SmartCompany Explainer: As Australia’s workforce becomes more casualised, what does it mean for business owners?

To say it’s been a tumultuous couple of months for businesses in Australia would be an understatement.

We’re not talking about the strawberry or honey crises, housing market upheaval, or even the crippling drought affecting thousands of farmers up north.

Instead, business owners have been struck with uncertainty about the best way to do something fundamentally core to their business: hiring people.

It started with a case in mid-August, which redefined what entitlements shift workers were provided. This was followed by another decision from the full bench of Australia’s Federal Court, which ruled casual workers employed regularly and systematically by businesses are entitled to the same entitlements as part-time workers, such as annual leave.

At the time, the rulings were called “dynamite” and “completely disconnected from reality and the Australian community” by experts and industry figures, but employment upheaval wasn’t over yet.

In the weeks to come, the Fair Work Commission also implemented a new clause into over 80 modern workplace awards, providing employees with a right to pursue legal action against employers if they do not properly consider requests to switch from casual to part-time employment.

This change was coupled with a push from industry and business groups to have a fourth kind of employment class introduced called ‘perma-flexi’, which would see workers on the arrangement entitled to leave, but have their casual loading slashed to 10%.

With all this occurring in just a couple of months, it’s easy to see how some businesses might feel overwhelmed with all the changes, and could be worried about what it might mean for them.

Thankfully, we’ve got you covered, and have recruited some of Australia’s savviest legal experts to walk you through the changes, why they’re happening, and what they mean.

Why now?

For those who pay attention to changes in the world of workplace law, this probably seems like a lot of imminent changes in a short period of time. That’s a fair assessment and one that employment lawyer and director at Workplace Law Athena Koelmeyer agrees with.

However, Koelmeyer can’t pin all the changes to one obvious reason, saying the recent switch-ups are likely due to the “natural progression” of various matters through the court system, coupled with a heightened focus by the fair work ombudsman over the past few years.

“Since the 7/11 case, the FWO has put an awful lot of focus on better enforcement on things where typically in the past there may not have been,” she says.

“The FWO started to act on its own volition a lot more rather than being directed by regulation or by the government, and now they’re very active and their cases receive a lot of attention from the general media.”

That’s brought a crest to the wave says Koelmeyer, and has resulted in greater vigilance and awareness of rights from employees, who have in turn started to challenge their employers over their entitlements.

“Employers who once had a fairly friendly yet non-compliant relationship with their employees are now being asked awkward questions by those employees about what their entitlements are,” she says.

“There’s been a general ‘if it ain’t broke don’t fix it’ mentality with a lot of employers, but now they have a compulsion to change.”

Similarly, Shane Westcott, partner at Patron Legal, agrees there’s no one overarching issue that’s led to the influx of industrial relations changes, instead attributing the move to an increasing casualisation of the workforce.

“We are seeing an increase in the casualisation of the workforce, and more people engaging employees as shift or casual workers. As a byproduct of that, we’ve got more and more casual employees who look like permanent employees,” he says.

Entitlements for casual workers, what does it mean?

In the case passed down in mid-August, the full bench of Australia’s Federal Court ruled a truck driver who was working for Rio Tinto under labour-hire company Workpac was entitled to $21,000 in annual leave.

This was due to his work being in regular, 12.5-hour shifts in “a seven days on, seven days off continuous roster arrangement”.

Koelmeyer says this ruling will likely “gently encourage” employers to take a critical look at how they hire workers and their human resource needs, saying the age of “knee-jerk” approaches to employment are over.

“Having employees working in your organisation without any consideration for proper resource management is going to keep causing problems for employers,” she says.

“This means employers need to get their recruitment right from the start and be very clear about what they want. Do you need someone for short-term and ad-hoc work? Or do you need someone for even just a fixed term position?”

Employers have plenty of options, and they’re now being forced to properly consider those options.”

Wescott says this will be a big issue for small- to medium-sized business in Australia, and the country is seeing a trend of long-term casual employees realising their entitlements. However, the lawyer says this will now start to filter through to other areas, such as unfair dismissal claims.

“This isn’t just in relation to their entitlements, it’s also in other areas such as unfair dismissals as the Fair Work Commission has broadened its scope,” he says.

Will there be a new ‘perma-flexi’ class of employment?

Earlier this month, the NSW Business Chamber sent a proposal to the Fair Work Commission for a new perma-flexi class of work, which would give employees access annual and sick leave entitlements, but cut their casual loading from 25% to 10%.

Both Wescott and Koelmeyer don’t believe the new perma-flexi employment option being pushed by industry groups will get up, saying it’s “not necessary” and is unlikely to solve many problems for either employers or employees.

“I think there are enough categories between casual, part-time, and full-time already, especially when you also take into account independent contractor arrangements,” Koelmeyer says.

“I think this is employers wanting to have their cake and eat it too, you can’t have something that only works for you when you want it to. Something like a perma-flexi arrangement would just codify the incorrect behaviour of the past.”

Wescott says the same, saying the business groups are likely making a mountain out of a molehill.

“I don’t think the flexi work arrangement is that big of a deal, it’s not a catastrophic change as the business chambers are claiming it is,” he says.

Will I have to make my casual employees permanent?

Finally, a recent decision made by the Fair Work Commission has changed over 80 modern awards to include a clause which will give casual employees the right to ask for permanent work and for employers to provide it unless they can provide significant justification for the contrary.

At the time, industry figures criticised the change, with COSBOA’s Peter Strong saying: “If this goes to what they want to do, it becomes impossible to run a business”.

However, Koelmeyer dismisses the changes, saying similar clauses have existed in other modern awards for some time, and the recent change is part of the “never-ending story” of the FWC changing modern awards.

“All this means is that employees who haven’t been paying attention are going to fall over with shock when casual employees approach them and ask for permanent employment,” she says.

“This should be no surprise to anyone anymore. You need to make sure you’re up to date with award changes.”

She believes this will affect some businesses who employ a great number of casual employees, and says those who do need to be prepared to have a good reason if they want to say they can’t employ them regularly.

What happens next?

According to Wescott, it’s a “foolish lawyer who tries to predict what the courts will do”, but thinks there will be a future move by the FWC to increase protections and coverage for casual employees.

“That’s the way things are going. There’s a trend in casual employees seeking certain protections they wouldn’t have otherwise been entitled to,” he says.

Koelmeyer agrees, and says it’s sad to hear “crickets” from the current government on any new changes to the Fair Work Act, saying both employees and employers need clarity in the form of strong regulation.

“But let’s not get our knickers in a bunch until we know what’s real, and what’s just talk,” she says.

NOW READ: Law changes needed to fix ‘illogical’ unfair dismissal decisions, says former Fair Work vice-president Graeme Watson