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Casual employment decision increases JobKeeper risks

"The decision of the Full Federal Court in the WorkPac v Rossato case will increase the risks of widespread job losses in September when the JobKeeper scheme ends. Parliament needs to act urgently to protect the community, to preserve fairness and to prevent ‘double-dipping’ claims," Australian Industry Group Chief Executive, Innes Willox, said today.

"Under the JobKeeper scheme a casual employee is eligible if the employee has worked on a “regular and systematic basis” for at least 12 months. This concept is drawn from the unfair dismissal laws in the Fair Work Act. The unfair dismissal laws, the JobKeeper laws and long service leave laws expressly recognise that casuals often work on a regular and systematic basis for more than 12 months. Awards also recognise this through the standard award clauses that give casuals the right to request permanent employment after 6 or 12 months, with the ability for an employee to remain casual indefinitely if they prefer to retain the 25% casual loading.

"The 25% standard casual loading arose from a decision of a Full Bench of the Australian Industrial Relations Commission (now the Fair Work Commission) in 2000. At the time, the loading was increased from 20%. The Bench calculated how much each relevant entitlement was worth in terms of a loading. While not adopting a precise formula, 10.1% of the 25% was calculated as compensating for the absence of annual leave entitlements. The Commission’s decision highlights that it is blatant 'double-dipping' for an employee to receive the casual loading and annual leave entitlements.

"The Federal Court’s decision flies in the face of very widespread industry practice. The risk and uncertainty caused by the decision will have the following effects:

  • Encouraging 'double-dipping' claims by employees who have been engaged and paid as casuals;
  • Discouraging employers from retaining casuals, including at the time when the JobKeeper scheme ends;
  • Discouraging employers from engaging new employees;
  • Increasing the level of unemployment, including amongst young people who are already disadvantaged in the labour market;
  • Encouraging class action claims against employers, including those funded by overseas litigation funders chasing super-profits at the expense of the Australian community;
  • Imposing costs of up to $8 billion dollars on Australian businesses for past annual leave entitlements;
  • Imposing huge costs on the Commonwealth through the Fair Entitlement Guarantee. 'Casuals' are excluded from claiming annual leave and redundancy entitlements under the scheme when their employer becoming insolvent, but the Court’s decision paves the way for widespread claims by employees on the basis that they are not 'genuine' casuals.

"Parliament needs to act quickly to preserve fairness. The Fair Work Act needs to be amended to clarify the meaning of a 'casual employee' for the purposes of the annual leave and other entitlements in the National Employment Standards. The obvious solution is to adopt the Fair Work Commission’s longstanding definition that is included in most awards. The definition is: 'A casual employee is an employee engaged and paid as such'," said Mr Willox.

Media enquiries: Tony Melville – 0419 190 347