15/10/2018Employee Issues

An opinion piece on recent developments regarding casuals - and whether the writing is on the wall?

A landmark Court decision affecting all businesses generally, and important award changes which will affect the retail industry specifically, are changing the landscape in relation to the employment of casuals. We give our views on what all this means.

Simplified –

  • Retail award penalties for casuals working after 6pm weekdays and on Saturdays, are going up.
  • Retail award penalties for casual and permanent shift workers working Sundays are going down.
  • Retail award casual conversion clause has gone live.
  • Federal Court of Australia recently awarded annual leave to an employee paid as a casual, on the basis he was a permanent employee, “as a matter of law”.
  • If there’s anything wrong with over-reliance on casuals, "just give me a sign!".

Signs of change

While we’re not saying that there is an intentional, hidden force at play that has orchestrated all these changes to occur at the same time, the scope and timing certainly should cause employers to pause and consider the impacts to their business.

Sign 1

The first sign was a major decision made by the Fair Work Commission (FWC) last year as part of the 4 yearly modern award review, determining that it was going to insert a model casual conversion clause into those 85 modern awards that did not already contain a casual conversion clause (see our earlier newsletter).

On 9 August 2018, a subsequent decision was published deciding any outstanding issues and so now the casual conversion clauses have been inserted into the awards, effective from 1 October 2018.

We have written more about this change in our newsletter article here and encourage you to have a read for more information.

Sign 2

The second sign was a recent decision by the Federal Court of Australia which determined a that an employee who was engaged and paid as a casual, still had an entitlement to annual leave under the Fair Work Act 2009, as the Bench deemed that the worker was really a ‘permanent’ employee.

Our view is that it’s a fringe case and doesn’t represent a deviation from the previous technical / legal understanding of the nature of casual and permanent employment - however, it’s certainly stirred up a great deal of noise and concern from employers. One thing both union and business sides can agree on – they want a legislated fix!

Sign 3

The third sign is another major decision by the Commission, which is hot off the press, regarding the long-awaited retail award four yearly modern award decision. The outcome is as follows:

  • In short, shiftwork penalties for Full, Part-Time and Casual workers on Sundays will reduce by 25% by 1 July 2020.
  • However, Saturday (non-shiftwork) penalties for casuals will increase by 25% by 1 March 2020. Note that (curiously) currently, there is only a 10% additional payment for casuals who work between 7 am and 6 pm on Saturday, not outside those hours.
  • Work completed by casuals Monday to Friday after 6 pm will also increase by 25% by 1 March 2021.

Please refer to our separate detailed article about the various penalty rate changes.

So, what do we think this all means?

In short, it’s going to become decreasingly attractive to engage casuals for two reasons:

  1. Cost - for many penalty hours, casuals will be increasingly expensive.; and
     
  2. Flexibility - with the new casual conversion clauses in many awards where they didn’t previously exist, there will be a further administrative process involved -
    Firstly, in informing casual workers of their right to transfer to permanent employment. Then, in keeping track of the employee’s work patterns to determine if they are eligible.
    And finally, handling any responses to conversion requests.
     
  3. However, the real burden will be in that many employers simply don’t want more permanent employees, whether part-time or full-time.

Part-time v. Casuals

Casual employees are very flexible. They can have their weekly hours varied, and they generally don’t get the various kinds of paid leave available to permanent employees. On the other hand, the existing 25% casual loading adds quite a hefty premium, and casuals are still able to take unfair dismissal cases, receive long service leave and superannuation entitlements, just like so-called ‘permanents’.

The current part-time provisions in most awards are very strict and can be an obstruction given the fast-paced nature of Retail and other labour-intensive industries. For example, you need to agree in writing before any change takes place to -

  • the hours worked each day;
  • the days of the week on which the employee will work;
  • the actual starting and finishing times of each day.

Also, it needs to be noted -

  • that any variation must be in writing and agreed before the time is worked;
  • the minimum daily engagement is three hours; and
  • the times of taking, and duration, of meal breaks needs to be monitored.

Employees get sick, go on annual leave, swap their shifts, quit their jobs, abandon their shifts - all on short (or no) notice. In the services sector, stores can have an influx of business, a huge sale, a busy season or other events which can spike demand.

Your pool of call-in-casuals may dwindle if you are forced to make many of them into permanent employees. How will you cope?

What we suggest

  1. Get on top of your resourcing mix.  Extend permanent employee hours where possible to reduce the increasing cost of casuals.
  2. Look at your employee data – how many employees are likely to be entitled to convert to permanent employment?
  3. Plan – use what business metrics you have available, to anticipate demand.
  4. Don’t stress - It’s not as though there won’t be any casuals available. You may want to expand your casual pool to include those who may not want to regularly work in your business. Also, we expect many, if not most, casual employees will not want to convert because of -
    1. the money (they get paid their casual loading as they go, rather than when taking leave), and
    2. they want ‘flexibility’ too – for example, study, sport or family commitments.

To view the full Retail award decision click here, and if you have any questions do not hesitate to contact ER Strategies on 1300 55 66 37 for more information.

Article Discussion