Businesses face “crippling” liabilities running from $18bn to $39.4bn if workers rostered on regular casual shifts are entitled to seek paid leave, according to a new government analysis lodged with the High Court.
Attorney-General Christian Porter has intervened in a critical High Court appeal after the full Federal Court in May ruled that casuals who worked regular shifts, and been paid a 25 per cent loading, were entitled to paid leave.
Informed by data from the Australian Bureau of Statistics, the analysis was conducted earlier this month by Thomas Hehir, the deputy secretary of the industrial relations group in the Attorney-General’s Department, and lodged with the High Court on behalf of Mr Porter.
The Federal Court ruling in May — in which it rejected a bid by labour hire firm WorkPac to have former employee Robert Rossato declared a casual and not entitled to paid leave — has ignited business and industry concerns the decision has overturned the accepted understanding of casual employment in Australia.
The analysis by Mr Hehir looks at three “cohorts” of casual workers: those employees with 12 months tenure and regular work; those with between six and 12 months tenure with regular work, and those with 12 months tenure and “somewhat” regular work.
“If only ‘Cohort 1’ casual employees were to be backpaid, I estimate that the potential liabilities could be up to approximately $18.5bn for liabilities accrued in the six years to August 2019,” he says. “If a broader approach was taken and all relevant casual employees were to be backpaid, I estimate that the potential liabilities could be up to approximately $39.4bn for liabilities accrued in the six years to August 2019.”
“That is, approximately $5bn to $7bn per year over that six-year period.”
Of the 2.6 million casual workers in Australia, about 1.35 million have worked regular shifts for their current employer for 12 months or more.
Australian Industry Group chief executive Innes Willox said the government’s submission “lays bare the extraordinary and crippling costs that employers face if this appeal is rejected”.
“These costs, if allowed to stand will simply destroy existing jobs and the work prospects of countless Australians.
“People have been employed as casuals and paid as such in good faith. To alter this arrangement would permanently up-end Australia’s long accepted workplace arrangements.
“We are pleased that the federal government has made such a strong intervention on behalf of employers.”
The Ai Group has supported the appeal by WorkPac and has produced its own numbers to argue that small, medium and large businesses would be exposed to up to $14.2bn in double-dipping backpay claims if the Federal Court decision is allowed to stand.
Mr Porter has also warned the decision has the potential to expose businesses to major financial liabilities at a time when they were “facing their greatest ever challenge” as a result of the COVID-19 pandemic.
The government has established five industrial relations working groups examining reforms across key areas, including casual workers, with Mr Porter hoping that greater certainty can be created around casual employment.
Unions hailed the Federal Court decision as a major victory, arguing it would protect the rights of working people who had been categorised as casuals by employers in order to strip them of job security and pay.
ACTU Secretary Sally McManus hailed the ruling as a “win for all workers who are suffering because of systemic casualisation”.