Unpacking the casual employee “double dipping” issue and its implications for ECEC
Recent coverage in the mainstream media and also on The Sector, about the pending appeal of a Federal Court decision to enforce payment of leave entitlements to long term casual employees and a Government sponsored Industrial Relations Bill that amongst other things will seek to quash the ruling, has raised a number of questions as to what precisely the impact on the early childhood education and care (ECEC) sector will be.
As Richard Schaube, National Manager – Early Childhood at ANZUK said “The current potential for “double dipping” is an odd situation that has created confusion and frustration given the loading and additional entitlements that are paid each day a shift is worked. For us, all we want is clarity.”
Given the substantial use of casuals across the ECEC sector, this piece aims to unpack the original rulings and provide some context on what is being proposed by the Government, along with a likely timeline for resolution from an ECEC perspective.
So where does this issue begin?
The specific issue of whether a “long term” casual employee should be entitled to a 25 per cent loading on top of their hourly rate and receive standard leave entitlements in addition to the loading was confirmed in the second hearing of WorkPac Pty Ltd v Skene the Federal Court of Australia in 2018.
It was found that an employee who was described as a casual but worked a regular roster, in this instance, set a year in advance was in fact a permanent employee and consequently, the Court ordered that the employee was entitled to annual leave under both the National Employment Standards and the enterprise agreement which applied to his employment.
Therefore an employer of a long term casual employee was obligated to pay the casual loading and the leave entitlements to the employee – something which many described as “double dipping,” because the employee enjoyed the higher rate of pay of a casual, while also having the leave entitlements and protections of a permanent employee.
But did it end there?
No it didn’t because although the ruling was clear on the definitions and treatment side of things, it did not specify exactly how the employee should be compensated for their entitlements.
In light of that, the employer WorkPac, who was actually a mining labour hire company, concluded that the ruling actually allowed them to ‘set off’ the liability for leave and other entitlements against the casual loading as long as it was clearly expressed to the employee and the loading was received by the employee.
They then took their position to the High Court again for ratification but just like the first case the request was struck down with the judges concluding unanimously that “set off” was not permitted and that payment of the entitlements in addition to the loading was mandatory.
This happened in May 2020.
So what happened next?
In the aftermath of the decision there was a lot of commentary from businesses associations about the implications of the ruling just as COVID-19 was reaching its peak across Australia.
This general commentary spurred WorkPac, the employer in the cases mentioned above, to seek the ability to appeal the decisions in the High Court, a request that, with the support of the Government, was granted in November 2020.
The ability to appeal was welcomed by business groups as it basically meant that the initial Federal Court Decisions would be unenforceable, and a number of Class Actions that had been launched halted, until the High Court had heard the appeal and made a decision.
The case is scheduled to be heard next year.
Is that the end of the story?
No not quite, as coincident to all of this the Federal Government have been working on a new Industrial Relations Omnibus Bill that includes legislation that more clearly defines what a casual worker is, a framework to support conversion of employees and rules that allow employers to offset entitlements against loadings and in so doing eliminating the “double dipping” decision made originally by the High Court.
The strengthened process for converting into full or part time employment will be an enhancement of existing rights of conversion under some awards and it will make the right to convert from casual to permanent available to all casual with an employer required to make a conversion offer if:
- the employee has worked for the employer for a year and worked a regular pattern of hours for the past six months (previously 12 months)
- the employee could continue to work as a full or part time worker without significant change to their hours
- an employer may decide not to make an offer or accept a request if they have reasonable grounds.
If a worker declined an initial conversion offer, they would retain the right to request every six months.
The new BIll would also eliminate the potential for “double dipping” issue by allowing the cost of entitlements to be offset against paid “loadings.”
So what happens if the IR Omnibus Bill is successfully passed by the senate?
If the Bill in its current form is passed by the Senate businesses would be expected to adhere to the new definitions of what denotes casual work and if an existing casuals work looks more like a permanent position based on the definition then the employer must offer a permanent position to the employee.
The employee does not have to accept, but the offer must be made.
In addition, employers would not need to pay for casual entitlements in addition to the casual loading of 25 per cent of wages. The cost of the entitlements would instead be set off against the loading.
But what happens if the Bill fails to pass the senate?
If the Bill fails to pass the senate then all eyes will turn to the Appeal lodged by WorkPac in the High Court of Australia.
This court will rehear the case that was presented to the Federal Court in May in which it was determined that long term casual should be treated as a permanent employee and leave entitlements must be paid in addition to wage loadings.
If the Court upholds the verdict then the case will set a precedent that will trigger the resumption of a range of class action lawsuits to claw back entitlements on behalf of casual workers from employers and trigger a reset as to how casuals are treated in employment settings vis a vis entitlements.
It would also likely precipitate a wholesale conversion of casual workforce into permanent staff which may raise real issues for casual employees who prefer the casual workforce arrangements.
So what do I need to do now if i am an ECEC employer or a long term ECEC casual?
Nothing at this juncture other than be aware that there will be changes to the way casuals are classified in 2021 and possible significant changes to how they are remunerated.
Going forward The Sector will report on the outcomes on developments and the implications for ECEC as new information comes to hand.