Australian employers are shocked with the the federal Court’s decision against labour hire firm WorkPac has given a new entitlement to casual employees in Australia. The full bench of the Federal court on Wednesday found that casual workers employed on a regular, permanent basis are entitled to annual, sick and other leave entitlements, despite getting their casual rates loadings, practically redefining what constitutes a “casual” worker in Australia.
Shocked employers are urging the federal government to change workplace laws to neutralize the effects of the decision which some in the business community feel is the only way to save many businesses going to the wall and remain sustainable to keep employing people.
Australian Industry Group chief executive Innes Willox feared employers could get an annual leave bill of between $5.7 billion and $8 billion.
“An employee engaged as a casual and paid a casual loading should not be allowed to turn around years later and claim the entitlements of a permanent employee, like annual leave,” he said.
Australian Mines and Metals Association chief executive Steve Knott said the prospect of six years’ back-pay could send businesses to the wall.
“This is a remarkable position that is highly damaging to business confidence and will see more internationally funded class action law firms, many with obscenely large contingency fees, circling Australian businesses like sharks,” he said.
AMMA and Ai Group want the government to change the definition of a casual employee as one that has been “engaged and paid as such”.
According to Employsure, Australia’s largest workplace advisory firm for small to medium-sized enterprises
the Government needs to urgently step in and amend the Fair Work Act or risk the livelihood of thousands of small Australian businesses already struggling through the COVID-19 crisis.
“We need the Government to step in here and amend the Fair Work Act,” said Employsure Managing Director Ed Mallett.
“If JobKeeper was a life raft, this decision just sunk it. Small businesses are already on their knees trying to do what they can to survive, and this could be the final blow. This potentially exposes business owners to billions of dollars in backpay claims.
“This is a landmark Federal Court ruling that will effectively roll back the benefit of JobKeeper. Every regular and systemic casual that employers have included on their JobKeeper application, they now have a leave liability for.
“If we assume that of the 6 million workers on JobKeeper, a third are employed on a casual basis, we could assume that each one of those employees are owed an average of two years of leave. That would equate to 40 days which would be roughly $6,000. That is effectively a $12 billion hole in the side of JobKeeper.
While on one hand the employers are shocked, the Unions have welcomed the decision. Australian Council of Trade Unions secretary Sally McManus said Labour hire companies & some employers thought they could get away with slapping the label “casual” on a worker when they have a regular, ongoing job to cut wages & rights. Not anymore. Well done!
Labour hire companies & some employers thought they could get away with slapping the label "casual" on a worker when they have a regular, ongoing job to cut wages & rights. Not anymore. Well done @tonymahercfmeu https://t.co/FUooyNlohd
— Sally McManus (@sallymcmanus) May 20, 2020
AN appeal against this decision is almost a certainty. And the federal government is likely to join the appeal, according to Industrial Relations Minister Christian Porter.
The minister also feared the decision would have immediate implications for shocked employers at a time when many had taken a huge hit from coronavirus. He issued reassurance to businesses by indicating the government might also consider legislating options if needed.
“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,” Mr Porter said.
Labor of course will fight it all the way. Labor’s Shadow Industrial Relations Minister Tony Burke said legislation would be a betrayal of Australian workers.
“If there’s any double dipping going on here it is being performed by the employers – they’re taking advantage of the insecurity of casual work while still getting permanent hours out of their workers,” he said.
To those shocked employers, Mr Burke did not mention employees getting paid the casual loadings from day 1 of their employment.