Small businesses at risk of millions in backpay claims as casual double-dipping debate continues

The campaign around casual double-dipping is set to reach fever pitch this week as new Australian Industry Group (Ai Group) figures pour more fuel on the fire.

When Parliament returns in April, Labor intends to move a motion in the Senate disallowing a government regulation from last December, which clarifies how employers can offset annual leave claims from regular casuals.

Fears about claims of this nature arose last year after the Federal Court ruled a casual fly-in-fly-out mining worker employed by labour-hire giant Workpac was eligible for annual leave because he worked regular hours.

Industrial Relations Minister Kelly O’Dwyer’s Senate regulation doesn’t change the law though, and for this reason, Labor wants to rubbish the regulation, instead advocating for changes to the Fair Work Act to clarify the nature of casual work.

Thus far the government has stopped short of introducing amendments to the Fair Work Act, despite this being the preferred position of employer groups, including Ai Group.

Lobbyists are now trying to convince the Senate crossbench to block the attempt to overturn the regulation in the lead up to April.

The Ai Group released new figures on Monday, now widely reported, which claim SMEs across the country could lose up to $6.56 billion from backpay claims.

These figures are derived from earlier Ai Group research which estimated the number of casuals eligible to make backpay claims at 1.6 million across the entire economy, equating to $8 billion in potential payments.

The $6.56 billion figure is reached by adjusting for the 82% of casuals who work for businesses with 99 or fewer employees, however, the proportion of “regular casuals” as classified by both the ABS and Household Income and Labour Dynamics in Australia (HILDA) is not SME-specific.

The data says nothing about the proportion of “regular casuals” by business size, meaning the actual degree of potential SME back-payments could be smaller.

While the original Workpac Vs. Skene decision related to a fly-in-fly-out mining worker, lawyers SmartCompany has spoken to say many other employers could be at risk.

“If you have a worker that you call casual but who is working with you on a reasonably predictable and systematic basis for more than six months you should consider yourself at risk,” Workplace Law managing director Athena Koelmeyer says.

Koelmeyer says a lack of clear communication that a 25% loading was being applied to casual wages was a key factor in the Skene case, but believes the Fair Work Act does need to be changed to clarify the nature of casual work.

“All you sloppy drafters out there, all you people who think it was known you are employed as a casual on this particular flat rate, beware.”

Going advice from lawyers is to clearly identify casual loadings on payslips, and ensure workers understand they’re being paid loadings.

Council of Small Businesses of Australia chief executive Peter Strong supports the Senate regulation, saying it provides certainty to business owners.

However, he says there’s no need to panic about the prospect of back-pay claims for small businesses, noting the decision as a bigger risk for mining companies.

“We’ve had a good hard look at this and we’re not panicking,” Strong tells SmartCompany.

“There is a risk, but it’s a mining risk more than likely,” he said.

O’Dwyer intervened in a test-case brought forward by WorkPac last year which seeks to have the full bench of the Federal Court determine whether casual loading can offset annual leave claims for regular casuals.

Koelmeyer says the outcome of that case is unlikely to be determinative for the broader economy though, as Workpac has its own EBA and employment agreements.

Meanwhile, large labour-hire firms such as Workpac and its competitor Hays have been the immediate targets of potential class actions.

O’Dwyer’s office did not comment on the government’s intentions for Fair Work Act changes when asked on Monday morning.

Instead, O’Dwyer offered a short statement, saying paying twice for entitlements would be unfair for small businesses.

“In trying to scrap this important regulation, Bill Shorten and Labor will force small businesses to pay for employee entitlements twice and put jobs at risk,” she said.

With a lack of control in the Senate and the lower house, it’s possible any attempt to change industrial relations law before the election could be hijacked, as was done with medical evacuations for asylum seekers several weeks ago.

Employer groups have concentrated efforts around the Senate regulation in recent weeks.

“It is obviously unfair for an employee who applied for employment as a casual and who has been paid a 25% casual loading throughout their employment to turn around years later and claim thousands of dollars in back pay for annual leave,” Ai Group chief Innes Willox said in a letter to Senators circulated to the media on Monday.

Small-business advocates have been supportive of the government’s Senate regulation.

“The retail sector would have been in dire straits save for some swift thinking on the part of the Government and at least this is some Christmas cheer for the retail sector,” Master Grocers Association chief and Council of Small Businesses of Australia board member Jos De Bruin, said of the regulation last December.

Labor’s industrial relations spokesperson Brendan O’Connor said in a statement last week the Senate regulation wasn’t remedying the double-dipping issue.

“This is bad regulation that the government’s own advice argues doesn’t even change the existing law. How can you get a remedy if you don’t change anything?”

“The government has shown no interest in tackling precarious employment and therefore are unlikely to join Labor and legislate an objective definition of ‘casual’,” he said.

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