It’s been a big month for industrial relations laws with the Federal Court’s judgement on the WorkPac/Paul Skene casual worker entitlement case setting a dangerous precedent, inciting potential class actions and leaving many concerned about the future for Australia’s casual workforce and significant backpay liabilities.
The ruling of the WorkPac case suggests casual workers on regular, predictable shifts should be considered ‘permanent’ and therefore should be entitled to permanent employment benefits in addition to their 25% loading – the so-called ‘double-dipping’. This does mean that employees who fall into this category may be entitled to back pay for annual leave – a decision that could mean a windfall for thousands of employees, but which has infuriated the business community.
Employers should be worried: it has been estimated that the judgment affects between 61 per cent and 85 per cent of casual workers and could result in Australian businesses being liable for a crippling $8 billion in back pay if court action is taken. Additionally, it throws into doubt the definition of casual employment and how the position should be used.
And I understand the outrage. It seems absurd that if a worker has been paid an additional 25% over the course of their employment to have the benefits of casual work that they can then ask for backpay for annual leave that they have effectively already been paid for. If a casual worker wishes to be deemed a permanent full-time employee from the particular point in time they believe they became one, it seems sensible that they should replay the 25% loading and recoup the full-time benefits. Furthermore, their contract should be negotiated to reflect their permanent full-time status.
Traditionally, the decision of whether to seek and accept casual versus permanent work has, rightly, come down to the employee. Many Australians actively choose to work on a casual basis – even if the hours are regular – to receive the 25 per cent loading up front as a bigger take-home pay packet and have flexibility over their shifts and leave. While some casual workers who worked shifts reflective of a full-time employee have taken advantage of conversion clauses under the Fair Work Act to become permanent, many haven’t. This choice, and the financial implications it has for employers, should be protected.
The ultimate resolution is for Parliament to take legislative action to block ‘double-dipping’ and clearly define ‘casual’ in the Fair Work Act. But time is running out before a predicted wave of class actions are filed – cases that could have a crippling effect on businesses of all sizes and the economy at large. In today’s uncertain business landscape, that is something we can do without.
In the meantime, the NSW Business chamber believe they have a solution: a new class of “perma-flexi” employee who could be rostered like a casual but accrue annual leave, personal leave, redundancy pay and get notice of termination, with a 10 per cent loading. The Australian Council of Trade Unions are set to oppose this idea on the basis that it will destroy the security of permanent work for millions of Australians. It will be interesting to see how this plays out.
With the effects of the double-dipping ruling yet to be fully felt, and with potential changes to employee classes and modern awards on the horizon, what can you do now to protect your business?
- Have a very clear idea of what your staffing needs really are. How much flexibility do you need? Are you employing casuals in the right way? Are you employing casuals when you should be employing full-time permanent staff or vice versa? Knowing exactly what you need and employing the correct employee classes will leave you in a less vulnerable position.
- Ensure shift patterns are consistent with Modern Award requirements. Automated rostering programs (such as Roubler) can go a long way to making this easier.
- Talk to you employees about the types of employment they want. As mentioned earlier, some employees want to be casual, some crave the stability of permanent positions, some casuals may want to be permanent but don’t know how to approach you about it. Respect each employee’s wishes, but make sure they understand how their benefits are broken down and paid, and what their Award means.
- Closely monitor your staffing costs. This is so much easier with automated rostering software that allows you to see your costs and labour efficiency percentages as you build the roster (like Roubler does). This way you can be sure you are rostering casual and permanent employees in the most cost-efficient way and that you are meeting Modern Awards at the same time.
- Use technology to help you stay compliant. Ensure the payroll engine you (or your managed service provider) uses is equipped to automatically update when changes are made to any awards.
These suggestions do require effort – but the payoff in terms of protecting yourself and ensuring your employees are receiving what they are entitled to are well worth it. I’ll be keeping a close eye on this issue and will be sure to report back as it develops.
Founder & Managing Director