Recent legal decisions are starting to challenge the right of employers to deploy workers in “casual” positions on an essentially permanent basis. For example, the Federal Court recently ruled that a labour-hire mine driver who worked regular shifts for years was still entitled to annual leave, even though he was supposedly hired as a “casual.” This decision has alarmed business lobbyists who reject any limit on their ability to deploy casual labour, while avoiding traditional entitlements (like sick pay, annual leave, severance rights, and more). For them, a “casual worker” is anyone who they deem to be casual; but that open door obviously violates the intent of Australia’s rules regarding casual loading.
Here is a commentary from Jim Stanford, Director of the Centre for Future Work, discussing the implications of these decisions for the mis-use of casual work. The commentary was originally published on the Ten Daily website.
Time to rethink reliance on casual work
Casual work has become a pervasive feature of Australia’s labour market. Until the 1990s, almost all workers, even part-timers, had permanent jobs with reasonably predictable schedules and access to normal work-related entitlements (like paid holidays and sick time). But then employers became obsessed with achieving “flexibility” in hiring. Flexibility sounds like a good thing, but in practice it meant granting employers more freedom to disemploy their workers, with no notice and no severance costs. The downside for workers is lack of certainty in rostering, poor job security, and no access to paid leave. That makes it impossible to make major purchases, plan child care, or take family holidays.
At last count, around 25 percent of paid employees in Australia (or over 2.5 million workers) were employed on a casual basis. The incidence of casual work has grown noticeably since 2012, when the mining investment boom ended and the overall labour market weakened. Casual work has grown fastest in full-time positions, and among male workers. For young workers (under 25), casual work is especially ubiquitous: 55 percent work casual. OECD data indicates that Australia now has the highest incidence of temporary work of any industrial country.
Because it is so common, casual work has become “normalised” in the eyes of employers and policy-makers. For example, Craig Laundy, former Commonwealth Minister for the Workplace, endorsed casual work enthusiastically this year, saying it is “a completely appropriate way for many businesses and many employees to conduct their relationship.” Even business lobbyists admit that most casual staff actually work regular and predictable schedules.
With this normalisation, many industries in Australia now rely on casual work as a permanent, core feature. Instead of using casual workers to meet temporary or seasonal fluctuations in demand, thousands of employers tap a permanent pool of casual workers to meet ongoing staffing requirements. Workers can be stuck on casual status even if they work regular shifts, for years at a time.
In theory, employers pay a price for this super-flexibility: Australia’s casual loading rules require a 25 percent wage penalty to be paid to casual workers: compensation for lack of access to paid sick leave and holidays, and for the insecurity and instability attached to casual work. In practice, many employers do not pay this wage premium – effectively “hiding it” in lower base wages, or else evading it entirely (especially for young and foreign workers who do not understand the rules). But even if they do pay casual loading, employers should be prevented from abusing casual work as is now commonplace. After all, the inherent insecurity of casual work imposes a cost on workers and their families – a cost that grows if that insecurity is permanent.
A series of recent legal decisions, however, is now challenging the assumption that casual work can be normal, legitimate and universal. Three particularly important cases could force employers to rethink their reliance on casual staffing:
- A Federal Court judgment has ordered a labour hire company to pay retroactive annual leave to a mine driver who worked casual for several years, even though he was assigned to regular shifts. Employers complain this ruling somehow amounts to “double-dipping:” they claim that paying the 25 percent casual loading somehow entitles employers to deny paid holidays and other normal rights, even to long-term staff. That assumption has now been refuted.
- The Fair Work Commission has decided to harmonise evening and Saturday penalty rates between casual and permanent workers in the retail sector. Until now, casuals were denied penalties of up to 25 percent of base wages for those shifts, compared to permanent workers. Now the penalties for casual workers will be raised to the same level as for permanent staff (although, perversely, the Commission is also in the process of cutting penalty rates for all workers on Sundays and holidays).
- Another Fair Work Commission ruling affecting 85 different modern awards affirmed the right of casual staff to request conversion to permanent status after working regular shifts for a year. Employers can turn down those requests, but only if they would result in major changes in the applicant’s hours of work, or are otherwise “unreasonable.”
Employers are pushing back hard against these precedents – and they seem to have the ear of the federal government. Business lobbyists predict billions in back payments arising from the annual leave decision, and are demanding legislative changes to avoid those costs. Kelly O’Dwyer, Minister for Jobs and Industrial Relations, has promised to investigate the idea. Some business groups are even proposing a brand new category of “perma-flexi” workers, who would receive a (smaller) wage loading for accepting casual status for years at a time. Anxious to preserve this highly profitable staffing practice, business leaders seem oblivious to the oxymoron inherent in their proposal for permanent casual work.
Business complaints about the costs of treating casual workers fairly ring hollow. The 25 percent casual loading system was never intended as a carte blanche: that is, a kind of “permit” that granted employers permission to keep workers in perpetual insecurity, denied access to basic security and regular entitlements. Employers who used casual workers only where originally intended – that is, in temporary or irregular shifts – can continue to do so without significant extra costs.
However, while promising, these recent decisions do not fully address the misuse of casual work. Casual workers should have broader options to convert to permanent status after shorter periods (say, six months) in a regular position. And the application of casual employment rules (which deny termination pay and notice of dismissal to workers, as well as access to paid leave) should be restricted to carefully-defined and genuine situations of temporary or volatile demand.
Nevertheless, these recent decisions are an important recognition that employers have been abusing this form of employment. And they are a wake-up call to employers, who should now think hard about reducing their reliance on casual staffing – and get back to creating steady jobs that workers (and their families) can count on.