Consistency for casuals
Enshrining a definition of casual employment into legislation provides much needed certainty for the employment landscape. By James Mathias.
In a major legislative win on Thursday, the Government was able to get its Industrial Relations bill through the Senate with arguably the most important pillar still intact – defining, for the first time ever in law, casual employment.
The stakes couldn’t have been higher. At risk were hundreds of thousands of jobs, businesses and the future of the employment landscape in Australia for generations.
Last May, the Federal Court decided businesses who employed casuals on a stable, regular and predicable roster not only needed to continue to pay them a 25 per cent loading supposedly in lieu of annual leave, public holiday and personal leave entitlements, but that in actual fact the employee was also entitled to those very same benefits on top, hence the term ‘double dipping’.
The judgement applied retrospectively, up to six years. Government modelling shows that if the judgment was allowed to stand, Australian businesses would have to pay a $39 billion backpay bill. The court also rejected the submission that the 25 per cent loading paid to casuals should be able to offset these liabilities.
At the time the Menzies Research Centre, in conjunction with Roy Morgan, surveyed businesses across the country and the results confirmed our worst fears. 794,000 businesses (one in four) would be affected by the ruling. 567,000 businesses said they would never employ another casual and most alarmingly 123,000 said that if they had to back pay according to the ruling then they would be forced to close. Further, 54.5 per cent of small businesses would have been affected in some way.
This week we learnt of Graeme, the owner of a small dry-cleaning business in the Victorian suburb of Dandenong who because of this ruling was delivered a backpay claim from a former long time casual employee for $80,000. For his part, Graeme was just doing what all other businesses were doing and paying their casual employees as per the direction of the Fair Work Commission. But with the ruling of the Federal Court, the goal posts were changed and suddenly unions were gearing up claims to businesses like this. If this wasn’t resolved this week, not only would Graeme have to close his business and let the rest of his staff go, but he would have potentially lost his house. This is just one of many thousands of examples.
Law firms and litigation funders were seeking their part of the action too. The Australian Financial Review reported this week that $150 million worth of backpay class actions are already in train and would have delivered another major blow to businesses just as they are getting back on their feet.
The underlying driver to destroy casual employment in Australia however, as evidenced by the unprecedented bombardment of cross benchers this week, is the union movement.
The union movement’s refusal to engage with the facts about casual employment helps to explain why so few casuals care to join a union. Fewer than one in 20 casual workers holds a union ticket.
A Menzies Research Centre report Casual Lies: Busting the myths about flexible employment found that some large unions have deliberately used their positions as employee advocates to disadvantage casual and non-standard employees. For example, enterprise agreements negotiated by the CFMMEU are typically designed to prevent building subcontractors from competing on price by forcing them to adopt less affordable union-approved pay and conditions.
Although casual workers have assumed a central focus in the ACTU’s public rhetoric and activities, it should be noted that the rate of unionisation among casual workers has long been consistently lower than the mainstream workforce. According to ABS data, just 4.8 per cent of casual workers are trade union members – nearly a quarter of the rate among permanent employees.
This trend has persisted for more than two decades, despite the union movement devoting considerable resources to campaigning on the issues of casualisation and insecure work over this period. For example, in 2011, the ACTU commissioned a national inquiry into insecure work, ran the Secure Jobs, Better Future campaign and gave us the disastrous Change the Rules campaign.
Something worth reflecting on is that the shameful approach of the union movement to destroy casual employment is at the cost of the hundreds of thousands of businesses that employ casuals.
Most importantly, casual employment is so important for young people and is often a stepping stone towards a successful career, particularly for younger workers:
76 per cent of 15 to 19 year olds are casuals
41 per cent of 20 to 24 year olds are casuals
By contrast, the prevalence of casual employment for workers aged 35 to 44 and 45 to 54 stands at 17 and 16 per cent.
There is also another story that needs to be told on casuals – they have high job satisfaction, are happy with their pay and a majority are satisfied with their hours.
According to HILDA survey data, casuals rated their satisfaction at 7.2 out 10 – slightly behind fixed-term contract employees and just ahead of permanent employees at 7.1. The same HILDA survey found that casuals rated their overall job satisfaction at 7 out of 10. The ABS reports that 69 per cent of casuals were satisfied with their current hours of work.
Finally, much hype was made around the ability of casuals to convert their jobs into a full-time contract after a forced time period. These casual conversion periods were passed; however, it must be noted that already between 28 and 32 per cent of casual employees transition to permanent employment within a year while between 46 and 49 per cent enter permanent employment within four years.
Considering that, a significant proportion of employees prefer casual work, and the above percentages suggest that the majority of workers who would prefer permanent employment make this transition within several years anyway.
Common sense prevailed on the day and now thankfully, businesses have certainty about their happily employed casuals, and are no longer up for a massive ‘double dipping’ backpay bill.