Given the continued uncertainty around ‘non-permanent’ worker engagement in Australia, what are the next steps for organisations looking to build a flexible and diverse workforce while staying compliant?
As the pandemic enlightened us on the benefits of workplace flexibility, and as businesses now embrace temporary and contract workers more than ever before, certainty on the terms under which these businesses can engage, contract or employ workers is now more important than ever to ensure we fully embrace the post-COVID optimism permeating through sectors of our economy.
Frustratingly, recent Court decisions have further blurred the distinction between casual v contractor and casual v permanent worker. In light of cases such as WorkPac vs Rossato and Gupta vs Portier Pacific (UberEats), we witness the extent of misalignment in how organisations, workers and the Court can perceive a worker engagement, as well as the scale of impact on the parties. The uncertainty created from these cases begs the question – what does it mean to be a worker in 2021?
Obscurity and uncertainty in casual employment contracts
The position of a casual employee in Australia is evolving quickly, making it a challenge for employers to keep up with relevant legislation to ensure compliance at all times.
Take the case of WorkPac vs Rossato, Mr Rossato was employed by WorkPac under six separate casual employment contracts from 2014 to 2018. During this time, he worked a shift roster of seven days on, seven days off, set by rosters some seven months in advance. His firm commitment to employment led to the Full Federal Court’s determination that he was, at law, a permanent employee and entitled to leave entitlements. The Court also ruled that despite having paid Mr Rossato a 25% casual loading during his employment, WorkPac was not entitled to set off the other entitlements Mr Rossato should have received, such as paid annual, sick and carer’s leave.
The Court’s decision made clear that engaging casual employees entails a closer look on their actual work patterns, rather than what they’re simply being described as in the agreement. As Aussies attempt to recover from the impacts of COVID-19 and engage in a more flexible work future, the uncertainty around casual employment seems to have appeared in an untimely manner.
New legislation to provide some clarity
Pleasingly, the silver lining is that legislation has been amended to address such concerns. On March 26th 2021, as part of the Omnibus Bill, the Morrison Government made changes to sections of the Fair Work Act relating to casual employees, including enshrining the definition of a casual employee into Federal legislation for the first time. The changes include the introduction of a Casual Employment Information Statement, a clear definition of casual employment and potential pathways for casual employees to move to permanent employment.
Gig workers remain in the spotlight
Meanwhile, employers must also pay attention to the difference between a permanent employee and an independent contractor. In the case of Foodora, it was found that the company deliberately misclassified employees as contractors to avoid paying them annual leave, superannuation and other entitlements. This resulted in millions of dollars in tax debts and underpayment as well as a lost court case that ended their business in Australia.
Interestingly, however, a Full Bench of the Fair Work Commission found that an UberEats driver was in fact an independent contractor. However, with the backing of the Transport Workers Union, the driver appealed to the Federal Court. Perhaps fearful of an adverse finding, UberEats chose to settle the matter prior to a formal decision being handed down. It has been noted that earlier this year UberEats drivers were required to enter into amended terms of business.
These cases suggest that it remains too easy to confuse a contractor with an employee. In the gig economy era, where organisations seek a greater mix of labour, this problem will likely grow. It is therefore important that they treat each engagement on its merits and carefully navigate the regulations set out each by the Fair Work Act and Independent Contractors Act.
Communicate to achieve workplace flexibility and legal compliance
Given the legal and structural changes happening around both casual employment and contractor engagement, organisations looking to build a diverse labour mix must ask themselves – what are my worker’s work patterns and do they align with the contract or agreement? Are they getting the entitled benefits based on the work they carry out? Am I referring to the right Act or Modern Award when dealing with each of them? These questions are critical when we begin to think about the market’s overall growing engagement in gig work, which is a natural outcome of increased desire for flexible workplace arrangements across Australia.
Clear communication also remains key to building a flexible and compliant workforce. Flexibility works out differently for each employee, so employers should be ready to engage in a series of conversations to help build out practices that would best cater to individual employee’s work, financial and lifestyle needs.