The Australian Federal Court has ruled that employers owe casual workers as much as $8 billion worth of paid leave in a landmark court case set to shape the worker entitlement landscape.
Opinion on the ruling is, however, divisive. Employers are now worried that casuals will be able to “double-dip” thanks to the ruling, after being paid a higher wage than their full-time colleagues, but now being able to claim back-paid entitlements. Those on the other side of the fence argue that it closes a long-time loophole for employers to take advantage of casual workers.
The ruling means that workers employed as ‘casuals’ that worked regular and consistent hours for their employers aren’t technically classified as casuals- they’re eligible for all the entitlements of a full-time employee regardless of the contract they’ve signed.
The ruling came after the Federal Court looked at the case of Robert Rossato, whose employer WorkPac classified him as a casual worker, in spite of the fact he worked “regular, certain, continuing, constant and predictable [hours],” according to the court. Mr Rossato was receiving his 25% casual loading on his wage, but the Federal Court judges ruled he was eligible for the full raft of entitlements.
The Federal Court held up the precedent set by the WorkPac v Skene ruling that found a casual miner was entitled to the full range of benefits, because of his work schedule which mirrored that of a full-time employee.
The 273-page ruling from Justices Mordy Bromberg, Richard White and Michael Wheelahan notes that Mr Rossato, based on his pattern and volume of work, was not a casual employee.
“The court has found that the parties had agreed on employment of indefinite duration which was stable, regular and predictable such that the postulated firm advance commitment was evident in each of his six contracts.”
Justice Bromberg noted that employers would be in breach of the Fair Work Act if they refused to pay according to the National Employment Standards. “That would be so even if Mr Rossato had agreed to accept something else in lieu of or in substitution of the entitlements because WorkPac and Mr Rossato cannot contract out of those entitlements or the timing and manner of their provision.”
Christian Porter, the Industrial Relations minister who advocated for employers in this particular case said the ruling was yet another blowback amid an uncertain pandemic economy. “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,” he said.
Porter said that an appeal was very much on the table, and if that were the case, his government would likely step in and provide support. “There is, of course, potential for an appeal in the matter and if that were to occur, the government would closely consider the merits of intervening,” he said.
“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.”
There are anywhere between 1.6 - 2.2-million casual workers in Australia, and with the overnight ruling, those workers may now be eligible for backpay from their current or former employers.
The national president of the CFMEU, Tony Maher has said that “this is a fantastic decision that puts an end to the ‘permanent casual’ rort that has become a scourge in the coal mining industry and across the workforce.”
Maher continued to explain that “employers must now stop with the nonsense that calling a worker a casual makes them so. When a job is full-time, regular and ongoing, it is permanent and deserves the security and entitlements that come with permanent work.” Maher added that the CFMEU was committed to “restore rights and lost pay for casual labour hire workers across the coal mining industry who have been illegally ripped off.”
The CFMEU estimates that around 40% of mining jobs are employed on a casual basis, in spite of the fact they perform the same job as full-time employees.
A spokesperson for the Australian Industry Group called on parliament to amend the Fair Work Act in light of the ruling, and adjust the definition of a casual as someone who is “engaged and paid as such.”
Innes Willox, chief executive of the Ai Group said that “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 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.”
Australian Council of Trade Unions secretary, Sally McManus said the ruling represented a “massive step forward.”
“We should be working together as a country to reduce the number of insecure jobs, it has got out of control and unfortunately too many people are now feeling the harsh reality of having no job protections during the pandemic.”
It could, however, become problematic for a number of small businesses, experts have said.
Numbers show that around half the nation’s casuals work for employers with less than 20 total employees. Steve Knott, chief executive of the Australian Mines and Metals Association has said that it could be “highly damaging to business confidence and will see more internationally funded class action law firms, many with obscenely large contingency fees, circling Australian businesses like sharks.”
“Most would agree it is rather unfair that an employee could accept a higher rate of pay for being casually engaged, only to later also claim for back-paid permanent entitlements such as annual leave and redundancy, due to their patterns of work.”
Knott continued to explain that “many Australian businesses - small, medium and large - are hanging on by their fingernails in this COVID-19 environment. The prospect of having to defend up to six years’ worth of back-pay claims from former casual employees is the last thing they need.”
Tony Burke, the opposition’s industrial relations Minister has urged the coalition to accept the decision, stating that it “would be a gross betrayal of Australian workers,” if the government was to support an appeal as Christian Porter had mentioned. “In the wake of the COVID-19 crisis, workers will need more job security, not less,” he said.