ASIC calls employers to provide for ‘casual’ employee entitlements in reporting

In a move that has garnered concern from the employer groups and legal commentators alike, the Australian Securities and Investments Commission (ASIC) has recently released guidance that companies should now calculate how much may be owed in employee entitlements for past and present 'casual' employees and make provision for it in their next financial statement.


WorkPac Pty Ltd v Rossato [2020] FCAFC 84

ASIC's guidance comes in the form of its answers to some FAQs on 'COVID-19 implications for financial reporting and audit'. Its position in relation to 'casuals' is not actually COVID-19 related. Rather it comes in the wake of the recent decision of WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (Rossato). In that decision, the Full Federal Court held that Mr Rossato, who had been employed as a casual employee across 6 consecutive contracts spanning nearly 4 years, was in fact not a casual employee on the basis that the parties had agreed on employment of indefinite duration, which was stable, regular and predictable.

The Full Federal Court went on to determine that WorkPac was not entitled to set off the amounts of casual loading that it had paid to Mr Rossato, and accordingly Mr Rossato was entitled to be paid his entitlements for annual leave, paid personal/carer's leave, paid compassionate leave, and public holidays.

This was held despite Mr Rossato's contracts expressly identifying him as a casual, three of the contracts referring to Mr Rossato's base rate of pay as incorporating the payment of a 25% casual loading rate, and one contract expressly acknowledging that casual loading was paid in lieu of leave, notice and redundancy entitlements.

We have published an article regarding the Rossato decision and the potentially significant ramifications for employers, which can be read by clicking here.

Notably, WorkPac has sought special leave of the High Court to appeal the Rossato decision.  Industrial Relations Minister Christian Porter has also signalled his intention to intervene should leave be granted, stating "Given the potential for this decision to further weaken the economy at a time when so many Australians have lost their jobs, it may also be necessary to consider legislative options".

ASIC's guidance

Notwithstanding the special leave application on foot, ASIC has recently released FAQ guidance on its website in respect of the financial reporting and audit requirements of Chapter 2M of the Corporations Act 2001 (Cth) (Corps Act).  The FAQ guidelines call for companies, in their financial reporting and auditing, to make provision for additional employee entitlements including:

  • annual leave;
  • personal and carer's leave;
  • compassionate leave;
  • public holiday pay; and
  • redundancy pay,
for both past and present casual employees who 'were employed in circumstances covered by the recent Federal Court decision' in Rossato.

ASIC also calls for provision of contingent liability for those casual employees employed in circumstances that were not clearly covered by the Rossato decision. ASIC has not suggested that provision be made for true casual employees (who are unaffected by the Rossato decision).

In response to ASIC's position, Christian Porter has confirmed that it is appropriate for ASIC to provide guidance on potential legal liabilities arising out of Rossato.

What does ASIC's guidance mean for employers?

Under Chapter 2M of the Corps Act, a financial report and a directors' report must be prepared for each financial year by:
  1. all disclosing entities; and
  2. all public companies; and
  3. all large propriety companies; and
  4. all registered schemes.
In some limited circumstances, a small proprietary company may also have reporting obligations under Chapter 2M.

Given ASIC's guidance, employers with obligations in respect of financial reports and audit under Chapter 2M of the Corporations Act 2001 (Cth) should take steps to identify those past and present 'casual' employees affected by the Rossato decision.  This includes 'casual' employees with the following characteristics:

  • stable, regular or predictable employment; or
  • a "firm advance commitment" of employment.
By way of example, Mr Rossato received weekly rosters which were typically fixed for long periods of time, and were provided to Mr Rossato far in advance. In some instances, Mr Rossato's roster was made up to seven months in advance.

If an employer, to whom Chapter 2M applies, identifies a casual employee, or a cohort of casual employees, who may be considered to be affected by the Rossato decision, per ASIC's guidance, it would be prudent to make provision in any financial report and audit for such entitlements that the 'casual' employee may be entitled to, should it be found that the employee was not in fact a true casual. In encouraging employers to make such provisions, Mr James Shipton, ASIC Chair, stated "in the current environment, the quality of financial reports and related disclosures is more important than ever for investors and to maintain confident and informed markets".

Notably, impacted employers should remember that ASIC's guidance requires provision for both current and former 'casual' employees.  On this basis, these employers should determine which, if any, past 'casual' employees may be affected by the Rossato decision.  Under the Fair Work Act 2009 (Cth), a Court must not make an order in relation to an underpayment of wages that relates to a period more than six years before the proceedings commenced. Accordingly, it would be prudent for an employer to make provision in its financial reporting for any such 'casual' employee employed within the last six years.

With the majority of employers utilising at least some casual employees, it is also important for employers to remain up to date in respect of any developments in the continuing Rossato matter.

The Employment Group at McCabe Curwood is well placed to advise in relation to the issues in this update. Please get in touch if we can assist.


Kim Hodge Partner
Elisa Blakers Lawyer