In a landmark ruling, the Federal Court decided that Robert Rossato, a casual mining worker employed by labour-hire firm WorkPac was entitled to paid leave. The decision could significantly affect payroll costs for many businesses. The judgement of the case decided that Rossato was entitled to annual, sick and carer’s leave. The reason for this was that he worked regular and predictable shifts committed to in advance.
The ruling affirms a 2018 ruling involving another WorkPac employee and reignited a political stand-off in which business lobbyists argued that this could cause $8 bil in back payment claims by casual workers across the economy.
Athena Koelmeyer, Workplace Law managing director, stated that firms should identify all casual workers and consider offering them a conversion to part-time roles. One exception is if casuals are “true casuals”: truly random, ad hoc and called in when you absolutely need them. She said that firms will be at risk “not only for entitlement paid to permanent employees, but also you’re going to get no relief by way of offset from casual loading rights.”
Sally McManus, Australian Council of Trade Unions Secretary said that the ruling is a win for workers suffering due to “systemic casualisation”. She also said that “we need to stop the practice of some employers labelling jobs ‘casual’ when they are in fact permanent.” She elaborated that this practice has stripped workers of rights and security.
This recent ruling not only affirms 2018’s decision, but also clarifies that WorkPac is not able to off-set Rossato’s leave entitlements with his 25% casual loading. The additional legal framework has created concerns throughout businesses across the economy that they, and not only large labour-hire companies, could also end up owing back payments. In addition to that, Koelmeyer noted that class actions could hit firms hard – particularly those already made vulnerable by the bushfire crisis and then the COVID-19 pandemic.
Business lobbyists at the Australian Industry Group, which represents 60, 000 employers, has been pressuring the government to ament the Fair Work Act to legislatively clarify the nature of “casual work”. They have previously claimed that 1.2 – 1.8 mil workers may fall under the arguably broad definition of a casual worker, which could lead to up to $8 bil in back payment claims.
Casual workers make up around 20% of the Australian workforce as the nature of the job provides flexibility that both employers and employees need.
Peter Vitale, a workplace lawyer, says businesses cannot do anything about back payment liability, but can make changes to current and future arrangements to limit their exposure. He cautions that the conversion to part-timer must be voluntarily accepted by workers, as some may be reluctant to miss their 25% loading during the financially unstable pandemic.
There is a significant disadvantage casual workers may see in taking on the conversion to a permanent role. If an employee insists on continuing as a regular casual, the risk of a situation such as what happened to WorkPac becomes higher. On the other hand, an employer who refuses to give a regular casual shifts for not converting to permanent position could be exposed to unfair dismissal claims or adverse action claims.
There are predictions that the federal government will now be forced to step in and finally create a proper legal definition for “casual work” in an amendment of the Fair Work Act. SMEs are especially vulnerable as they are not necessarily equipped with their own workplace lawyer or HR manager to manage these details.