The New South Wales Business Chamber has written to the Fair Work Commission in an urgent bid to change a number of modern awards in the wake of a Federal Court decision that may entitle some casual staff to annual leave benefits.
In a letter sent to Fair Work Commission president Iain Ross on Monday night, seen by SmartCompany, the NSW Business Chamber said it will apply to add a new category of work, called ‘perma-flexi’, to six modern awards.
Under the plan, employers could convert casual employees who work regular hours into perma-flexi staff, which would give them access to annual and sick leave entitlements, but cut their casual loading from 25% to 10%.
The NSW Business Chamber wants to change awards in industries exposed to casual employment, including awards like the Social, Community, Home Care and Disability Services Industry Award 2010, the Aged Care Award 2010, Security Services Industry Award 2010, the Contract Call Centres Award 2010, and the General Retail Industry Award 2010.
The push comes amid mounting concern among industry and employer groups over a recent Federal Court decision that has opened the door to casuals that work “regular hours” being able to claim annual leave benefits, while also being paid casual loadings.
The Federal Court ruled last month a casual truck driver employed by labour hire company Workpac was entitled to $21,000 in annual leave back payments because he worked regular shifts over an extended period of time.
The resulting precedent has sent shivers through the business community, with the Australian Industry Group estimating last week that employers across the country could be on the hook for up to $8 billion in back payments to as many as 2.2 million casual employees.
Particular concern has emerged for small businesses, which employ a higher ratio of casuals than other types of businesses, according to analysis of Household Income and Labour Dynamics (HILDA) survey data published earlier this year.
“The game has changed”
Speaking to SmartCompany about the proposal, NSW Business Chamber chief executive Stephen Cartwright said the Workpac decision had “forced the hand” of employers.
“[Casual employment] was never intended to be a double dip with annual leave,” he says.
“The game has changed.”
While the Workpac decision only applies to casuals who work regular hours, class action lawsuits are already being prepared against labor-hire firms, including Workpac, to claim leave back payments on behalf of more workers.
Adero Law is seeking expressions of interest from employees for a potential suit following the Federal Court decision, according to its website.
Cartwright believes small businesses are likely to be next, particularly as awareness of the case and its implications builds in the community.
“It will become widely understood in the community that individual employees can make applications for up to six years of back pay,” he explains.
Australian Small Business and Family Enterprise Ombudsman Kate Carnell is backing Cartwright’s idea.
“It is a way of addressing what’s a very real issue and it’s something that should be looked at seriously,” she tells SmartCompany.
However, Carnell stresses the Workpac decision relates only to casual employees who work regular hours over an extended period, and small business owners with more varied arrangements shouldn’t be worried.
Australian Retailers Association executive director Russell Zimmerman says he will consider the chamber’s proposal, as the Workpac case has quickly become one of the most prevalent issues facing the retail industry, particularly for small-to-medium sized traders.
“I’m concerned there could be claims across the whole industry,” he tells SmartCompany.
“We’ve spoken to our members … our retailers are concerned.”
Government considers its options
Nevertheless, employer groups are scrambling to work out the best way to respond to the decision, and whether the government should intervene.
SmartCompany understands a meeting of national employer groups will take place on Tuesday afternoon in a bid to develop a united response to the issue.
Australian Industry Group chief executive Innes Willox has called on the federal government to amend the Fair Work Act to clarify the definition of casual work to protect employers.
“Unless Parliament acts quickly, the litigation likely to result from the decision will lead to a big increase in business insolvencies,” he said in a statement last week.
But Cartwright believes legislative change in the near term is unlikely because of political gridlock in Canberra.
“Parliament could step in and fix this problem in a heartbeat,” he explains. “They’re unlikely to do that.”
SmartCompany understands Minister for Industrial Relations Kelly O’Dwyer is considering legal advice on the implications of the Workpac decision, but has yet to commit to any legislative change.
Minister O’Dwyer said in a statement provided to SmartCompany the court’s ruling needs to be carefully considered.
“We need to carefully examine the extent to which the Court’s ruling raises uncertainty in the industry around casual employment,” she said.
“Obviously there could be quite serious implications that flow from that.”
Perma-flexi employment faces opposition
Under the NSW Business Chamber’s perma-flexi employment scheme, employers would still be able to increase or decrease the number of hours an employee works from week to week, without having to pay overtime unless an employee exceeds 38 rostered hours in one week.
Cartwright believes the new category would balance employer concerns about casual entitlements with the desire for fair, but flexible working arrangements among staff.
He says he expects the union movement to jump onboard with the plan, however, in the hours after the NSW Business Chamber made the announcement, the Australian Council of Trade Unions released a statement slamming the proposal.
“Some employers have been getting away with robbing workers of their rights and security by claiming workers are ‘casual’ when they are not for far too long. Employers should accept the decision and accept workers are also people with bills to pay and families to support,” ACTU secretary Sally McManus said.
Union opposition will make adoption of any changes to the modern awards much more difficult and will delay any possible reforms.
However, Cartwright believes the Fair Work Commission will be amenable to the perma-flexi change, and the Chamber will take the application to arbitration if necessary.
SmartCompany contacted Adero Law for comment but did not receive a response prior to publication.
*This story was updated at 12:00PM on September 25 to include comment from Minister O’Dwyer.
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