“Money isn’t there”: Businesses say Federal Court ruling will deter them from hiring casuals

Small business owners say they’re now better off hiring permanent workers over casuals in the wake of a recent Federal Court ruling finding so-called ‘regular casuals’ are entitled to leave pay on top of their 25% loading.

A report released by data analysis firm Roy Morgan this week finds almost 800,000 workers could be affected by the casual entitlements case, with almost a quarter of SME owners surveyed saying it will deter them from hiring casual workers.

In a landmark ruling last month, the Federal Court found a casual labour-hire worker employed by Workpac was entitled to leave pay because they were doing regular shifts with firm advance commitment to work.

The court found Workpac could not offset leave claims against the worker’s 25% casual loading, raising fears among business lobbyists that so-called ‘regular casuals’ may be able to claim both loading and leave pay.

Roy Morgan surveyed 881 businesses in late-May about how the recent Federal Court decision may affect their businesses, asking whether the ruling will force them to close, cause a large financial impact or deter them from hiring casual workers in the future.

It found 24.5% believe the ruling will deter them from hiring casuals, while 10.5% believe the decision will have a “large financial impact” on their businesses.

“We’re better off hiring permanents and re-aligning rosters,” one business owner said in response to the survey.

“This means less flexibility and higher cost,” another said.

As SmartCompany has previously reported, employment lawyers are advising businesses to consider offering regular casual workers conversions to permanent work.

About 5% of respondents said they would be forced to close if the ramifications of the ruling came home to roost, including the possibility casuals employed on a regular basis could make claims for back payment going back six years.

The Morrison government is currently undertaking consultations with business lobbyists and unions about potential changes to the modern award system which could address concerns raised by the court ruling.

Several class-action suits targeting large labour-hire firms already plan to seize on the casual ruling to press ahead with back payment claims, although there is so far little evidence SMEs have been caught in the dragnet.

Nevertheless, respondents to the Roy Morgan survey expressed their concern that uncertainty over casual entitlements could have an adverse impact on their businesses.

“We are in hospitality and the ramifications are disastrous,” one business owner said.

“This money has never been accounted for in the past so it will cripple business to pay it out now,” another said.

“The money simply isn’t there.”

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