“Months of uncertainty” for employers of casual workers are set to come to an end with the announcement that a new law will explicitly prevent casuals from double-dipping on entitlements.
Jobs and Industrial Relations Minister Kelly O’Dwyer revealed that the government will introduce a new Fair Work Regulation to end the uncertainty around casual entitlements that arose from the result of a court ruling mid this year — specifically that workers could potentially pocket the 25 per cent casual loading and simultaneously have legal rights of permanent leave entitlements.
In October, Ms O’Dwyer said that the government would join a legal appeal to clarify the situation over what constitutes a casual employee.
That matter remains before the Federal Court.
What the new regulation covers
“Small businesses have told us that they are concerned that a recent Federal Court case may give rise to claims to pay additional amounts for leave entitlements when they have already paid a casual loading in lieu of those leave entitlements,” Minister O’Dwyer said.
“Every employer must comply with their legal obligations. But being forced to pay for entitlements twice is unfair and potentially crippling for many small businesses. It is critical that small and medium-sized businesses have the confidence to invest in their business and employ people.”
Under the new regulation, any casual loading previously paid to an employee will be offset against any potential claim for permanent entitlements, should similar claims proceed to court in the future.
It would be up to the court to determine how such an offset would be applied according to the particular circumstances of the parties involved.
“This is an important issue to maintain confidence in employment, for both employers and employees,” Ms O’Dwyer said.
“That is why I have also recently intervened in the WorkPac v Rossato matter before the Federal Court of Australia. My intervention and the making of this regulation are complementary measures, both seeking to provide certainty around existing general law rights and to prevent employers [from] having to pay employees their benefits twice.”
‘Loophole now closed’: ACCI
Australian Chamber of Commerce and Industry chief executive James Pearson said that the move will close a loophole that had been a major concern for SMEs Australia-wide.
“[The] government is to be congratulated for closing a loophole that has created months of uncertainty and called into question the employment of hundreds of thousands of Australians, particularly young people, students, parents and carers,” Mr Pearson said following the announcement.
“Australians know it’s not fair to be paid twice for the same work — that’s not a fair day’s pay for a fair day’s work.”
Mr Pearson said that he had been contacted by employers genuinely concerned that the situation would cause them to lose their business, and with it their homes and livelihoods.
“Small business people employing casuals across Australia will welcome the certainty delivered by today’s announcement,” the ACCI chief executive said.
Casuals given rights to request conversion to permanent
However, Mr Pearson said that there remains concerns around the definition of a casual employee, and the potential for casuals to be deemed permanent employees based on the regularity of their hours.
“Casual conversion is rarely consistent with the realities of operating a business. It reduces scope for employees and employers to negotiate a balance that meets each of their needs,” he said.
“We need to remember that most casuals chose to stay casual because they like the additional pay and flexibility.
“We look forward to inputting the government’s implementation of extended casual conversion rights to ensure the interests of businesses, employees and jobseekers are protected.”
It followed a separate announcement by Ms O’Dwyer that new legislation would be introduced to allow casual employees the right to request they be moved to full- or part-time employee status.
According to Ms O’Dwyer, it follows a decision by the Fair Work Commission that ruled employers can only refuse such requests on reasonable grounds, and after consultation with the employee.
“Many in the community are concerned about security of employment. But if regulation is too onerous, it is likely that employers will be less willing to create jobs. This issue requires a careful and balanced approach,” the Minister said.
“If award-reliant employees have the right to make a request and it is subject to reasonable safeguards for employers, it is only fair that the same right is extended to other casuals who currently do not have the same right.
“The government’s approach will ensure a consistent, fair and balanced safety net for all employees covered by the national workplace system. Fairness and balance means having regard to the interests of employers and employees.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.