Employers Justifiably Worried About Definition of Casual Workers

There’s something unnerving about legal and regulatory developments which shake the very foundation of what most business owners have considered to be safe and secure ground. Such a development is now in hot debate, and those impacted are reportedly (or perhaps should be) scrambling to find what kind of ground they’ve been standing on, or how slippery the slope may be going forward.

It’s common knowledge that there are some key entitlements which regular part time and full time employees get which casuals do not – most notably annual holiday leave and sick leave. It is in large part the absence of these entitlements which gives rise to the “casual loading” – an amount added to the minimum wage (or the wage they would be earning if the were a non-casual) which arguably compensates the casual employee for the above mentioned benefits – benefits they are missing out on because they’re employed on a casual basis. Or are they really casual employees? This now appears less certain than before.

And it’s not as if small business in Australia didn’t have enough to worry about. Although corporate insolvencies overall have fallen significantly since the GFC, numerous businesses still find themselves resorting to referring their overdue debtors to a debt recovery agency in order to keep the cash flowing in sufficiently to stay abreast of their existing financial obligations. The prospect of a giant casual-workers-that-weren’t-casual “skeleton in the closet” adding an unmanageable financial burden to their already stretched balance sheet is as daunting to some as it is unthinkable to others.

Why do businesses employ casuals in the first place?

Employing workers on a casual basis undeniably has some attractions. The ability of an employer to be able to offer work to someone who wants to work, without finding themselves obligated to provide them ongoing work. The comfort of knowing that when they’ve paid their employees their wages (including any PAYG withholding instalments), superannuation and workers insurance, that there’s little if anything more to pay with respect to the casual employee. Employers of casual workers will, if confronted with a claim for entitlements argue that they’ve already paid, in form of the casual loading, a wage rate which they were only able to justify paying since they were under the impression that they didn’t need to pay the extra costs associated with employing non-casual workers. They will argue that for employees to go back retrospectively and allege that they have been non-casual employees all along, and insist on their accumulated entitlements, is just plain wrong. Many more Australian businesses, not least those whose ‘casual’ workforce has in the past been locked into regular, predictable and inflexible roster arrangements over extended periods of times, will no doubt be approaching their legal advisors over the coming weeks and months seeking clarity as to where they’ve been and where they’re at in light of the recent developments.

All information provided in this article is intended to be correct at the time of publication. It is not legal or other professional advice. Any opinions expressed are those of the author, and no responsibility is held for any errors or omissions.

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