A retailer employs a ‘casual’ worker. The employee doesn’t want permanent employment because the ‘casual rates’ are higher – casuals don’t have leave entitlements and other benefits enjoyed by permanent staff. But recently, the Federal Court ruled that a worker should receive back-pay entitlements because he worked ‘regular shifts’.  As Dominique Lamb explains, the ruling could open a can of worms!

Recently, the Federal Court handed down a bombshell ruling that could have far-reaching consequences across all sectors of the economy, including retail. 

The phenomenon of ‘double dipping’ has received a fair degree of attention in the IR world since a 2018 case involving labour hire firm WorkPac and a former casual employee. 

Basically, the Federal Court ruled that a former worker was owed back pay for entitlements not afforded to casual staff such as annual leave since he had worked regular shifts. Hence the term ‘double dipping’, given that as a casual worker he would have also received a higher wage than his permanent counterparts.

Then in May this year, the court upheld its 2018 decision when it ruled in the case of WorkPac Pty Ltd v Rossato [2020] that a casual employee who had worked regular shifts was entitled to paid leave and rejected the opportunity for leave entitlements to be set-off against any casual loading “paid in error”.

So, what do these Federal Court rulings mean and what impact do they have on the retail sector?

First, it’s important to clarify what exactly the Federal Court ruled. In layman’s terms, the decision was that a casual worker, in their particular circumstances, was entitled to be paid leave because they were not actually a casual. The ruling does not mean that every casual worker now qualifies for leave entitlements.

So, while all of you reading this can breathe a sigh of relief that not every worker you employ as a casual is now owed substantial back pay, the decision does inject a degree of ambiguity into what constitutes casual employment. And that presents a genuine issue.

The ruling opens up a real can of worms that could have ramifications for any industry that employs casual workers, and that is why the decision is relevant to retail. Our sector has one of the highest proportion of casual workers of any sector. If businesses are forced to back-pay leave entitlements to casuals who have worked regular shifts, it could spell doom for many businesses and the workers they employ.

This would have potentially devastating economic implications in ordinary times, but with Australia now entering its first recession since 1991, the impact on jobs could be even more severe.

Interestingly, one piece of feedback we often hear from our members is that even if they offer a permanent position to a casual employee, in many cases the worker rejects the offer due to the fact they’d prefer to maintain extra income in the form of a casual loading. This is where the lack of clarity over the definition of a casual can have a big impact. 

As we progress further through economic recovery, we want retailers to feel empowered to employ more permanent staff, and not constrained from doing so by the rigid requirements of part-time employment under the Retail Award. JobKeeper has had the side-effect of highlighting the weakness in casual employment, namely that employers cannot compel those employees to attend work. 

The priority now should be to restore clarity to casual employment arrangements, save as many businesses as possible and thereby save as many jobs as possible. 

This ruling by the Federal Court will only make that task harder, not easier.

Double-dipping claims for leave entitlements from casual workers would almost certainly lead to further insolvencies. This will see the taxpayer – who is already subsidising the wages of many workers through JobKeeper – forced to pay twice as claims will be paid under the Fair Entitlements Guarantee.

It is important that an amendment is made to the Fair Work Act that clarifies what constitutes casual employment. Otherwise, we will simply see both businesses and the workers they employ face the adverse effects.