The Albanese Government is currently preparing to table a series of industrial reforms in the Australian Parliament in September. It would be fair to say that these reforms are largely motivated by a desire to respond to long held views by the Australian union movement that there is a need for change.
The proposed reforms, referred to as the Tranche 2 IR Reforms, are expected to be tabled in the Australian Parliament during September. Specific reforms are being pursued in 11 key areas. Three areas are of particular interest to ACAPMA given their potential to impact fuel transport/wholesale and fuel retail businesses. These include:
a) Proposed changes to casual employment laws;
b) The introduction of criminal penalties for wage underpayment; and
c) The establishment of a new body to set workplace conditions in the Road Transport Sector in the wake of the failed ‘truckies tribunal’ a few years ago.
“ACAPMA has been actively engaged in the government’s consultative process on the reforms that are likely to have the greatest impact on our industry”, said ACAPMA CEO Mark McKenzie.
“While we are wary of the potential impact of these proposed reforms on the businesses that operate in our industry, discussions with the Australian Government and the Minister’s office in recent months have been both considered and constructive”, added Mark.
But in a sign that things are starting to heat up as we get closer to the tabling of the new reforms for debate in the Australian Parliament, media debate erupted this week about the proposed changes to casual employment. The debate was initiated by business groups in response to an address by the Federal Minister for Employment and Workplace Relations, the Hon. Tony Burke MP, in Sydney on Monday.
The Minister stated that the changes to be introduced would likely include provision for casual employees to request conversion to permanent employment after having worked a regular pattern of hours for just six months (i.e. the current laws make provision for conversion only after 12 months). The Minister also stated that the Government was seeking to change the legal definition of a casual employee.
Significantly, the Minister’s address provided an overview of the proposed reforms – as opposed to the detail, given that these reforms are still being discussed with Unions and business groups.
The address was followed by a series of public comments from leaders of key business groups about the likely impact of the proposed reforms. Sadly, many of these comments appear now to be wrong. They suggested that there was a limited understanding of what was being proposed.
“As an employer association, we will always be wary of industrial reforms that are being pushed by the Union movement and we are engaging closely with the government consultation process in relation to the proposed reforms”, said Mark.
“But the public comments made by some business leaders about the Government’s proposed changes to casual employment laws were just plain wrong. They have raised unnecessarily alarm at a time when many business owners are already anxious about the future of their businesses in a particularly challenging economic environment”, added Mark.
What is the Government seeking to change? More importantly, what is not changing?
The Government is seeking to make a series of ‘tweaks’ to casual employment laws. The changes represent the second attempt by an Australian Government to resolve the issues associated with the apparent misuse of casual employment laws by some labour hire companies, following two decisions by the Supreme Court. Under these decisions, a national labour hire company was ordered to backpay entitlements to a casual employee who was deemed to be a permanent worker (see HR Highlight: Casual Controversy…beyond the headlines – ACAPMAg for further background).
The court decisions rightly raised alarm amongst all business groups. The former Morrison Government implemented a series of changes to employment laws in response. These laws established a definition of a casual within the legislation and minimised the risk of businesses being compelled to back pay years of entitlements to workers who had been incorrectly engaged as casual employees.
The (then) new laws were ratified by the Australian Parliament in 2021 and essentially resulted in the following arrangements for casual employees:
- Definition – The definition of a casual was developed solely around the stipulations in the employment contract. That is, if the employment contract agreed between a business and an employee said that the employee was as a casual, then they are a casual for the purposes of Australian employment law.
. - Casual Conversion – Employer-Initiated Offer – Where a casual has been employed for 12 months, the business must formally advise the employee (i.e. in writing) that they are either:
- Not eligible for casual to permanent conversion because they are not working a regular pattern of hours,
- Eligible to receive a permanent offer (and then attach the offer of conversion); or
- Eligible for conversion but that the conversion cannot be accommodated, and that this refusal is based on business grounds. **Importantly despite receiving (or not) one of these employer-initiated offer letters, the employee retains the right to request conversion anytime after 12 months provided that an offer or refusal has not been provided in the six months prior to the request coming though.
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- Dispute Resolution Mechanism – Where there was a dispute around conversion (i.e the employer did not offer conversion but the employee believes they are entitled to and the business can and should provide), an employee can lodge a dispute through the longstanding dispute resolution mechanisms that exist in the relevant modern award and formalised pathways at the Fair Work Commission.
. - Offset – In cases where an employee is incorrectly classified, or not offered conversion in a compliant manner, the business can offset any casual loading paid in the period dating back to the effective conversion date against the cost of entitlements that accrued since that time.
. - SME Exemption – Within the framework of the changes to casual definition and conversion operation there were also exceptions provided for small businesses (those employing under 15 employees) who do not have to provide the employer-initiated casual conversion offer, but are required to consider any formal request for conversion and respond.
For their part, the Unions remained concerned about the prospect of the casual definition being ‘gamed’ by labour hire businesses and have lobbied for changes to the casual definition since 2021, due to the pure focus on the agreed status at the commencement of the employment as outlined in the contract. They argued that post contract conduct and the ‘reality’ in the workplace needed to be given significant weight in any dispute over the classification of employees.
The Unions also sought to lower the qualifying employment period in order to be offered conversion to just six months.
Business groups, including ACAPMA, have pointed to the fact that the 2021 changes are adequate and have continually pointed to the fact that less than one per cent of workers (at least in the fuel industry, where casual to permanent conversion clauses have been in operation since 2009) accept the invitation to convert to permanent employment and that there have been almost no formal disputes through the Commission about the Casual Conversion process in the past two years.
So, what are the changes to casual employment laws that are being discussed?
Based on ACAPMA’s direct engagement in the 2023 consultative process to date, ACAPMA understands that the Albanese Government is seeking to implement three ‘tweaks’ to the 2021 laws governing the employment of casuals. These changes can be summarised as follows:
- Definition – A change to the definition of casuals such that the pattern of work becomes the dominant consideration (i.e. supersedes the primacy of the stipulations in the contract) after six months of employment. This change raises questions of interpretation, but longstanding dispute procedures will still be available to both the employer and employee if a dispute arises. It is expected that the pattern of a displayed low desire of casual employees to convert to permanent employment will continue and means that the number of any such disputes is likely be low.
. - Casual Conversion – The addition of a provision that allows an employee who believes that they are working regular hours to request conversion to permanent employment after just six months. Importantly, this is a new employee-initiated casual conversion provision and does not change the employer-initiated casual conversion offer requirements introduced by the former Morrison Government in 2021.
. - Offset – The inclusion of a clear stipulation that there is no requirement for the business to backpay entitlements in the event that a casual employee is converted to permanent employment. While the detail of the conditions surrounding this provision are yet to be finalised, this is a very welcome provision that further mitigates risk for business owners.
“There has been a flurry of comment on what might be changing. Having engaged directly on the proposals it is vital to understand, and contrary to the statements made by some business leaders this week, there are a number of important provisions that are not changing”, said Mark.
First, the existing 12-month employer-initiated casual conversion offer requirements (for an employer to offer an employee conversion or refusal based on pattern or business grounds), is not changing. Rather, the new laws will provide an additional provision for casual employees working regular hours after six months of employment to request that the business review their employment and consider them for conversion to full time employment.
Second, and again contrary to claims made this week, the business retains the right to refuse such a request on reasonable business grounds. That applies to both the new provision for an employee-initiated request after six months and the continuation of the requirement for employer-initiated casual conversion offer after 12 months of employment.
Third, businesses will not be required to convert casual employees to permanent employment at the casual rate of pay (i.e. award rate plus casual loading). An employee choosing to convert from casual to permanent employment will be required to forego the loading in return for the relevant leave and other entitlements afforded to a permanent employee – as occurs now.
Lastly, the Minister has confirmed that there will be no change to the dispute resolution mechanism or to the exemptions framework that currently applies to small businesses.
“All in all, the sky is not falling in. Australian business and industry groups are not being conned into accepting changes to casual employment that are likely to limit the ability to employee casuals in the future”, said Mark.
“What is more, employees retain the right to choose whether to remain a casual employee – as is their right in a free and open society. And the vast majority have shown through history that they prefer the higher hourly rate and flexibility of working as casuals in our industry”, Mark said.
Recognising that the changes to casual employment, and the 10 other areas of reform, are still being developed, ACAPMA is working constructively with the Minister’s office and the Commonwealth Department of Employment and Workplace relations to ensure that these new laws do not make it more difficult for the businesses in our industry to employ workers in the future.
If you have any concerns about the proposed IR reforms, please contact the ACAPMA Secretariat by emailing communications@acapma.com.au or by calling Mark McKenzie on 0447 444 011.
ACAPMA
Source: https://acapmag.com.au/2023/07/casuals-reform-debate-gets-a-little-silly/.
