A recent Fair Work ruling could have big implications for retailers facing tough market conditions.
The retail sector has one of the highest concentrations of casual workers of all the industries in the Australian economy.
Although casual work does not come with the same level of job security as permanent employment, it still provides a beneficial arrangement for some members of the workforce. Young workers in particular rely on the flexibility offered by casual employment in order to juggle their school or university commitments. Not to mention the fact that it enables them to obtain genuine work experience that can enhance their skillset.
In lieu of missing out on entitlements such as annual leave and sick leave, casual workers are compensated with a higher hourly wage compared to their permanent part-time and full-time counterparts.
However, this longstanding arrangement has been blown wide open following a recent decision by the Federal Court. In August this year, the Court found that a truck driver, who had previously been employed by labour hire company WorkPac, was entitled to backpay for entitlements otherwise reserved for permanent staff.
According to the Court the term ‘casual employee’ is unclear in the Fair Work Act, meaning the exact definition is up for interpretation depending on individual circumstances. It was ruled that because the worker had maintained the same roster for a prolonged period of time, that they were not performing a role that was ‘casual’.
Put another way, this ruling has resulted in that former employee effectively ‘double dipping’ on the higher casual rate of pay and subsequently entitlements only available to permanent staff.
So why should a case involving the Australian mining sector matter to the retail community? Simple – the word ‘casual’ is not unique to the mining sector, so this case could end up setting a precedent that impacts on industries beyond the mining sector, including retail. Indeed, several law firms have already taken steps to commence class actions in reliance on this case.
According to the Fair Work Commission (FWC) 38.9 per cent of retail employees are casual workers. A sector that employs such a high proportion of non-permanent staff cannot afford – literally or figuratively – to have double dipping become widespread practice. Many mum-and-dad small business owners would have their retail stores plunged into financial uncertainty if they were forced to backpay casual staff for leave entitlements.
In the absence of certainty, the net result will be that more and more small businesses will be reluctant to hire casual staff. With the retail sector heading into the busy Christmas period – and therefore an increased demand for temporary, casual jobs – this uncertainty could not come at a worse time. Add into the mix that Australia already has an unacceptably high rate of youth unemployment and it is vital that the issue of double dipping be put to bed once and for all.
WorkPac has brought a second case before the Federal Court to determine whether businesses are vulnerable to retrospective backpay dating back as far as six years. The NRA therefore welcomed the announcement by Federal Jobs and Industrial Relations Minister Kelly O’Dwyer that she would exercise her ministerial discretion and intervene in the case.
Given the large number of casual workers employed in the sector, it is vital that retail is provided with certainty, clarity and confidence as to exactly what their obligations are to casual employees.
However, the NRA believes there is a straightforward solution to the double dipping debacle. We have advocated directly to Minister O’Dwyer and will continue to strongly argue for legislation to be passed that specifically addresses the issue of double dipping claims. It is of critical importance that the Parliament passes the necessary laws that safeguard what both the Government and the Opposition have called the “engine room of the Australian economy” – small businesses.