Business Group Says Government Needs Better Understanding of Economics

Labor's move to tighten casual-to-full time work pathway attracts criticism

A member of staff prepares the tables in one of the Colonial Tramcar Restaurant vintage trams in Melbourne, Australia, on March 23, 2015. Indranil Mukherjee/AFP via Getty Images

Business groups warn small enterprises could be devastated by a new federal government move to tighten laws around offering casual workers full-time positions.

On July 24, the federal Labor government said it would “close a loophole” in current industrial relation laws that leave “people stuck as casuals.”

Specifically, it will open a new pathway that allows eligible workers to claim permanent positions at their workplaces—details of how this will operate have yet to be provided.

The government said that the reform would give 850,000 casual workers across the country “more choice” and provide them with greater access to leave entitlements and more financial security.

However, employees can continue to retain their casual working arrangement if they do not wish to convert to permanent workers.

The conversion will take effect from the date it occurs, and businesses will not have to back-pay workers for any entitlements obtained from switching to permanent employment.

While the government did not specify a minimum working period requirement for the conversion, it said the current framework, which included existing processes to offer eligible employees permanent work after 12 months, would be kept.

In addition, the government said it would compose new legislation to give a “fair, objective definition” of casual employment.

Strong Objection from Business Community

In an interview with ABC Radio, Andrew McKellar, the CEO of the Australian Chamber of Commerce and Industry–the country’s largest business organisation—said the reform showed a lack of understanding of how businesses and the economy operate.

The CEO said that the proposal would deprive small businesses of the flexibility to hire workers according to business conditions and potentially limit choice, which would impose extra costs on employers.

“For many small businesses, if they simply don’t have the demand, if they don’t have customers coming in at that point in time, they don’t have the flexibility anymore,” he said.

“Now that is going to cost small businesses more. It’s going to mean they’re more reluctant to take on new employees. It’s not going to work in that context.”

A waiter wears a mask during Bentley Cup Day at Royal Randwick Racecourse in Sydney, Australia, on Nov. 3, 2020. Jenny Evans/Getty Images

Mr. McKellar argued that hiring practices should strictly follow conditions in employment contracts to ensure the right balance between the parties.

“When you employ somebody, you enter into a contract. Both parties are required to sign that contract,” he said.

“It shouldn’t be one-sided. It shouldn’t be just handing all of the control either to the business themselves or to the employee.

“It’s got to be a collective decision. It’s got to work for both parties. And unfortunately, I think what’s happening here is that the government is not getting the balance right.”

The CEO also alleged that there was an ongoing “false narrative” pushed by unions to demonise casual employment as insecure jobs.

Mr. McKellar pointed out that casual employment was an ideal form of employment for many workers and businesses that needed flexibility and that casual workers were currently paid a casual loading rate of 25 percent on top of their wages.

“If you look at the percentage that casual employment accounts for in total employment, it’s about 22 or 23 percent, (which) hasn’t changed in 30 years,” he said.

“These are not insecure jobs, and it’s not that we’re being overwhelmed with some wave of casual employment that was never there before.”

Government’s Response

Meanwhile, Employment Minister Tony Burke has defended the new industrial relation reform, saying it would not affect businesses’ ability to hire casual workers or their bottom lines.

“I don’t see in a million years how this can add costs to business because instead of paying the loading, you pay leave, you never pay both ... and they’re calculated to offset each other,” he said.

“At the moment, you can be working a full-time roster for a year, and you still get classed as a casual.

“There'll be some people with those sorts of hours who want to stay where they are, and nothing will change for them, but for people who want security this gives them a way to be able to do it.”

Workers are seen in a butcher shop in Lakemba in Sydney, Australia, on July 22, 2021. Jenny Evans/Getty Images

Australian Council of Trade Unions Secretary Sally McManus welcomed the government’s proposal, saying that Australian workers deserved reliable incomes.

“What the government is proposing is sensible and fair. It will put the decision in the hands of workers,” she said in a statement.

The permanent pathway reform is the latest change in industrial relation laws put forward by the Labor government targeting workers.

In June, the government announced “same job, same pay” legislation, which seeks to make employers pay labour-hire contractors the same amount they pay to their direct employees for the same job.

The legislation sparked fierce protests from the business community as they argued the new law would deprive workers of flexibility and the opportunity to negotiate more pay for harder work.