Casual employment is under fire after a recent Australian court decision recognised the rights of people who enjoyed “regular and systematic” work. But do the drastic changes disincentivise employment for small businesses?
By Zilla Efrat
A decision by the Full Federal Court of Australia has sparked much uncertainty among employers relying on casual workers, with some now more cautious or reluctant to hire them. Many are hoping the government will intervene.
In May, the court ruled in WorkPac Pty Ltd v Rossato that casual employees working regular and systematic hours with “predictable periods of working time” may be considered permanent employees, regardless of what their contracts say or whether they are paid a casual loading.
The judgment means that some casual workers may be able to claim for entitlements not usually applicable to genuine casuals, such as annual leave, personal leave, compassionate leave and redundancy pay.
Paul Zahra, CEO of the Australian Retailers Association, says the case has caused significant concerns as to whether employees are casual or permanent as well as worries that there might be unbudgeted back-pay claims by casual workers who take action against employers.
“Unless clarity is provided, it is likely to lead to a more cautious approach to hiring casuals,” he says. “This would be unfortunate as retailers require the flexibility of a casual workforce and that form of employment suits many Australians.”
Wes Lambert, CEO of the Restaurant and Catering Industry Association, confirms that many of his members are now more cautious and reluctant to hire casual employees.
He says some members are more inclined to “spread” existing casuals’ hours of work in order to avoid their employment being misclassified as “regular and systematic”. Others are also asking casuals who have been employed for at least 12 months and who show a pattern of regular and systematic employment to convert to permanent full-time or part-time roles.
Jos de Bruin, CEO of the Master Grocers Association (MGA), says it is business as usual for most of his members although his organisation has advised them to carefully examine how they roster their casuals.
He believes that most MGA members’ casual workers want to stay casual because of the flexibility this offers and the additional upfront pay rates they receive.
Both Zahra and de Bruin attribute their members’ reliance on casual workers to the inflexibility and complexity of their award systems.
“It is simply not easy for an employer to employ anyone. In fact, you can say there’s a disincentive to employ people given the current rules, red tape and burdens placed on employers,” says de Bruin.
Government likely to intervene on casual employment ruling
Lambert and Zahra are hopeful the court ruling will be overturned.
WorkPac, a labour hire firm, has filed a High Court challenge. Attorney General and Industrial Relations Minister Christian Porter has since confirmed that the government will intervene in the appeal.
"This Full Federal Court decision has caused confusion and uncertainty and has the potential to expose businesses to significant financial liability during a period where businesses are facing their greatest ever challenge,” says Porter.
The Australian Industry Group reportedly filed evidence with WorkPac's application that estimated the decision could expose Australian businesses by as much as A$14.2 billion in permanent entitlements.
What should an employer do?
“At this stage, we would discourage our members from making any back payment and to review each and every request, given the High Court appeal,” says Lambert.
He also suggests that his members review the current working patterns of existing casual employees. If a casual’s employment history reveals a pattern of regular and systematic employment, members should request them to convert to a full or part-time work status. Or they should provide those employees, where possible, with a greater spread of hours.
Zahra says: “It’s important to be clear on rostering and to ensure that casual employees are truly working on a casual basis and have sufficient variation in their work schedules.
“We also recommend seeking employment law advice to help review contractual arrangements and to determine an appropriate course of action to mitigate any potential risks.”
“We are likely to see additional claims made against employers as a result of the WorkPac decision, particularly in highly casualised industries which engage on-hire labour,” says Zahra.