In both cases, it was found that employees who were currently regarded by an employer as ‘casual’, but whose employment circumstances otherwise reflected key characteristics of a ‘permanent’ employee should not have been treated as ‘casual’.

As a result, for entities whose financial years end 30 June 2020 and thereafter, affected employers may have an additional remuneration obligation towards some casual employees. This will only affect casual employees employed on a regular and systematic basis.

To assist entities negotiate their obligations, the AICD along with the accounting professional bodies Chartered Accountants Australia & New Zealand and CPA Australia has prepared a guide: Accounting for entitlements - casual employees. The guide contains a summary of the legal position from law firm Clayton Utz and some guidance for affected entities about how the accounting treatment of entitlements might be handled.

While the details of individual pay arrangements of employees would typically be the domain of management, non-executive directors of entities that employ casuals may wish to satisfy themselves that the impact of Rossato has been properly considered by management. In those circumstances, and when the entity is yet to finalise its annual financial report, it might be prudent for boards to ask management to consider the circumstances of Rossato and determine whether it is likely to apply.

Listed entities who may have already finalised their annual financial report might look to see if adjustments need to be made in future financial reports, for example half-yearly reports.