The Australian business community is totally unprepared for the unprecedented challenges they face in just over four months on August 26.
And many struggling to pay mortgages have no idea they face the danger of a big take home pay cut.
Last week, business people including bankers and I were at the same table and I put to them a simple question: What is set to happen on August 26 that is likely to transform business, including yours?
No one knew.
For example, not one banker around that table had any idea that the events looming on August 26 could endanger mortgage loan repayment rates. There were no retailers around the table, but it is likely they would also be oblivious to what is about to hit them.
Accordingly, this commentary is a wake-up call, so CEOs can no longer claim they didn’t know about August 26.
On that date, vast areas of the 700-plus page Albanese government business blueprint, called the industrial relations legislation, come into operation.
It will cover areas like giving power to employees to ignore bosses who phone after hours, hit independent contracting, machine gun parts of the gig economy, boost transport costs, require union representatives in businesses with one employee (this came in earlier) and much more.
Today, I will concentrate on only one measure – the dangers posed by the new rules for those employing casual labour and those being employed as casuals.
I chose this section because it threatens to be a form of legalised wage theft – an incredible thing for an ALP government to do, albeit that it boosts union membership.
Bankers are endangered because a vast number of their mortgage holders are currently meeting their instalments because part or all of their employment is casual, and they enjoy a 25 per cent bonus premium payment in exchange for no holidays and long service leave etc.
Without that premium payment, they could not meet their instalments.
But after August 26, any employer hiring casual labour is in grave danger of breaking the law and being forced to double-dip and later add holiday and long service leave payments to the 25 per cent premium they have paid.
And because hiring casual employees could be breaking the law, directors of employer companies could face all sorts of personal liabilities and not be protected by insurance.
The detail is complex and employers need to check my interpretation with top lawyers in such matters. There are no certainties, only dangers.
The High Court in the 2021 ‘Rossato’ case declared that the employment definition of “casual” required the “‘’no firm advance commitment as to duration of hours of worked”.
In the 2024 act, the long section under the heading “meaning of casual employee” starts by duplicating the thrust of the High Court definition by stating that the casual employment relationship is “characterised by an absence of a firm advance commitment to continuing and indefinite work”.
So far, so good.
But then comes the chaos. The above definition “is to be assessed” on the basis of seemingly endless criteria, including:
• “The real substance, practical reality and true nature of the employment relationship”.
• “Whether, having regard to the nature of the employer’s enterprise, it is reasonably likely that there will be future availability of continuing work in that enterprise of the kind usually performed by the employee”.
• “Whether there are full‑time employees or part‑time employees performing the same kind of work in the employer’s enterprise that is usually performed by the employee”.
I know my suburban newsagent and his small staff well, and we yarn about the legislation. With some merriment, the staff plan to choose a sixty-year-old, part-time employee as the union representative.
But serving in the shop alongside that part-time employee is a casual with a mortgage who desperately needs the 25 per cent premium.
On my simple definition, the newsagent is taking a grave risk employing a casual to do the same job as a permanent employee, particularly as the casual has been doing the work for a long time.
My advice to the owner of the business is to see a lawyer rather rely on me. But he can’t afford a top lawyer.
He faces a terrible dilemma because these people are not just his employees but his friends.
The directors of large retailers like Woolworths, Coles, Bunnings and others obviously don’t know personally the hundreds of thousands of people working as casuals, but the dilemma is the same.
My guess is that on August 27 they will continue to pay the 25 per cent casual premium, but the complexity of the law is so great that they may be building up liability for back holiday and long service leave.
In one year’s time, when the liability has built up, the “illegally” employed casuals may be involved in a class action seeking holiday and long service leave.
A union aim will be to solve the problem by increasing the total salary bill by around 20 to 25 per cent, which will send inflation through the roof.
Some lawyers may say that the High Court ruling will still apply despite the act.
My advisers say that the law has changed dramatically and so the original High Court ruling will have to be retested and might not come up with some result forcing huge losses on those “illegally” employing casuals.
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