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The Federal Court ruling on casual leave entitlements is threatening to sink the JobKeeper life raft, a workplace relations specialist has warned, urging the government to step in immediately.
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Federal Court ruling ‘sinks JobKeeper life raft’
22 May 2020
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9 minute read
The government has been urged to step in and amend the Fair Work Act or risk the livelihood of thousands of small Australian businesses already struggling through the COVID-19 crisis.
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According to workplace advisory firm Employsure, there are fears the latest changes will result in more than 2 million regular casuals double-dipping into taking paid leave, while at the same time receiving 20 to 25 per cent loading at the expense of the employer.
“We need the government to step in here and amend the Fair Work Act,” said Employsure managing director Ed Mallett.
“If JobKeeper was a life raft, this decision just sunk it. Small businesses are already on their knees trying to do what they can to survive, and this could be the final blow.
“This potentially exposes business owners to billions of dollars in backpay claims.”
On Wednesday, a full bench of the Federal Court ruled that regular and ongoing casual employees are entitled to seek paid annual leave, paid personal/carer’s leave and paid compassionate leave, if they are working regular shifts on an ongoing basis.
The Federal Court upheld the precedent WorkPac v Skene ruling in 2018, when it decided that a casual mine worker who had regular and predictable shifts was entitled to the same benefits as a permanent member of staff, including accrued annual leave pay.
The labour hire firm, WorkPac, decided not to appeal the ruling in the High Court, instead deciding to challenge the Skene decision’s definition of casuals before a new full bench and with a different employee, Robert Rossato.
However, in a long-awaited judgment, Justices Mordy Bromberg, Richard White and Michael Wheelahan found that, according to the “regularity and predictability” of Mr Rossato’s hours, the long-term and advance rostering that was present from his first contract and the provision of accommodation facilities, he was a permanent employee.
Mr Mallett believes that this ruling will effectively roll back the benefit of JobKeeper.
He said: “Every regular and systemic casual that employers have included on their JobKeeper application, they now have a leave liability for.
“If we assume that of the 6 million workers on JobKeeper, a third are employed on a casual basis, we could assume that each one of those employees are owed an average of two years of leave. That would equate to 40 days which would be roughly $6,000. That is effectively a $12 billion hole in the side of JobKeeper.”
SMEs, he noted, will simply not be able to afford this liability, particularly in the current environment.
“In New South Wales, for example, we’ve seen drought, followed by one of the worst bushfire seasons in history, followed by a global pandemic. Another significant financial blow to a business could be that final nail in the coffin.
“We can’t wait for more legal wrangling on the double-dipping issue. Small businesses need certainty now, especially in the age of COVID.”
The court’s decision has prompted the federal government to flag legislative changes. Attorney-General and Industrial Relations Minister Christian Porter has revealed pleas by employers to make changes to the Fair Work Act are being considered.
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