Last week the Federal Court handed down a judgment which held that casual employees can be entitled to the same benefits permanent employees hold, such as paid personal leave and paid annual leave.
Previously, the common understanding was that casual employees are not entitled to as many benefits under the National Employment Standards (NES) which include various forms of leave and redundancy entitlements and instead, receive up to a 25% loading on their wage.
While the decision is a huge win for casual employees who represent 1 in 5 Australian workers, not every casual employee will be eligible to receive leave entitlements.
Essentially the Workpac Pty Ltd v Rossato judgment upholds the precedent in Workpac Pty Ltd v Skene which entitles employees incorrectly characterised as casuals, known as permanent casuals, the entitlements they would be entitled to under the NES and the Fair Work Act. The practice of incorrect labels in employment contracts has been said to foster employers ‘double-dipping’ in receiving a reliable employee that cannot claim paid leave. The other side of the argument is that employees can potentially double dip in receiving both a loaded wage and leave entitlements, the debate sparking contentious political opinion.
So who is likely to be a permanent casual? The court paid particular attention to the fact that Mr Rossato and his employer had agreed that his work was predictable, stable, and regular, affirming that there was a firm advance agreement. Workpac’s restitutionary claim to recover the 25% loading paid to Mr Rossato’s also failed. The judgment will not affect those employees who are really casuals and work irregular hours or have no mutual understanding of guaranteed work in the future.
The ruling will allow eligible workers to access unpaid annual leave entitlements, provided they have been engaged in the position in the last six years. The estimated $8b in back pay could further set back small to large size companies already struggling to adapt to the impacts of COVID-19. Listed companies who employ many casual workers include Coles (ASX: COL), Wesfarmers (ASX: WES), Woolworths (ASX: WOW), Crown Resorts (CWN) and Star Entertainment (ASX: SGR). A class action was filed against Woolworths last year by 7,000 employees claiming $620m in unpaid wages, the company also owns 75% of hospitality company, ALH Group, who operate 330 licensed venues and over 550 liquor outlets.
While the decision could still be appealed and the fight is by no means over, there is sure to be an influx of class action suits coming in the near future against various employers. Omni Bridgeway Limited (ASX: OBL) who recently merged with IMF Bentham, facilitate class action funding, have extensive experience running cases against large corporations including Facebook (NASDAQ: FB) and AMP (ASX: AMP).
If the decision sticks, many large corporations may need to restructure countless long-term casuals. The economic impacts following what has already been a tumultuous year for many corporations could be even more devastating, and likely to impact the smaller businesses in particular, who may now more than ever, be reluctant to hire casuals.