How the IR reform bill could affect you: Job certainty or lower pay?

December 10 2020
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The government’s IR reform proposals are expected to be watered down as they make their way through Parliament, with business and unions at odds over some of the more contentious parts of the bill.

While the bill seeking to amend the Fair Work Act in relation to casual employment was tabled in the House of Representatives on Wednesday, punters expect it to be a slow burn, with the government said to be ready to bargain and even dump some of the more contentious changes.

In particular, these contentious changes affect casual employees, and seemingly give bosses increased powers, including the ability to cut pay due to the impact of COVID-19. And while the bill creates a simplified pathway to permanency, whereby casual employees are able to request to become permanent after 12 months, it puts casual backpay at risk.

So, what does the bill mean for you?

While recent research from Griffith University has suggested that as many as 1.1 million Australian casual workers are already being ripped off, employment and industrial law barrister Ian Neil believes that the numbers are exaggerated.

Speaking to nestegg, Mr Neil said: “I have seen comments or suggestions that casual workers have been underpaid on large scale. I don’t accept that that is an accurate description of what has happened.”

Griffith found that 1.1 million Australians are not being paid the 25 per cent loading rates they’re entitled to, to compensate for sick leave and other leave entitlements.

But the legislation introduced on Wednesday actually aims to fix the reverse of what Griffith’s research claims is the norm for over a million casuals.

“What has happened is that, as a result of two Federal Court decisions handed down in 2018 and earlier this year, many casual employees who have been paid either a casual loading, traditionally 25 per cent, or a higher rate of pay than permanent employees have been held not to be casual employees and to be entitled to benefits of permanent employees, such as paid annual leave, paid sick leave. And it had also been held, in the second of the two decisions, that they’re entitled to those benefits even though they’ve been paid casual loading and a higher rate of pay.

“The additional amounts they’ve been paid can’t be used to offset annual leave, sick leave and so on. That’s the so-called double-dipping,” Mr Neil explained.

The legislation is meant to deal with this issue, ‘fixing’ the landmark Federal Court case that held regular casuals were entitled to annual leave, sick leave and other permanent entitlements on top of the 25 per cent loading. This ruling, according to estimates, could cost businesses $39 billion in backpay, and while the bill would technically save businesses, it could put casuals out of pocket.

“That’s one of the three things that the legislation is going to do in relation to casual employees,” Mr Neil said.

The other two are to provide, for the first time, a legislative definition of casual work and to provide for the conversion of some casual employment to permanent work (the 12 months rule).

The unions are arguing that many casual employees will be worse off if these changes are in fact enacted. The government and business groups are countering this argument by flouting greater certainty and increased job certainty. Others, however, believe that both workers and businesses will be worse off, as the government moves to “micro-manage employee-employer relationships”.

Mr Neil believes that casual employment does need a greater degree of certainty than it currently has.

“One way or another, what is needed is greater certainty and clearer rules,” he said.

Key IR areas addressed by the bill:

Award simplification – Cutting red tape, improving flexibility and job opportunities in 12 awards covering the retail and hospitality sectors, which were hit hard by the pandemic and saw heavy job losses;
Greenfields agreements – Boosting investment in job-creating mega-projects by making them more attractive to global investors through new maximum eight-year life-of-construction agreements, complete with appropriate safeguards and guaranteed wage increases;
Casual employment – Ending the confusion and uncertainty surrounding the legal status of casuals, while providing a clearer pathway for those working regular shifts to convert to permanent roles after 12 months if they wish to do so;
Enterprise bargaining – Reversing the decline in agreement making by simplifying the ‘better off overall test’ (BOOT test) and setting a 21-day approval deadline to help drive productivity gains and real wage growth;
Compliance and enforcement – Reducing the risk of wage underpayments by helping employers comply with their obligations, providing improved mechanisms to rectify underpayments where they do occur, and protecting employee entitlements by introducing a new criminal penalty with a four-year jail term for the small number of employers who deliberately exploit their workers.

About the author

Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of nestegg and Smart Property Investment. Email Maja at [email protected]

About the author

Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of nestegg and Smart Property Investment. Email Maja at [email protected]

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