Inside Story

How casual became predictable

Casual employment can be fixed, but not the way the government wants to do it

David Peetz 17 December 2020 1200 words

Wish list: attorney-general Christian Porter introducing the government’s industrial relations bill in the House of Representatives last week. Mick Tsikas/AAP Image

For decades, employees defined as a casual by their employer weren’t entitled to paid annual leave or sick leave. Their employment contract effectively lasted for one shift, and they could be eased out with almost no notice. An employer who wanted to avoid invoking unfair dismissal laws — which technically only apply to those “employed on a regular and systematic basis” — could simply reduce the casual’s hours, perhaps to zero.

Casuals were unlikely to join a union, partly because of the higher potential chance of losing their job and partly because both their attachment to work and the financial stakes were lower. Without unions, their power declined even further, leaving a power imbalance that employers could take advantage of. Casuals were generally paid at a lower rate than their “permanent” equivalents, especially in low-paid occupations.

Companies also used casual employment as a low-wage pathway into permanent positions. In the mining industry, for example, companies used labour-hire workers alongside permanent employees, full-time, doing identical work. Although these “contractors” were paid substantially less than the mining companies’ own workers, they were rostered like any other employee. They knew, up to a year or more in advance, what time they would be working on which days. After a while, some of them were selected to be permanent employees.

In this way, casual employment — either through labour hire or directly with the mining company — became the only way most blue-collar workers could get a permanent job in the industry. Less fortunate “contractors” might work on mine sites for many years without becoming permanent.

Other industries varied in their use of long-term casuals. Universities, for example, used sessional teachers for five, ten or more years. Nationally, at any point in time, around 340,000 casuals had been with their employer for at least five years. Forty thousand had been with that employer for more than twenty years. Thousands of people, classed as casuals, deprived of leave, worked to the same patterns year after year.

So, casual employment was not especially about flexibility of work. Data from the Australian Bureau of Statistics showed that most casuals expected to be with their employer in a year’s time, and at least half worked the same hours week to week. Their working arrangements weren’t a response to any employer’s need to flexibly deploy labour over short periods in a variety of situations. They were cheap, stable, disposable and easily controlled.

Not that employers often did dispose of that labour. It was easier to hang on to it. But the option of reducing hours, or cutting off all work, gave the employer substantial power over these employees.

The one thing that united casuals was that they had no leave entitlements. They were better described as “leave-deprived employees.”

All that changed quite recently. One day, a leave-deprived employee in the mining industry took his former employer to court seeking compensation for unpaid leave. He won. In effect, the court said that the employee was not a genuine casual, and had to be paid for the leave he was owed. The company took the matter to appeal, and lost. Another leave-deprived employee took the company to court, and again the company lost.

This is the origin of the omnibus employment bill recently introduced into parliament by the federal government but unlikely to be voted on for several months. Employer organisations had a long wish list for industrial relations reform, but most of all they wanted to overturn these decisions. Another appeal is to be determined by the High Court, but the employer organisations don’t want to risk the outcome.

A key element in the omnibus bill would render that appeal irrelevant by enshrining employers’ right to define someone as casual. If they do that when the worker’s employment begins, and make clear there is no promise of continuing employment, then the employee is indisputably a casual. That’s the case even if continuing employment follows. The employee is without leave entitlements, and can have his or her hours cut, or cut out, on a whim.

But the bill does hold out the prospect of a better life. If, after a period of twelve months, employees want “permanent” status, they can ask for it, and the employer should grant their wish unless there are reasonable business grounds not to. Casual employees can at least take that question to court, if they have the money.

Some see this, or at least a variant of this, as the key to overcoming the chronic insecurity of casuals. Some want a stronger right for employees to convert from casual to permanent status after a defined period. They point to the fact that the bill’s provisions don’t adequately prioritise employee interests, and make appeals too expensive.

But there are problems with seeing the issue in this way.

First, the stronger the right, the stronger the incentive for employers to cut casuals’ hours, or sack them, before the designated date. This is, for example, what I saw happening in Korea. “Temporary” and “dispatched” workers (mostly women) had access to additional rights after twelve months’ employment, so employers would sack them after eleven months, or swap them between employers.

Second, and perhaps fearing this fate, some casuals may decide not to take their chances by asking to change status. The concept of “choice” can be problematic when it is constrained, especially for leave-deprived employees.

A third, probably bigger, matter is that many leave-deprived workers become financially dependent on the casual loading (if they get it). This 25 per cent premium on their ordinary pay is intended to compensate for their lack of entitlements or security. When you’re on a low income, that extra amount can make a big difference. This shouldn’t be ignored.

Other countries don’t allow employers to buy out of their obligation to provide annual leave, and nor should Australia. The challenge is to find a way to overcome that inequity while preserving the interests of this low-paid group.

A way forward would be to allow every employee access to paid annual leave and sick leave, regardless of their status and proportionate to the duration of their job. They would also have access to protection against unfair dismissal.

Employees who have no guarantee of minimum weekly hours would still be paid a loading. At present, the majority (71 per cent) of leave-deprived workers with variable hours have no guarantee of a minimum number of hours, but that proportion would fall if employers had to pay a loading for workers without the guarantee. Existing leave-deprived workers could be protected by a “grandfathering” clause, which would allow them to keep the current casual loading if that’s what they want.

In this way, the casual loading would shift from being a compensation for loss of entitlements and security to being a genuine compensation for unpredictable hours. It would be an unpredictability loading rather than a casual loading.

Over time, the casual loading would become less common and the unpredictability loading would take its place for those people who really are employed for short and irregular periods. Work would be more secure. And almost everybody would have a right to a paid annual holiday. •