Businesses lash Victoria’s sick pay guarantee for casual workers

A controversial trial to give casual workers sick pay won’t be scrapped, the government says, despite outrage from leading business groups.

Andrews government minister Danny Pearson has said a controversial trial to give casual workers five days of paid sick leave a year won’t be scrapped despite outrage from leading business groups.

The Premier on Monday announced a $245.6m pilot scheme to support casual worker entitlements including five days of sick pay per year at the national minimum wage.

The state government will power ahead with the plan just weeks after it sensationally scrapped its $800m social housing tax following a similar outcry from the sector.

The two-year pilot program will target workers in insecure sectors, including hospitality, security and cleaning.

As of 1.30pm on Tuesday, 501 Victorians had signed up to take part in the scheme.

Mr Pearson on Tuesday said he didn’t believe the government had blindsided business groups by announcing the program on Monday.

“I don’t think there’s any great surprise that as a progressive government that cares about the vulnerable and disadvantaged members of our community that we’ll take steps in that action to address that,” he said.

“I think what this pandemic has shown is some of the really difficult choices that some of our most vulnerable Victorians have to make every day.”

Government minister Danny Pearson says a controversial trial to give casual workers five days of paid sick leave a year won’t be scrapped. Picture: Getty Images

Mr Pearson said the trial, funded by the government, will run for two years.

“We’ll assess the outcome of that trial,” he said.

“We’ve made that commitment to provide that level of support.”

It comes as the Australian Retailers Association said the two-year pilot, while “well-intentioned” posed more questions than answers.

ARA chief executive Paul Zahra said he was seeking information and assurances from the government.

“We are concerned about the ongoing funding of the scheme beyond the two-year pilot, with no details provided about the government’s plans,” he said.

Mr Zahra said casuals already received a loading paid by employers to cover sick leave and holiday pay.

“This additional payment could dis-incentivise workers to take the step towards permanent employment – which is the ultimate aim of many employers, particularly in a skills crisis like the one we are currently experiencing,” he said.

“It may, unfortunately, also encourage more absenteeism which was a huge challenge through the JobKeeper stage of the pandemic that employers had to contend with.”

Workplace Safety Minister Ingrid Stitt and Premier Daniel Andrews announce sick leave entitlements for casual workers. Picture: Andrew Henshaw

Industry groups have lashed the announcement, saying it went further than they had anticipated.

Australian Industry Group Victoria head Tim Piper said he was surprised by the extent of the announcement despite months of ongoing discussions.

“We’ve been having a lot of discussions with the government, but it doesn’t necessarily mean that they’re listening,” he said.

“They’ve actually engaged us, but it hasn’t been consultation, it’s been telling us. And in fact, this has gone beyond what we expected.”

It comes after the government earlier this month sensationally scrapped its $800m social housing tax following a furious backlash from property groups.

Despite major negotiations, the industry refused to accept the proposal, leading to the embarrassing backflip.

“Today’s announcement … is notable for the absence of any retraction of its previous announcement that businesses will most likely need to fund the huge ongoing cost once the two-year trial is over, through a levy,” Mr Piper said.

“The levy would, in effect, be a tax on employment and would be another deterrent to employers investing in Victoria.”

The two-year pilot program will target workers in insecure industries such as the restaurant, hospitality, security and cleaning industries.

Phase one will cover about 150,000 workers who are eligible to register for the scheme from Monday.

Mr Piper said the list of eligible occupations included many that could not be considered insecure.

“The government has costed stage one at $245.6m for a two-year period. Presumably phase two will involve an even wider set of eligible occupations and a much larger cost.

“These huge costs will no doubt require a very substantial levy on Victorian businesses if the government decides to pass on the costs to businesses at the end of the two-year trial, as it appears to be planning to do. The scheme is deeply flawed and should be abandoned.

“It is something that we think is unneeded and uncalled for and it is double dipping, because casual workers already receive a 25 per cent loading.”

Small Business Australia executive director Bill Lang, who formed the new Victorians Party, said under the scheme casual workers would be paid more to stay at home than go to work.

“Under this policy the Victorian government will now be paying casual workers in selected industries more to stay home than they will earn at work, guaranteeing that Victoria’s casual workforce in these industries will be pulling all five ‘sickies’ a year,” he said.

“Paying people more to not be at work, as we have seen throughout the pandemic, leads to people electing not to work and given Victoria’s casual workforce can now effectively take a day off on additional pay whenever they like, well good luck getting people to work on Cup Day, Xmas Day or New Year’s Eve.

“Casual workers also receive loading on their hourly rate due to them being casual and not being paid things such as sick leave, yet the government expects employers to continue to pay this charge, even though sick leave will now become an entitlement. Then there is the $245m question of who pays for this overpaid leave once the initial two years has expired?”

Restaurant & Catering Association chief Wes Lambert said the hospitality industry had not been consulted on the move.

“If casual workers are still being paid casual loading rates, why is the Victorian government topping up for sick pay?” he asked.

Small Business Australia executive director Bill Lang claims casual workers will pull ‘sickies’ under the move.

The state opposition hit back at the announcement, saying that they would consider scrapping the move if they won the state election in November.

Deputy liberal leader David Southwick said the Premier was “completely out of touch,” writing off the new scheme as “just another tax”.

“At a time when many small businesses are struggling to survive, Daniel Andrews wants to throw another tax,” he said.

He said the focus should be on the creation of jobs and ensuring small businesses are able to thrive.

“At the end of the trial, there is nothing in place to make sure there are payments available for these workers,” Mr Southwick said.

“He has tried to use Labour Day to roll out something with no detail,” he said.

“It simply won’t be fair for many of those workers because as the doors of a small business closes, people lose jobs.”

Victorian Chamber of Commerce and Industry chief executive Paul Guerra said that he did not consider the program to be necessary, a sentiment the Chamber said it had expressed during the government’s consultations.

“While paid leave to isolate was necessary and sensible during the pandemic to prevent the spread of Covid-19, this is no longer a significant issue as the pandemic impact has subsided,” Mr Guerra said.

Premier Daniel Andrews says unstable employment is ‘completely and utterly toxic’. Picture: Andrew Henshaw

“Now is not the time for another cost to taxpayers when casual workers already have additional loading catered for in their hourly wage,” he added.

“There should be no expectation that this trial should continue beyond the stated two years.”

But Mr Andrews said the move was necessary to curb the “completely and utterly toxic” nature of unstable employment.

“It’s about equity and fairness and it’s about learning the lessons of a one in one hundred year event,” he said.

“Business will see as the trial goes on that this is seeing less people away from work, less people sick at work … less WorkCover claims … the last thing you want is people turning up who are sick and making everyone else sick.”

United Workers Union national secretary Tim Kennedy said he expected the scheme to be a success and called on other jurisdictions to follow suit.

“If the Covid pandemic has shown us anything, it is that casual, precarious and insecure work has ramifications for the health of the whole community,” Mr Kennedy said.

“I commend the Andrews government for listening to the concerns put to them by workers and the union and call on the federal government and other state governments to consider a similar program.”

The program will not include super.