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Employers say ‘double-dipping’ ruling could cost billions

Employer association Ai Group called for urgent legislative reform "to restore fairness" after a full bench of the Federal Court ruled that regular, ongoing casual workers may be entitled to paid annual leave. “The potential cost impacts on employers…for annual leave alone, are between $5.7 billion and $8 billion,” it said. The AMWU tweeted: “Huge win for workers.”

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    "A major deterrent to the
     employment
of casuals": 
   Innes Willox, CEO Ai Group

 

"Today's decision of the Full Federal Court in the Workpac v Rossato case highlights the need for urgent legislative reform to provide certainty to businesses and casual employees, and to prevent double-dipping claims by casuals who have been paid additional remuneration in lieu of the entitlements of permanent employees," said Innes Willox, CEO of national employer association Ai Group.

The ruling changes the common understanding of casuals as workers paid an extra 20 to 25 per cent in lieu of permanent employee entitlements, defining them instead by their pattern of work, according to Nine’s The Australian Financial Review. “Regular shift workers who have received 25 per cent pay loadings in lieu of benefits such as annual leave may be able to double-dip billions of dollars of annual leave back pay following a Federal Court ruling on the definition of casual work.”

Willox added: "Casuals make up around 20% of the Australian workforce, providing vital flexibility to employers and employees. The Fair Work Act needs to be urgently amended to define a casual employee in a simple and clear manner to address the uncertainty caused by the Federal Court's Workpac v Skene decision, and now the Workpac v Rossato decision. The current laws, as interpreted in these decisions, operate as a major deterrent to the employment of casuals.

"The expression 'casual employee' needs to be defined in the Fair Work Act, in line with the common definition included in modern awards – that is, 'a casual employee is an employee engaged and paid as such'. An employee engaged as a casual and paid a casual loading (or a loaded rate that accounts for a casual loading) should not be allowed to turn around years later and claim the entitlements of a permanent employee, like annual leave.

"With unemployment and underemployment rapidly increasing during the COVID-19 crisis, employers need to be encouraged to retain and take on casual employees – not deterred from doing so.”

In a statement, Ai Group said; “The following statistics highlight the implications of today's decision for the Australian economy:
At least 1.6 million of the 2.6 million casuals in Australia work on a regular, ongoing basis;
The potential cost impacts on employers of the Federal Court's decisions, for annual leave alone, are between $5.7 billion and $8 billion;
Over 50 per cent of casuals work for businesses with less than 20 employees and over 80 per cent work for businesses with less than 100 employees.”

Sally McManus

     "A massive step forward":
Sally McManus, secretary ACTU

 

The Australian Manufacturing Workers Union (AMWU) welcomed the long awaited Federal Court decision. “Huge win for workers today,” it tweeted. “The full court has ruled that workers employed on a stable, regular, and predictable basis are entitled to paid sick leave, carer's leave, annual leave, and compassionate leave.”

Australian Council of Trade Unions secretary Sally McManus said the decision was a "massive step forward...a win for all workers who are suffering because of systemic casualisation – it clearly demonstrates the need to reduce workplace insecurity.”  Employers must stop labelling employees “casual when they are in fact permanent – this has stripped workers of rights and security,” McManus said.

Industrial Relations Minister Christian Porter indicated that the government was open to changing the Fair Work Act following the decision. "What appears fairly obvious on the face of the decision is that it has immediate practical implications for the bottom line of many Australian businesses at a time when so many have taken a huge hit from the COVID-19 pandemic. 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."