In examining the evidence presented throughout the inquiry, the committee has considered the question: how can the Australian Government better support casual workers?
In casual work, and other forms of insecure employment, the burden of 'risk' shifts from the employer to the employee. Economist, Mr Dan Nahum, from the Centre for Future Work at The Australia Institute (Centre for Future Work) identified the Government as the 'third major player in terms of that burden of risk'. Mr Nahum said:
… during times of major economic stress, government does have a role to step in to mitigate the effects of some of that stress, large quantities of that stress, on both businesses and employees.
The committee is firmly of the view that much more needs to be done to support casual workers and challenge the tendency of industry to choose insecure forms of work over building a secure, stable workforce.
This chapter highlights the key issues raised during the inquiry regarding the casual workforce and recent changes to the Fair Work Act 2009 (Fair Work Act). These topics were discussed in detail across Chapters 4, 5 and 6, the committee's views and recommendations are provided subsequent to each proposed reform.
The case for casual work
The common argument supporting the necessity of casual work is that it provides 'flexibility'—flexibility to enable businesses to deal with peaks and troughs in demand, and flexibility to allow employees to maintain competing life priorities. Therefore, both employers and employees have a 'shared interest' in maintaining casual employment arrangements.
Inquiry participants had differing views on the legitimacy of this justification of casual work. These opposing views are discussed below.
Casual work enables employer certainty and employee choice
According to advocates for casual work, it underpins two principles of a successful industrial relations (IR) environment: employer certainty and employee choice.
A few submitters argued that most employees engaged as a casual do so as a preference, and that this is often overlooked. The Australian Chamber of Commerce and Industry (ACCI), for example, submitted that:
Casual employment is a genuine and fulfilling choice for many employees, particularly those who seek to balance work and other aspects of their lives such as studying or caring responsibilities, and those who prioritise additional take home pay over leave.
Similarly, the Australian Industry Group (Ai Group) submitted that many people engage in casual work because these arrangements offer them 'more flexibility to balance work, family, study and leisure'. To restrict casual employment arrangements would 'destroy jobs, including for young people and others who are disadvantaged in the labour market'.
From an economic perspective, casual work plays an important role in keeping Australia competitive and dynamic to global changes. Ai Group maintained that flexibility increases workplace participation, and that 'Australia's future success depends upon the maintenance of flexible workplaces'.
Similarly, the ACCI submitted that casual employment provides 'the necessary flexibility' for many businesses to manage their activities. Further, that casual employment 'is crucial for recovery' from the impacts of COVID-19, as it allows businesses to 'scale up' their workforces as they rebuild:
Casual employment makes our workplaces more productive, competitive and adaptable, and gives more Australians opportunities to work.
Using the example of the retail sector, Chief Executive Officer of the Australian Retailers Association (ARA), Mr Paul Zahra said that casual work allows a business to 'flex up when there are customers and flex down when there are no customers'.
Retail is a very fast and dynamic business. Often decisions made at the rostering levels are made by a sales manager an hour before they may need it. And what we're seeing within the industry—unfortunately, it's become a real cultural thing—is that it's easier to bring in a casual and not deal with the administration of a part-time change.
Mr Duncan Fletcher, a labour employment legal practitioner of 20 years, said that the term flexibility has been bastardised to 'denigrate employer sentiments, in the view that flexibility is akin to treating workers poorly'. This is in contrast to Mr Fletcher's own experience. Instead, Mr Fletcher argued that the workforce needs to modernise, and it is prudent to consider what 'actually motivates people and what people really want from their workplace':
I appreciate that we need to have a safety net. We need to have a structure that prevents people from falling through the cracks, but, in terms of the way people want to work, if we look at our system of employment, all of the overtime, penalty and other arrangements that have been developed over the years are built on a postwar concept of a Monday to Friday, 38-hour week, with time and a half on a Saturday till 12 and double time for the rest of the weekend so that you can go to church on Sundays and enjoy a public holiday when that comes around.
Similarly, the Recruitment, Consulting and Staffing Association (RCSA) referenced the diversity of the Australian workforce and the evolving global environment in which it operates in its argument against imposing generic IR policy, saying it 'is futile to attempt to engineer, via regulation, the retention of permanent full-time employment as the default work-type'.
The myth of 'flexibility'
The overarching reason provided by inquiry participants who were not in favour of casual employment was that it does not constitute a fair employment arrangement and, in practice, 'flexibility' frequently favours the employer.
Rather than viewing casual employment arrangements 'as a source of flexibility for employer and employee', Professor Peetz suggested that it may be more prudent to describe it as a means of depriving employees of leave entitlements and promoting dependency on employers.
Professor Peetz further explained:
Employers may have the ability to deploy [casual workers] in all sorts of flexible ways, but often do not need to utilise that flexibility. The low use of these flexibilities is indicated by the seeming stability of employment for many leave-deprived workers, stability which by its nature suits the employer. The implicit threat of having their hours cut, or being dismissed, enhances the potential power of the employer to exercise discipline. So 'casual' employment reduces employee power and reduces employee entitlements (often without any offsetting 'loading') under the guise of providing necessary flexibility.
In a similar vein, the National Foundation for Australian Women (NFAW) submitted that employer defined flexibility, and flexibility for workers, are two distinctive concepts and are not to be confused. The NFAW stressed that flexibility, not insecurity, is vital for women:
Working time minima and predictable working patterns are crucial for women … However, it is deliberate myth-making to imply that the numerical flexibilities that benefit employers are the same flexibilities that benefit for women—though the two are often conveniently conflated by employer associations. Steady and substantive minimum hours of work and a reliable working pattern represent basic income security to women and set a floor to the transaction costs of working, such as the expense and time in travelling to work. Most importantly, they assist in the planning of caring arrangements—which is the reason why most women are working 'non-standard' hours to begin with.
The Executive Director of Per Capita, Ms Emma Dawson said that flexibility means different things in different workplaces. For some it means 'being able to work from home and pick up the kids from school a couple of days a week' but for others, especially those in 'low-paid shift work it almost always means insecurity'.
In its submission, Per Capita phrased it this way:
'Flexibility' is a term used to describe insecure work conditions: it is often portrayed as offering benefits to workers and employers equally, but in practice, the concept is sold to employers by labour hire companies as a way to reduce the 'ongoing burden of fixed costs' … workforce 'flexibility' is most often a euphemism for insecure employment and is of far greater benefit to business owners than it is to workers.
The Australian Services Union (ASU) identified the use of casual labour as a profit driver for businesses:
[C]asual employment is driven by employers trying to realise short-term savings and higher profits by avoiding the costs associated with permanent employment...
Director of the Migrant Workers Centre, Mr Matt Kunkel said that employers prefer to hire casuals as they recognise the benefits of keeping their employees 'hungry for work' and, as such, businesses can 'hire and fire much more easily'.
However, this short-term gain may actually be to the detriment of an employer in the long run. In their submission, Associate Professor Angela Knox & Associate Professor Susan Ainsworth argued that ultimately there are consequences for businesses who extensively rely on non-standard employment:
Firms that rely heavily on nonstandard employment can experience a gradual erosion of firm-specific skills in the organization, limiting its competitiveness, including its ability to respond to changing market demand. Any short-term cost and flexibility gains based on using non‑standard employment, may be outweighed by productivity losses.
Proposals for reform
The committee received a number of proposals for addressing and improving casual employment arrangements. The below section considers range of regulatory and policy options available to strengthen job security for casual workers.
Review and amend the Fair Work Act
A majority of inquiry participants―including workers and their representatives, academics, and state and local governments who made submissions―agreed that amendments made to Fair Work Act 2009 (Fair Work Act) in March 2021 entrenched casual employment, and that a review and further amendment is warranted. A small number of submitters asserted that the existing legislation should not be disturbed, but they were significantly outweighed by participants who argued in favour of revision.
Statutory definition of casual employee
As discussed in Chapter 4, many inquiry participants agreed that there is a clear need to clarify work status, but that the statutory definition of a casual employee is too restrictive and does not consider the substance of casual employment relationships.
Concerns were raised that the new definition of causal employee would exacerbate job insecurity amongst casual workers. The Victorian Government submitted that consequently, engaging workers casually may now be preferred by employers because, by simply 'applying the casual label they can shift risk and engage workers on an insecure basis, regardless of whether a permanent employee is required'.
Unions NSW submitted that the definition is 'fundamentally flawed', and that, whilst they support a statutory definition, it needs to be one that 'accurately reflects the common law definition that has evolved over time'.
The overarching recommendation from submitters was that the definition of casual employee should be amended again. For example, the NFAW recommended:
… the insertion in the Fair Work Act … of a new objective definition of casual employment in which employment status is determined by post-contractual employment history as well as the nominal employment contract itself.
Referring to the High Court case, Workpac Pty Ltd V Skene , the Isaac Regional Council recommended that the casual work definition should further clarify 'how the character of the work undertaken forms the core determining factor for employment classification'.
Chapter 4 also outlined the pessimism shared by submitters concerning the introduced casual conversion provisions. The common critique, in sum, being that it enables employers to avoid making an offer of conversion to casual workers at all.
For example, Unions NSW submitted that the vague 'reasonable grounds' on which an employer can refuse an offer 'creates a convenient loophole to release employers from a requirement to provide their workers with security'. Furthermore, the union argued that the inadequacy of this provision was 'compounded by the apparent absence of an avenue for arbitration to dispute that decision'.
Many submitters recommended in favour of introducing provisions to address this inadequacy. The Australian Council of Trade Unions (ACTU) submitted that the provision should be:
A meaningful and enforceable right for casual employees to transition to permanent employment, including the capacity to have conversion issues arbitrated in the Fair Work Commission.
The committee is concerned that the provisions newly introduced into the Fair Work Act favour employer interests and take advantage of those who can least afford it—marginalised and precarious workers.
The committee notes that the need for a definition of casual work is supported by many participants. However, the introduced definition did not strike the right balance and may encourage artificial characterisations of casual work. Further, the committee is not persuaded that the introduced casual conversion provisions will improve pathways to permanent work for casual workers.
While the Attorney-General's Department was unable to provide any data on casual conversion offers to this committee, throughout the course of the inquiry data has been provided by unions and employers which illustrates the utter and complete failure of the casual conversion laws.
Across employers as diverse as the Universities of Sydney, Melbourne and Newcastle, TAFE NSW, Commonwealth Bank, ANZ Bank, PwC, and Spotless, approximately 2 per cent of casuals have received conversion offers. It was evident in some cases―such as at the University of Newcastle where thousands of casuals received an identical form letter informing them they would not receive an offer―that no real assessment ever took place of their eligibility for conversion.
At the time the casual conversion laws were introduced into Parliament, unions, academics and other submitters were very clear that the proposed conversion laws would not deliver any meaningful prospect of attaining permanent employment, and this is precisely the situation that has eventuated. It is apparent these laws were not designed to increase job security; they were designed to flatter and fail.
Not only are the laws ineffective, but they also lack a fair and accessible appeal mechanism. The committee notes evidence from Mr Gerard Dwyer, National Secretary-Treasurer of the Shop, Distributive and Allied Employees Association (SDA) who indicated that a worker may face costs of up to $100 000 should they pursue redress through the courts.
The understandable reluctance for workers to pursue lengthy and costly redress options, which may not even result in a worker being converted, is a key concern for the committee. There should be a simple, low or no-cost process via the Fair Work Commission to apply for mediation in a dispute about casual conversion.
In the committee's view the Fair Work Act should contain fundamental safeguards that are designed to ensure the benefits of productivity growth are shared by both employers and employees.
Given this, and the concerns raised by submitters, the committee is firmly in favour of a revision of the Fair Work Act, to implement such safeguards, and believes that their implementation would materially improve the security of casual workers.
The committee recommends that the Australian Government urgently assesses the performance of the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Act 2021. As the data collected through this inquiry suggests, the amendment has not had a positive impact on job security, and it should be repealed and replaced with a new statutory definition of casual employment that reflects the true nature of the employment relationship―rather than a definition which relies upon the employer's description of the relationship in an employment contract―and a new casual conversion provision.
Establish a national portable leave scheme
Chapters 5 and 6 demonstrated the problems associated with casual employees not having an entitlement to paid sick leave, namely: workers working whilst sick or injured, including working whilst potentially exposed to, or infected with COVID-19. In response, some inquiry participants, including two state governments, flagged the creation of portable leave entitlements as a solution.
Portable leave schemes follow the worker, as opposed to an employee being required to be employed for a specific period of time with one employer before being eligible for leave entitlements.
Professor Michael Quinlan and Dr Elsa Underhill argued that while such a scheme would be beneficial, it should be an 'interim measure to support casual workers' and should not be prioritised over 'discouraging and/or limiting precarious work'.
The Ai Group were opposed to the development and establishment of any portable leave scheme, citing that such a scheme would be an 'inhibitor to growth and competitiveness'. It estimated that the implementation of a national portable long service leave scheme would cost Australian businesses over $16 billion per annum, with the cost of portable annual leave and personal/carer's leave being even greater.
The committee was made aware of existing portable leave schemes operating in Victoria and Queensland. The Queensland Council of Unions outlined the 2020 introduction of portable long service leave in the Queensland building and construction industry, contract cleaning, and the community sector in 2020. The Union further submitted:
The importance of introducing initiatives such as portable long service leave into sectors with high rates of insecure work such as the construction industry and the community services sector, helps to ensure that workers are not disadvantaged or that employers don't seek to casualise jobs as a cost savings initiative.
The McKell Institute, an independent public policy institute, presented evidence on how such a scheme may operate, including consideration of the benefits to employees, employers and taxpayers. In giving evidence to the committee, Executive Director of the McKell Institute, Mr Ryan Bachelor, highlighted the policy opportunity that exists:
… to deliver better outcomes for workers, increase their job security and provide them with the kind of security that means that they don't have to turn up to work sick or that they know that they can take some time off on school holidays because they've got to take care of their kids. We need to think about work as being more than just a financial transaction between an employer and employee and about supporting and sustaining the lives of all workers beyond work as well. That's been the foundational principle of industrial relations in this country since the Harvester judgement, and we should never lose sight of that.
Mr Bachelor pointed to research produced in a January 2021 report entitled, Insecure Work and Portable Entitlements, which concluded that the implementation of a portable entitlement scheme would require:
… the close collaboration between government, workers, and businesses to ensure its feasibility and accessibility for individuals. Detailed modelling would be required to determine appropriate contribution rates, and to work through the range of legislative changes that might be needed to the Fair Work Act to enable leave portability.
The committee believes that the benefits of extending entitlements for all workers are clear.
COVID-19 has exacerbated fundamental inequalities that beset the Australian industrial landscape prior to the pandemic. As expected, casual workers were the first to experience financial hardship during the pandemic, enabled in large part by a lack of leave entitlements.
In the trade-off between working whilst sick and potentially contributing to the spread of COVID-19 or staying home and foregoing financial security for that week, the worker lacking entitlements always loses.
The Government should comprehensively investigate the potential benefits of expanding coverage of existing portable leave schemes to workers in some other industries, through close consultation with employer and employee groups, and state and territory governments.
The committee recommends that the Australian Government undertakes a review of the current portable leave schemes operating in Australia, and examines where such schemes could be extended to workers in other industries. This should be done in consultation with employer and employee groups, and state and territory governments.
Minimise the use of casual work
Dr James Stanford, an Economist and the Director of Centre for Future Work, was concerned about the 'misuse of casual labour', stating that the casual labour relationship should be limited to:
… situations where fluctuations in demand for seasonal reasons or the ups and downs of normal business are fitting for casual labour rather than the current practice of employers using a casual labour relationship even for flows of work that are quite regular and predictable.
When asked about the 'removal of choice' implied in this statement, Dr Nahum further clarified that this did not mean that Australians should be deprived of the option to work casually.
In terms of what role the Government can take to disincentivise use of unnecessary casual employment, General Secretary of the Western Australian Branch of the SDA Mr Peter O'Keeffe said:
I refer to it as 'employment with your fingers crossed behind your back'. They'll take the view: 'Although this person may have worked for me for seven years doing the same hours every week, they're a casual and I can click my fingers and send them on their way.' I think there needs to be something that also breaks the mindset … I think there really needs to be a focus on how you dissuade the employers from that notion that insecure employment is a good thing. Maybe that's an issue of cost; maybe casuals should cost more than they do currently. It's hard to say, but there certainly is, in my view, a mindset out there that will take some breaking.
The committee firmly disagrees with the perspective that casual Australian workers must accept that job insecurity is the reality of a profitable and dynamic economy.
Rather, it seems that the Australian industrial relations system is increasingly encouraging 'flexibility' for employers, while casuals and other insecure workers take on an unfair burden of business risk and forego the core benefits of employment, like job security and paid leave.
As evidenced by this inquiry, there are a very narrow set of stakeholders who value the 'flexibility' in casual work benefits. The lives of many casual workers who live with less power and opportunity than many of their fellow Australians stand as proof of that. They are the ones who live in constant precarity, not knowing when their next shift will be, if they will be able to provide for their families, or if they will have a job next week.
Most importantly, as demonstrated by the COVID-19 pandemic, they are the ones who keep this country running in times of crisis.
The committee acknowledges that there needs to be available casual labour to support seasonal peak workloads and when there is a crisis. However, the committee believes this form of employment should only be utilised when necessary to perform work which is genuinely casual, and not be used as a quasi-permanent arrangement for ongoing work.
Given this, the committee is firmly of the view that casual working arrangements should be minimised unless genuinely preferred by the employee.
The recommendations above, which would provide a revised definition of casual employment, make casual conversion easier, and provide avenues for arbitration, would help to reduce the overuse and misuse of casual employment contracts.
However, the committee also believes there are some positive steps that can be taken to encourage employers to understand the benefits of investing in a permanent workforce.
The committee recommends that the Australian Government provides encouragement and incentives for businesses to hire permanent staff instead of casuals through investigating the use of:
education campaigns around the benefits of ongoing employment for businesses and employers;
training and employment subsidies with secure, ongoing employment requirements attached to the funding;
increasing reporting requirements for publicly-listed companies in relation to work status, pay and conditions; and
introducing a procurement framework to prioritise firms that favour a permanent, directly engaged workforce.
The committee recommends that the Australian Government provides increased resources for the Fair Work Ombudsman, unions and employer associations to provide tripartite support and education to small businesses about their regulatory obligations―and their employees about their industrial rights―in order to increase the proportion of permanent employment in the small business sector.