato did not make himself unavailable for any shift, or seek to take any leave, until towards the end of his period of employment when he left the Collinsville site to care for his partner, who had been hospitalised. As a result, WorkPac did not have to find replacement labour for Mr Rossato, and was able to meet its obligations to its client to provide an employee of whom the client approved, and whom it considered to be a good worker. Second, under the contracts of employment the parties intended that Mr Rossato be the recipient of the remuneration that WorkPac agreed to pay him, and that he enjoy the benefit of those moneys. There was nothing unconscionable about Mr Rossato retaining and enjoying the benefit of the remuneration that WorkPac had agreed to pay him on account of the work that he had performed: cf, Roxborough at [100], [104] (Gummow J). Third, in common with cases concerning the recovery of interest paid in excess of that permitted by statute, the restitutionary relief that the retailer succeeded in obtaining in Roxborough involved only the repayment of a sum of money, and placed the parties in the position in which they would have been had the tobacco licence fee not been paid and then retained by the wholesaler. The present case is not of that type, because it is not concerned merely with the payment and recovery of divisible sums of money. The bargains that the parties struck involved securing Mr Rossato’s time and labour in return for remuneration that was for his benefit. On the hypothesis that any severable part of the basis for the payments of remuneration failed, the position of the parties cannot in any real sense be restored. Fourth, contrary to the submissions of WorkPac, for the reasons that follow, I do not accept that a casual loading formed a severable part of the remuneration that WorkPac paid to Mr Rossato the consideration for which can be said to have failed.

979    In the joint judgment in David Securities at 383, the loan agreement in issue was treated as being capable of being broken up or apportioned, with amounts capable of being identified and attributable to the impugned obligation under the loan agreement to pay an amount on account of withholding tax. The Court remitted for determination the question whether the appellants paid those amounts because of their mistaken belief that their contractual arrangements with the Bank required the payments. In Roxborough, the agreement to pay a separately identified amount on account of the tobacco licence fee was referrable to a distinct object of the transactions, which was that the wholesaler should pay the licence fees, which obligation had a common benefit. That object failed upon the legislation that imposed the fees being declared invalid.

980    By the contracts of employment, Mr Rossato was engaged in employment that was not casual, and under which he was not a casual FTM for the purposes of the Enterprise Agreement. The contractual obligations that WorkPac undertook were to pay remuneration to Mr Rossato at the flat hourly rates of pay specified in the NOCEs, which were in excess of the rates prescribed by the Enterprise Agreement. The object of the agreements was to secure Mr Rossato’s attendance at the mines and the performance of work, which he undertook without declining any shifts, or taking leave until towards the end of the employment period. There may have been a sense in which the state of affairs contemplated as the basis for WorkPac’s agreement to pay the flat hourly rates did not exist at the time of the payments, but the payments were made pursuant to a contractual obligation to do so that arose upon the performance of work by Mr Rossato. The remuneration was not divisible merely because an assumption which may have formed part of the calculation of the agreed flat hourly rates did not exist. I do not accept that an assumption of that type is a severable object of the employment contracts that failed.

981    For all these reasons, in my view, to allow a restitutionary claim in these circumstances would cut across the parties’ contractual rights and obligations: see, Mann v Paterson Constructions Pty Ltd at [23] (Kiefel CJ, Bell and Keane JJ).

Defences alleged by Mr Rossato

982    Having regard to my conclusion that no monies are recoverable by WorkPac as monies paid under mistake, or upon a failure of consideration, it is unnecessary to consider Mr Rossato’s reliance on the defences of illegality, change of position, and estoppel by representation. However, in case this matter goes further, in relation to the question of illegality, I agree with the reasons of White J on that topic. As to change of position, and estoppel by representation, in my view there is a degree of artificiality in evaluating those defences in the absence of a prima facie finding of money paid under mistake, or failure of consideration, and I would be cautious about doing so. I have referred at [25]-[26] to the recognition of the influence of equity on the applicable common law principles. Questions of unconscionability, which are not at large, but are to be resolved by reference to established principles and doctrines, are involved in evaluating any detriment claimed to give rise to defences of change of position, and estoppel. A full consideration of whether it would be unconscionable to require restitution having regard to any detriment that a payee might suffer on the faith of the receipt of money may require an examination of all the connected circumstances, including the circumstances of payment, such that a true appraisal may not be possible upon a mere hypothesis that a prima facie case is made out. Subject to this comment, I agree generally with the observations of White J in relation to the defences of change of position and estoppel.

WorkPac’s claim to offset payments to Mr Rossato

983    WorkPac submitted that it was entitled to “set-off” a portion of the remuneration that it paid to Mr Rossato against the obligations to pay the entitlements that Mr Rossato claimed were owing to him pursuant to Part 2-2, Divisions 6 and 7 of the Fair Work Act and under the Enterprise Agreement. Although WorkPac described this claim as one of “set-off”, I do not understand it to be a set-off in the true sense, because there is no countervailing claim by WorkPac against Mr Rossato in the nature of an actionable right. Rather, the real substance of the claim made by WorkPac is that it should be entitled to have some portion of the payments of remuneration that it made to Mr Rossato brought into account in discharge of its obligation to pay the entitlements that Mr Rossato claims, and in working out whether any sums remain owing to Mr Rossato. See: Poletti v Ecob at 333-334 (Keely, Ryan and Gray JJ), cited in Linkhill at [53] (North and Bromberg JJ); James Turner Roofing Pty Ltd v Peters [2003] WASCA 28; 132 IR 122 (James Turner Roofing) at [18] (Anderson J).

Mr Rossato’s claimed entitlements

984    It is convenient to identify the entitlements which Mr Rossato claims –

(1)    payment on account of 22.3 weeks of untaken annual leave;

(2)    payment in respect of personal/carer’s leave and compassionate leave that Mr Rossato took from early March 2018 when his partner became ill and was hospitalised; and

(3)    payment for Christmas Day, Boxing Day and New Year’s Day, being public holidays on which Mr Rossato did not work.

985    These entitlements were statutory entitlements, and the contracts of employment were not effective to the extent that they purported to take them away.

The authorities

986    The question whether the payments made by WorkPac to Mr Rossato were effective, to any extent, to discharge the entitlements that Mr Rossato claims invites attention to the principles concerning the appropriation of payments, which in turn raise questions of purpose, characterisation, and what inferences are to be drawn from all the circumstances. In Linkhill, North and Bromberg JJ reviewed many of the authorities that have considered the circumstances in which payments made to an employee working under a contract of employment may operate to discharge the employer’s statutory obligations to pay entitlements to an employee, such as those arising under the Act, an award, or an enterprise agreement. Those authorities identify the relevant principles, and provide insight through the examination of the way in which other judges have addressed similar problems.

987    In Linkhill at [53], North and Bromberg JJ cited a passage from the Full Court’s decision in Poletti v Ecob, in which the Court (Keely, Ryan and Gray JJ) at 332-333 referred to the common law rules of appropriation governing payments by a creditor to a debtor. In relation to those rules, in Cory Brothers & Co Ltd v Owners of the Turkish Steamship Mecca (The Mecca) [1897] AC 286 at 293, Lord Macnaghten stated the general rule as follows –

Now, my Lords, there can be no doubt what the law of England is on this subject. When a debtor is making a payment to his creditor he may appropriate the money as he pleases, and the creditor must apply it accordingly. If the debtor does not make any appropriation at the time when he makes the payment the right of application devolves on the creditor.

988    The application of the rules governing the appropriation of payments was explained by Lockhart J in Re Walsh; Ex parte Deputy Commissioner of Taxation [1982] FCA 92; 60 FLR 355 at 357-358 –

A debtor who owes two debts to a creditor is entitled to appropriate a payment which he makes to his creditor to one debt rather than to the other. If he omits to do so, the creditor may make the appropriation. If neither makes any appropriation, the law appropriates the payment to the earlier debt. If there is specific appropriation by the debtor cadit quaestio. In the absence of a specific appropriation it is a question of fact whether there was any appropriation by the debtor. To constitute an appropriation there must be more than an intention to appropriate by the debtor. I respectfully adopt the following passage from the judgment of Greene LJ in Leeson v Leeson [[1936] 2 KB 156 at 162–3]: “When, however, he does not notify the creditor of his intention, and when the circumstances are such that the creditor receives the payment merely in satisfaction of the debts and the payment is not more appropriate to the payment of the one debt than to that of the other the creditor is entitled to make the appropriation. When it is said that there need not be an express appropriation of a payment, but that the appropriation can be inferred, that does not mean that appropriation of a payment can be inferred from some undisclosed intention in the mind of the debtor. It is to be inferred from the circumstances of the case as known to both parties. Any other view might lead to injustice, as the creditor’s right to appropriate a payment would be defeated. When the matter is examined upon principle it will be found that an undisclosed intention in the mind of the debtor is not sufficient to support an appropriation. If authority is needed for that proposition it can be found in the judgment of Lush J in Parker v Guinness [(1910) 27 TLR 129 at 130] where he said: ‘What is to be considered is this. Is the true inference to be drawn from all the circumstances of the case that the debtor paid the moneys generally on account, leaving the creditor to apply them as he thought fit, or is the true inference that he paid them on account of special portions of the debt for the purpose and with a view to wipe these out of the account? His undisclosed intention so to do would, of course, not benefit him. It is what he did in fact, and not what he meant to do that is to be regarded.’ A debtor’s undisclosed intention to appropriate a payment to one of two debts owed by him to a creditor cannot benefit him.”

(footnotes omitted)

989    See also: Knysh v Corrales Pty Ltd [1989] FCA 466; 15 ACLR 629 at 633-4 (Morling, Pincus and Lee JJ).

990    In Poletti v Ecob, one of the issues before the Full Court was how weekly payments that had been made in cash by a horse trainer to his stable foreman should be credited to various obligations that arose under the applicable award. The Court rejected a submission that the employer was entitled to offset the total of all amounts actually paid to the stable foreman against the aggregate of all the amounts that were due under the award. In relation to the circumstances in which payments made by an employer to an employee could be treated as discharging award entitlements, the Court stated that it was appropriate to apply the reasons for judgment of Sheldon J in the Industrial Commission of New South Wales in Ray v Radano, which had been approved in a later decision of the Commission in Pacific Publications Pty Ltd v Cantlon (1983) 4 IR 415. At 332-333, the Court summarised the principles as follows –

It is to be noted that there are two separate situations dealt with in the passage from the judgment of Sheldon J which has been quoted and in the reasoning of the Commission in Pacific Publications. The first situation is that in which the parties to a contract of employment have agreed that a sum or sums of money will be paid and received for specific purposes, over and above or extraneous to award entitlements. In that situation, the contract between the parties prevents the employer afterwards claiming that payments made pursuant to the contractual obligation can be relied on in satisfaction of award entitlements arising outside the agreed purpose of the payments. The second situation is that in which there are outstanding award entitlements, and a sum of money is paid by the employer to the employee. If that sum is designated by the employer as being for a purpose other than the satisfaction of the award entitlements, the employer cannot afterwards claim to have satisfied the award entitlements by means of the payment. The former situation is a question of contract. The latter situation is an application of the common law rules governing payments by a debtor to a creditor. In the absence of a contractual obligation to pay and apply moneys to a particular obligation, where a debtor has more than one obligation to a creditor, it is open to the debtor, either before or at the time of making a payment, to appropriate it to a particular obligation. If no such appropriation is made, then the creditor may apply the payment to whichever obligation or obligations he or she wishes. See Halsbury’s Laws of England, 4th ed, vol 9, pars 505 and 506.

[Note: see also, Halsbury’s Laws of England, 4th ed Reissue (1998), vol 9(1) at [956] and [957]].

991    The Court then stated at 333-334 that the principles discussed by Sheldon J in Ray v Radano to which it referred were “specific applications of general principles relating to parties to contracts and to debtors and creditors”.

992    The approach of Sheldon J in Ray v Radano, which was endorsed in Poletti v Ecob, was accepted by the Full Court of the Supreme Court of South Australia in TransAdelaide v Leddy (No 2) (1998) 71 SASR 413 (TransAdelaide). TransAdelaide has some parallels to the essential factual structure of the present case. The employee, Mr Leddy, agreed to be engaged as a permanent part-time bus operator. Under the applicable enterprise bargaining agreement (the EBA), a part-time employee was entitled to be paid 1/38th of the weekly rate payable to a full time employee, plus a loading that was expressed to be –

… a twenty (20) per cent loading in lieu of sick and annual leave entitlements and public holidays.

993    The EBA contained a proscription on the employment of part-time employees for more than 48 weeks in a year. It was held by the Full Court that upon Mr Leddy working more than 48 weeks, he ceased to be a part-time employee, and became a full-time employee for the purposes of the EBA, and that he was thereafter entitled to the benefits that were payable to a full-time employee. The question that then arose was whether any part of the 20 per cent loading that the employer had paid to Mr Leddy could be offset against his entitlement to wages as a full-time employee. The Industrial Relations Court of South Australia had held that since the 20 per cent loading was paid for particular purposes, it could only be offset against those purposes, namely public holidays, annual leave, and sick leave, and it could not be applied to ordinary time or overtime. On appeal, Doyle CJ (Lander J agreeing) took a different view, stating at 419-420 –

I respectfully disagree with the conclusion reached by the president [of the Industrial Relations Court of South Australia]. In my opinion the 20 per cent loading was not paid for the particular purposes identified by the president. Under the EBA Mr Leddy had no entitlement to sick leave, annual leave or to payment for public holidays. The 20 per cent loading is paid in substitution for those entitlements. In my opinion it cannot be said that it is a payment for public holidays, or for annual leave or for sick leave. It replaces the payments that would otherwise be made in that respect. The loading is paid because there is no such entitlement.

In my opinion the amount paid to Mr Leddy, in respect of each hour worked as a part-time employee, is simply the wage to which he was entitled under the EBA. The manner in which his entitlement is calculated is neither here nor there. It does not alter the nature of the entitlement. His entitlement remained an entitlement to receive a specified hourly rate.

As a full-time employee Mr Leddy is now entitled to receive payment for at least 38 hours of work in each week worked, even if he did not work that many hours, and at the rate applicable to a full-time employee. Mr Leddy has already received a payment for the hours actually worked. I find no reason why the payment actually received for the hours worked should not be offset against Mr Leddy’s yet to be determined monetary entitlement in respect of 38 hours for each week worked or, when the number was greater than 38, the number of hours actually worked.

…

The wage actually paid to Mr Leddy was paid as such. The money paid to him was never attributed by either party to anything other than his entitlement under the EBA to wages. Now that it appears that his monetary entitlement, by way of wages, is to be calculated differently, in my opinion there is no reason why the amount actually paid to him by way of wages should not be set-off against the yet to be calculated entitlement. The amount already paid, and the yet to be calculated entitlement, are both a wage rate payable under the EBA in respect of hours worked. There is no question of, for example, a payment for sick leave being now attributed to an entitlement in respect of hours worked.

[emphasis added]

994    The main point arising from these passages is that the wages paid to Mr Leddy, although incorporating a loading, were paid as wages, and were not payments for public holidays, annual leave, or sick leave. Olsson J gave separate reasons for judgment in which his Honour stated at 432 –

… The element of “loading” was included in lieu of any entitlement to leave and paid public holidays. It could never be said that such element comprised moneys appropriated to meet a liability for paid sick leave, annual leave or paid public holidays prescribed by any industrial prescription. The appellant’s contention was that no such liability ever existed. Its stance was that, in substance and in fact, the sole entitlement of the respondent was to an “all up” hourly rate computed as 120 per cent of that payable to a permanent full-time operator. The margin element was included, not in discharge of any liability to grant paid leave or for paid public holidays (for there never was any such liability), but to compensate for what was said to be a lack of such entitlements.

995    Poletti v Ecob, and its adoption of the analysis of Sheldon J in Ray v Radano, was applied by the Full Court of the Industrial Relations Court of Australia (Wilcox CJ, Marshall and Madgwick JJ) in Logan v Otis Elevator Co Pty Ltd [1999] IRCA 4; 94 IR 218 (Logan). In Logan, the applicant was employed as the respondent’s local representative in Orange, New South Wales, and he was entitled under the applicable award to payments in respect of overtime and call-backs. The Court held that the employer was not entitled to offset against the entitlements salary that it paid to the applicant that was in excess of his award entitlements. That was because neither party sought to designate or appropriate the excess, or any part of it, to any particular obligation owed by Otis to Mr Logan. Rather, the difference between the award entitlement and the salary that the respondent paid was held to be appropriate to reflect the difference between the position of a local representative, and an ordinary “electrician special class”, which was Mr Logan’s award classification. For that reason, none of the excess could reasonably be identified as a payment on account of overtime and call-backs.

996    The Full Court of this Court considered the issue again in Australia and New Zealand Banking Group Ltd v Finance Sector Union of Australia [2001] FCA 1785; 111 IR 227 (ANZ v FSU). The question before the Court was whether payments made by an employer to some retrenched employees under the employer’s Retirement/Severance Allowance Scheme operated to discharge its obligation to make payments on account of untaken long service leave under the applicable award. At [47], the Court (Black CJ, Wilcox and von Doussa JJ) held that the passage in Poletti v Ecob which I have set out at [39] above accurately analysed the judgment of Sheldon J in Ray v Radano, and enunciated the relevant principle. In relation to the reference in Poletti v Ecob to a contractually agreed purpose of a payment, the Court stated at [48] –

The first situation noted in the passage is one where “the parties to a contract of employment have agreed that a sum or sums of money will be paid and received for specific purposes, over and above or extraneous to award requirements”. In that situation, the Full Court said, “the contract between the parties prevents the employer afterwards claiming that payments made pursuant to the contractual obligation can be relied on in satisfaction of award entitlements arising outside the agreed purpose of the payments.” (Emphasis added.) So the critical question is whether the relevant award entitlements arose outside the contractually agreed purpose.

997    The Court held at [50]-[52] that both the award entitlement and the contractual entitlement under the Scheme were money entitlements in respect of untaken long service leave, and that the award entitlement and contractual payment arose out of the same agreed purpose. The Court held that it was not necessary that the same label attach to the payments, but what was required was a close correlation between the nature of the contractual obligation, and the nature of the award obligation, which the Court held to exist. In relation to the second situation discussed in Poletti v Ecob, namely the designation of the purpose of payments by the employer, the Court stated at [54] –

The question that arises in respect of the second situation is whether the Retirement/Severance Allowance payment “is designated by the employer as being for a purpose other than the satisfaction of the award entitlements”. … It is evident that it was intended that any payment of Retirement/Severance Allowance would subsume any lesser obligation to make payment under the award in respect of untaken long service leave.

998    Counsel for the Finance Sector Union relied on the notices of payment issued by the employer bank, which divided the total payment between “long service leave” and “Retiring Allowance Eligible Termination Payment”, and submitted that the notices had irrevocably designated the payments in question. In addressing this submission, the Court held that the division was explicable on account of the different taxation treatment of the amounts, and that the true character of the payments was to be determined by the Scheme, a feature of which was to subsume the award obligation. Accordingly, because the character of the payments under the Scheme was in respect of untaken long service leave, the payments were to be taken into account in determining whether the employees had received the money due to them under the award on account of untaken long service leave.

999    White J has considered at [850] to [852] and [877] to [880] the decision of the Western Australian Industrial Appeal Court in James Turner Roofing. I respectfully agree with his Honour’s summary and analysis of that decision, to which there is nothing that I can add.

1000    As I have mentioned, many of the authorities were reviewed by North and Bromberg JJ in Linkhill. In that case, the employer had sought to characterise the parties’ relationship as one of principal and independent contractors, but at trial the primary judge held that the relationships were of employer and employees. The employer sought to raise on appeal for the first time new arguments concerning whether payments made to the employees during the course of their employment could be taken into account in calculating outstanding award entitlements. The Court (North and Bromberg JJ at [93], and White J at [134]) refused leave to raise the new arguments. Although it was unnecessary to do so, North and Bromberg JJ addressed briefly the merits of the arguments that the employer had sought to raise. There is nothing in their Honour’s observations by way of obiter dicta that directly challenges the correctness of the principles in Poletti v Ecob or ANZ v FSU. However, their Honours stated at [99]-[100] –

99    … Neither Linkhill or the Director contended that the principles articulated in Poletti v Ecob and ANZ v FSU and the other authorities discussed in these reasons were inapplicable because they were developed in circumstances where the parties succeeded in creating the employment relationship which, subjectively, they intended to make. Given that the purpose or intent of the parties in relation to a particular payment is central to the application of those principles, it may be that the principles do not translate well to a situation where the parties have created a relationship different to that which, subjectively, they had set out to make. Those principles may not apply to the circumstances in which the parties did not intend to provide for award entitlements at all because they did not advert to or had disavowed the relevance of such entitlements.

100    However, both the proper interpretation of James Turner Roofing, and the question whether the principles established in Poletti v Ecob and ANZ v FSU and the other authorities discussed in these reasons apply in the case of a failed attempt to create a contract for services may be left for another day.

1001    In Fair Work Ombudsman v Transpetrol TM AS [2019] FCA 400 (Transpetrol), the applicant applied unsuccessfully for the imposition of civil penalties on the employer of the crew of an oil and chemical tanker flagged in Panama which was sailing in Australian regulated waters under temporary licences issued on the application of sub-charterers of the vessel pursuant to s 37 of the Coastal Trading (Revitalising Australian Shipping) Act 2012 (Cth). Pursuant to reg 1.15E(1)(c) of the Fair Work Regulations 2009 (Cth), and s 33(3) of the Fair Work Act, the Act extended to ships in Australian regulated waters that were the subject of a temporary licence. The crew on the vessel were the subject of collective agreements negotiated with the International Transport Workers’ Federation (ITF). Those collective agreements included specific agreements according to the nationality of the seafarer, and an ITF standard collective agreement covering vessels flying a flag of convenience. The ITF agreement applied different collective bargaining agreements to different seafarers depending on their nationality or the relevant national law. Under these agreements, seafarers and officers of different nationalities performing the same work would be entitled to different rates of pay. There were also individual seafarer employment agreements. However, under separate arrangements, the employer applied a gross pay wage scale across the crew so that there was an equivalence of pay for seafarers and officers of the same rank performing the same work. The rates of pay in the pay scale were higher than those required under the applicable collective bargaining and employment agreements. The employer issued each crew member with a statement that broke down the gross wage into various components specified in the applicable collective bargaining agreements. The breakdown in the statements had to reflect the obligations under the various collective agreements so as not to put the vessel’s “blue certificate” at risk. The top up to reach the employer’s own wage scale was specified as an “owners allowance”.

1002    It was uncontentious that, in respect of ten voyages, the amounts that the employer paid to the crew were not sufficient to discharge its obligations under the Australian Seagoing Industry Award 2010 and the National Minimum Wage Order 2014. One of the issues that Rares J considered in Transpetrol was whether and to what extent payments made by the employer to the crew in the way described above could be offset against monies due under the Award and the Order, and could thereby be taken into account in the employer’s favour for the purposes of considering the question of penalty. Rares J cited Poletti v Ecob, ANZ v FSU, James Turner Roofing, and Linkhill and stated –

113.    It follows that there is no inflexible principle that precludes a creditor, who has appeared to designate or appropriate a payment to discharge a specific liability, from relying on all of the circumstances to demonstrate that the true character of the payment is, in fact, different or, alternatively, to justify the use of that payment as a set off to a different liability. …

…

116.    [T]he character of Transpetrol’s total payment to the crew member was that it wished to pay a common lump sum, in addition to the requirements of the differing relevant national laws applicable to any particular crew member, according to the wage scale that would be more than sufficient to meet all contractual and statutory liabilities (even if overlapping) that it had to the crew member. Accordingly, the gross total payment that Transpetrol made (before the Ombudsman’s investigation) to each crew member is the relevant one for the purposes of assessing its liabilities under the Fair Work Act while Turmoil sailed on each of the ten voyages in Australian regulated waters.

117.    For those reasons, I am of opinion that Transpetrol is entitled to set off fully the total wages it paid earlier to the official crew members to reduce the sum of its liabilities in respect of each of the ordinary time, overtime or NMWO contraventions. That enables Transpetrol to achieve a partial discharge of its additional liabilities to pay the crew members under the Fair Work Act during the part or parts of the ten voyages when Turmoil sailed in Australian regulated waters.

1003    Rares J identified the relevant intention of the employer as payment of a gross total payment that would be more than sufficient to meet all its contractual and statutory liabilities arising under different jurisdictions. A payment of that character was able to be appropriated to discharge liabilities under the Fair Work Act.

WorkPac’s submissions

1004    WorkPac submitted that the authorities established two propositions. First, if payments are made pursuant to a particular contractual obligation, then the payments may not be relied upon to discharge an entitlement under an award that arises outside the agreed contractual purpose. Second, as an application of the common law rules relating to appropriation, an employer may pay a sum of money to an employee, and designate it as satisfying a relevant award entitlement. WorkPac’s principal submission, however, was that neither of these principles was applicable to the present case because, “those principles were developed in circumstances where the parties succeeded in creating the type of relationship which, subjectively, they intended to make”. WorkPac submitted that a third principle for which it contended applied, namely that the purpose or intent of the parties was irrelevant, and that the entire amount paid to Mr Rossato that exceeded the rate applicable to a permanent FTM, regardless of its agreed purpose or designation, was available to “set off” the entitlements payable to Mr Rossato as a permanent employee. By its submissions, WorkPac claimed that by application of the third principle, the whole of the difference between the hourly rates that were actually paid to Mr Rossato, and the applicable hourly rates payable to a permanent FTM under the Enterprise Agreement, were available to discharge the entitlements that Mr Rossato claimed.

1005    In the alternative to its principal submission, WorkPac submitted in reliance on the first two propositions to which I have referred at [53] above that portions of the casual loading that it claimed was incorporated into Mr Rossato’s rate of pay were attributable to annual leave and personal leave, and could be applied to discharge its liability to pay Mr Rossato the entitlements that he claimed on account of leave. WorkPac claimed that of the 25% casual loading –

(1)    11% was attributable to annual leave; and

(2)    5% was attributable to personal leave.

1006    In addition, WorkPac relied on reg 2.03A of the Fair Work Regulations, to which White J has referred.

Analysis of WorkPac’s claim to offset the remuneration paid to Mr Rossato

1007    There is no difficulty in finding that the payments of remuneration made by WorkPac to Mr Rossato were appropriated by WorkPac to the indebtedness that arose upon the performance of work by Mr Rossato pursuant to the contracts of employment. That inference arises from the combination of the express terms of the NOCEs, and WorkPac’s payment advices to Mr Rossato for the weeks from 28 July 2014 to 7 April 2018 that were in evidence. The payment advices recorded the hours that Mr Rossato worked, and multiplied those hours by the applicable flat hourly rates of pay. The summaries in the payment advices attributed sums to “wages”, “gross taxable wages”, and “net wages”, and consistently with the agreed fact that Mr Rossato did not take leave, no payment advice attributed any sum to the entry “leave taken”. However, the forms of expression used in the payment advices are not determinative of the next question that arises, which is whether the discharge of the indebtedness arising under the contracts of employment also operated to satisfy the statutory obligations to pay the entitlements that Mr Rossato claims. That question involves an inquiry that must look to the objective purpose of the payments under the terms of the contracts of employment set against the circumstances known to both parties, and the surrounding statutory framework, which amounts to determining what a reasonable person would have understood by the terms: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

1008    If the payments under the contracts were directed to the same purpose as, or at least had a close correlation to, an obligation under the Fair Work Act to make a payment, then they may be taken into account in satisfying the statutory obligations: ANZ v FSU at [50]-[54]. I do not accept WorkPac’s submission that there is a third principle which circumvents these principles and under which purpose is irrelevant. Such a principle is not supported by the Full Court decisions in Polletti v Ecob, ANZ v FSU, and Linkhill, or the decisions of other appellate courts in Logan, TransAdelaide, and James Turner Roofing. Those decisions have not been shown by WorkPac to be wrong, still less plainly wrong.

1009    I shall now address in more detail the statutory entitlements that are the subject of Mr Rossato’s claims.

Annual leave

1010    The entitlement of an employee other than a casual employee to take paid annual leave arises under s 87 of the Fair Work Act, which provides (inter alia, and omitting notes) –

87    Entitlement to annual leave

Amount of leave

(1)    For each year of service with his or her employer, an employee is entitled to:

(a)    4 weeks of paid annual leave; or

(b)    5 weeks of paid annual leave, if:

(i)    a modern award applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or

(ii)    an enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or

(iii)    the employee qualifies for the shiftworker annual leave entitlement under subsection (3) (this relates to award/agreement free employees).

Accrual of leave

(2)    An employee’s entitlement to paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.

…

1011    The term “paid annual leave” is defined by s 12 of the Fair Work Act as “paid annual leave to which a national system employee is entitled under section 87”. Clauses 19.1 to 19.6 of the Enterprise Agreement contained terms that supplemented the statutory entitlements: see Fair Work Act, s 55(4)(b). Under the Agreement, an employee was entitled to five weeks of annual leave for each year of employment, with some shift workers entitled to six weeks. In relation to flat rate FTMs, annual leave was payable at the flat rate of pay prescribed by the schedules to the Agreement.

1012    As the text of s 87 of the Fair Work Act indicates, the primary entitlement is an entitlement to take paid annual leave. The entitlement is an element of the minimum terms and conditions in the National Employment Standards. Ancillary provisions of the Act serve to reinforce the nature of the entitlement as a composite entitlement to take leave while being paid, with the evident purpose of encouraging the taking of recreational leave: see, WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536 at [125] (Tracey, Bromberg and Rangiah JJ). When leave is taken, the employer must pay the employee at the applicable base rate of pay for ordinary hours worked: s 90(1). Section 90(1) of the Act is to be construed with s 323(1) which, subject to some exceptions, provides that an employer must pay an employee amounts payable in relation to the performance of work in full and at least monthly. The notes under s 323(1) provide that the amounts referred to in the subsection include leave payments if they become payable during a relevant period. The notes to s 323(1) are at least an aid to interpretation. In addition, I am of the view that the notes to s 323(1) form part of the Act and are therefore not subject to the exclusion of marginal notes, footnotes, and endnotes effected by s 13(3) of the Acts Interpretation Act 1901 (Cth) as in force on 25 June 2009: see: Fair Work Act, s 40A. The notes to s 323(1) were referred to in the explanatory memorandum to the Fair Work Bill 2008 at [1283], which supports the view that they form part of the text of the Act, and are explanatory of s 323(1). See: One.Tel Ltd (in liq) v Rich [2005] NSWSC 226; 53 ACSR 623 at [45]-[54] (Bergin J); Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union [2015] FCAFC 100; 231 FCR 298 at [30] (Tracey, Flick and Katzmann JJ); Oreb v Australian Securities and Investments Commission (No 2) [2017] FCAFC 49; 247 FCR 323 at [46] (Rares, Davies and Gleeson JJ); and see also, Herzfeld and Prince, Interpretation (Thomson Reuters, Sydney, 2020) at [5.130]. leave may be taken for a period agreed between the employer and employee, and the employer must not unreasonably refuse to agree to a request by an employee to take annual leave: s 88. There is a general prohibition on cashing out annual leave, subject to the provisions of an award or enterprise agreement, or an agreement between an employer and an award/agreement free employee: s 92. Permissible terms allow the cashing out of leave only in respect of the excess beyond an accrued entitlement of four weeks: s 93(2)(a) and s 94(2).

1013    The entitlement to payment on account of untaken annual leave which Mr Rossato claims arises under s 90(2) of the Act, which is contingent upon two conditions: (1) the accrual of a period of untaken annual leave; and (2) the end of the employment –

90    Payment for annual leave

…

(2)    If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.

1014    Mr Rossato claimed an entitlement to payment on account of 22.3 weeks of accrued annual leave pursuant to s 90(2) on the ground that this entitlement to payment arose upon his employment by WorkPac ending.

Personal/carer’s leave

1015    Mr Rossato’s claim for payment for personal leave arises under s 96 and s 97 of the Fair Work Act, which provide (inter alia) –

96    Entitlement to paid personal/carer’s leave

Amount of leave

(1)    For each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer’s leave.

Accrual of leave

(2)    An employee’s entitlement to paid personal/carer’s leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year.

97    Taking paid personal/carer’s leave

An employee may take paid personal/carer’s leave if the leave is taken:

…

(b)    to provide care or support to a member of the employee’s immediate family, or a member of the employee’s household, who requires care or support because of:

(i)    a personal illness, or personal injury, affecting the member; or

(ii)    an unexpected emergency affecting the member.

1016    The term “paid personal/carer’s leave” is defined by s 12 of the Act as meaning, “paid personal/carer’s leave to which a national system employee is entitled under s 96”. The entitlement under the Act to 10 days of personal/carer’s leave for each year of service is, like annual leave, a composite entitlement to paid leave. Personal/carer’s leave cannot be cashed out except under the terms of an award or enterprise agreement, and can only be cashed out in respect of accrued leave in excess of 15 days: s 100 and s 101(2)(a).

Compassionate leave

1017    Mr Rossato makes a claim for compassionate leave for the period in early March 2018 when his partner was hospitalised. That claim arises under s 104 to s 106 of the Fair Work Act. The term “compassionate leave” is defined by s 12 of the Act as meaning “compassionate leave to which a national system employee is entitled under section 104”. The entitlement to compassionate leave is also an entitlement to paid leave, because the employer has an obligation under s 106 of the Act to pay the employee for the employee’s ordinary hours of work in the period of leave. The statutory entitlement to compassionate leave was supplemented by clause 19.12.4 of the Enterprise Agreement, which provided that payment for compassionate leave should be “at the amount a permanent FTM would reasonably be expected to be paid if the FTM had worked for the period of paid leave”.

Public holiday pay

1018    As to public holidays, an employee is generally entitled to be absent from work on a public holiday, subject to an employer’s ability to make a reasonable request that the employee work: s 114. If an employee is absent from work on a public holiday, the employee is entitled to be paid at the base rate of pay for the employee’s ordinary hours of work on the day: s 116.

The purpose of the payments under the contracts of employment

1019    In examining the purposes of the payments made to Mr Rossato under the contracts of employment, it is necessary to acknowledge, as Bromberg J and White J have explained, that the terms of the NOCEs were not uniform. However, the differences in terms do not affect my conclusions in relation to whether the payments under the contracts can be offset against the entitlements that Mr Rossato claims and which are the subject of this proceeding.

1020    The present case bears some similarities to the situation that arose in TransAdelaide. The objective purpose of the payments of remuneration to Mr Rossato under each of the six contracts of employment was to discharge the contractual obligations to pay wages at the agreed hourly rates that were fixed by the NOCEs. I do not consider that the entitlements that Mr Rossato now seeks were within the agreed purposes of the contractual payments. While at a general level of abstraction it might be said that a purpose of the payments of wages under the contracts was to discharge corresponding statutory obligations including those under the Enterprise Agreement, in my view it formed no part of those purposes to discharge statutory obligations to give Mr Rossato paid annual leave, paid personal/carer’s leave, paid compassionate leave, or pay in respect of a public holiday on which Mr Rossato did not attend work. The remuneration was calculated by reference to specified flat hourly rates of pay, and on the basis that entitlements such as those that are now claimed were not available. For the reasons given by White J, the flat hourly rates of pay provided for by the first, second, and third NOCEs might be said to include an identifiable casual loading of 25% referable to the base rate of pay for a casual FTM, which included percentages allocated to annual leave, and personal leave. However, the contractual significance of those terms is another question. That is because the employment relationship that was created by the contracts of employment was not one under which Mr Rossato was a casual FTM for the purposes of the Enterprise Agreement. But whether or not there was an identifiable and applicable casual loading, I do not consider that the weekly wages paid to Mr Rossato and the entitlements that he claims in this proceeding had a close correlation in purpose. That is because the wages were not paid on account of any such entitlements, and any loadings that were incorporated were ostensibly paid on account of the absence of those entitlements. In reaching this view, I am persuaded by the reasoning of Doyle CJ in TransAdelaide in the passages to which I have referred at [993] above.

1021    Furthermore, there are two features of the legislation that militate against accepting WorkPac’s submissions that it can offset wages, including wages said to include a casual loading, against payments referrable to leave entitlements. First, as I have identified above, the entitlements to leave were composite entitlements to paid leave. The statutory obligations of the employer under s 90(1), s 99 and s 106 of the Act in respect of a period of paid leave during the term of the employment were to pay Mr Rossato at his base rate of pay for his ordinary hours of work in the period. The leave entitlements under the Act were supplemented by the Enterprise Agreement, but not in a way that changed the character of the entitlements. There was thus no correlation between the payments, and any leave in fact taken, or liability under s 90(2) of the Act to pay a sum on account of accrued leave at the end of the employment. The second feature is the prohibition against cashing out annual leave and personal/carer’s leave in s 92 and s 100 of the Act. These provisions form part of the statutory framework, acknowledged by clause 1 of the General Conditions, in which the objective purpose of the payments at the agreed hourly rates is to be evaluated. The prohibitions on cashing out tell against any finding that the contracts had the effect of appropriating any part of Mr Rossato’s weekly wages to his entitlements to paid leave. Having regard to all these circumstances, it is difficult to see how the parties, by the contracts of employment, have succeeded in appropriating any part of Mr Rossato’s remuneration to his entitlements to paid leave.

Fair Work Regulations, reg 2.03A

1022    White J has set out the text of reg 2.03A of the Fair Work Regulations at [939]. I agree with White J that none of Mr Rossato’s claims is in lieu of an NES entitlement, and that therefore reg 2.03A is not engaged in the present case. In addition, I do not construe reg 2.03A as affecting the substantive law to be applied in the adjudication of a claim to have a loading amount taken into account. The regulation confirms that an employer may make a claim to have a loading amount taken into account, but it does not purport to alter the substantive law that is applicable to the determination of such a claim. This construction is supported by the text of reg 2.03A(2) and (3), especially when construed in the context of the explanatory statement to the Fair Work Amendment (Casual Loading Offset) Regulations 2018 which added reg 2.03A, and which included the following passage (emphasis added) –

As the Amending Regulations are declaratory in nature, they apply to employment periods before, on or after the commencement of the Amending Regulations (i.e. when the Principal Regulations are amended). For the purposes of subsection 12(2) of the Legislation Act 2003 (Legislation Act), the retrospective application of the Amending Regulations does not disadvantage any party to the employment relationship as it is merely declaratory of the existing law in relation to the circumstances for which a claim to have the payment taken into account may be made. The amendments do not change the existing rights of an employer to make a claim, nor do they change the factors that a court must have regard to in determining whether a payment made may be taken into account in any particular factual circumstances.

1023    An explanatory statement must be approved by the rule-maker and be laid before each House of Parliament: Legislation Act 2003 (Cth), s 15J(2)(a), s 39. The explanatory statement is therefore a legitimate part of the background context against which the regulation is to be construed.

1024    For the above reasons, reg 2.03A has no application to the resolution of the substantive questions that arise in relation to WorkPac’s claim to offset any part of the remuneration that it paid to Mr Rossato against the entitlements that he claims.

Conclusion

1025    Subject to hearing from the parties, I agree with the declarations proposed by Bromberg J, and would otherwise dismiss WorkPac’s claims.

Associate:    

Dated:    20 May 2020