Radical casual work overhaul will cost jobs

18 October 2023

This opinion article by Business Council chief executive Bran Black was published in Australian Financial Review on Wednesday, 18 October 2023 

There are countless flaws with the Federal Government’s radical overhaul of the workplace relations system, but the biggest by far is that it is going to cost Australians jobs and cut wages.

That is not just the view of the Business Council and an increasingly anxious alliance of big and small organisations across the country; it is the considered view of one of the nation’s preeminent industrial relations barristers, Stuart Wood AM KC.

In fact, Mr Wood predicts that the Government’s “new and unworkable” definition of casual employment alone will not only cost jobs but have flow-on effects for consumers as the “dismantling” of casual workforces leaves labour-constrained businesses unable to deliver services.

Mr Wood was commissioned by the Business Council to review key elements of the government’s Fair Work Legislation Amendment (Closing Loopholes) Bill.

His assessment of proposed changes to casual working arrangements should alarm every employer with a casual workforce and every Australian who relies on the flexibility, regularity and additional income that casual employment provides.

Mr Wood’s analysis is that the administrative burden on employers of implementing and keeping up with the changes will inevitably lead to a reduction in job opportunities – casual or permanent – as overwhelmed businesses take steps to mitigate risk.

None of this cost to business and the community has been factored into the Government’s flimsy risk assessment of the Bill, which claims employers will need only 15 minutes to apply the new multi-layered test as to whether a casual employee is entitled to an offer of permanent employment. Just 15 minutes to accurately apply 12 different and highly technical considerations biased towards finding a role is not casual, with fines of up to $469,500 if an employer gets it wrong – a staggering assumption.

The more the Bill is examined in detail, the more detail it seems to lack – with hidden complexities for business waiting behind each corner. The loophole that really needs to be closed in the Closing Loopholes Bill is the lack of detail.

The Bill seeks to overturn the existing clear definition of a casual employee in the Fair Work Act, which is based on the contractual agreement between employee and employer and has been reaffirmed by the High Court, in favour of a vague and unreliable definition based on the “nature” of the relationship and role being performed.

Dismantling the Government’s claim of a low administrative burden, Mr Wood warns that the new definition will prove “frustrating, impractical and unreliable” for employers who will be forced to “constantly check the work patterns of their casuals to avoid the surprise of a notification that they’re no longer casuals”. 

“The current clear and forward-looking definition is replaced with novel, abstract and uncertain concepts that will perhaps be loved by lawyers, but frustrating, impractical and unreliable for employers seeking to classify correctly their employees,” he says. “Letting post-contractual conduct influence whether or not an employee is a casual will require constant employer vigilance to ensure their employees are correctly characterised.”

This makes a mockery of claims that employers will not need to review casual employment unless asked to by employees. In fact, all employers of casuals would need to reconsider their work arrangements in the wake of such amendments.

Mr Wood also draws out dire implications for the future of casual work in Australia adding: “Faced with the challenges that will arise from the new and unworkable definition of casual employment, I expect that many employers will decide to structure their workforce so casual employment is no longer a choice for employees. They’ll only be left with inflexible full and part-time employment. Alternatively, casual employment might be reduced to an unattractive offering for employees that is characterised, from the get-go, by irregular shifts, no representations about any certainty of shifts, and short-term employment to mitigate as much as possible any risk of the employment drifting into something more permanent."

He sees a similar situation emerging to the introduction of modern awards in January 2010 and the associated increase in Sunday rates, which led some employers, particularly small hospitality businesses and other retailers, to stop trading or offer only limited Sunday services or hours.

He says the dismantling – or at least weakening – of casual workforces caused by the Bill’s measures will leave many employers ill-placed to offer adequate services for consumers due to the absence of a casual workforce that can be deployed to meet customer demand in peak periods.

“One could imagine that many employers will be advised to replace their casual workforce with a permanent or part-time workforce as the risks of maintaining a casual workforce are simply too high relative to its potential benefits,” he says. “Far from closing a loophole, it’s far more likely it will close down casual employment per se for many, even though it’s a form of employment enjoyed by a significant and largely stable portion (23 per cent) of Australian workers.”

Mr Wood foresees the new definition of casuals leading to legal challenges – including claims from casual employees subsequently determined to have been working in a permanent role – and Fair Work Commission disputes orchestrated by unions using the casual conversion process “as a bargaining point or pressure point” given their new powers under the Bill.

Mr Wood’s analysis confirms what we are hearing on the ground: this Bill will add cost, complexity and confusion to the employment of casual workers and businesses will understandably take steps to mitigate their risk, including by offering fewer casual roles.

This means pain for the very people the Bill purports to protect – the many Australians who embrace casual work for its regularity, flexibility and additional pay. Casuals who become part time or full time will face an immediate 20 per cent pay cut. Some jobs may disappear entirely.

The Government must go back to the drawing board on this ill-considered Bill, which far from creating secure jobs will actually cut them.


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