The Victorian Labour Government has introduced a trial scheme providing paid leave entitlements to some casual workers. The scheme provides for personal or carer’s leave to casuals for up to 5 days per year, paid at the minimum wage rate.

The current trial in Victoria is limited to employees in certain industries, such as hospitality, food, retail, care workers, cleaning and security workers.  It will be gradually expanded to other roles and sectors over the trial period.

The Victorian scheme was designed as an extension of some of the measures introduced during the COVID pandemic. The government expects the scheme will demonstrate that access to paid leave will improve productivity, health and wellbeing generally (including mental health), while reducing staff turnover rates.

The obvious criticism about this scheme – and one of the loudest from employers – is that casuals are already paid a 25% loading on their hourly rate specifically to compensate them for entitlements including paid leave. In effect, the scheme enables casual employees to “double-dip”, at least in relation to personal leave. It also raises questions of fairness for permanent workers who are not paid a casual loading.

To keep things in some perspective, the scheme provides only for paid personal leave (and not annual leave) and it is only half of the paid personal leave entitlement of 10 days for permanent, full-time employees.  Under the Victorian scheme, paid leave does not accumulate from year to year and is paid at the minimum wage rate rather than the actual rate paid to the employee.

For the union movement in Australia which has expressed their concerns about the increased casualisation of the workforce, this must be a mixed blessing: On the one hand, the scheme affords some of the entitlements of permanent employment. However on the other hand, the scheme will not be an encouragement for employees to take up their right to request conversion to a permanent role under modern awards – an entitlement which is also now enshrined in the NES for non-award employees.

The Victorian trial is for a period of 2 years and it looks like the ACT government is considering its own trial. Employees claim directly through Service Victoria and currently the employer is not required to do anything other than confirm the employment if required. The ominous question for employers is how such a scheme is to be funded once the trial – and the government funding – concludes. The Victorian government’s future plan involves a levy on employers to maintain the scheme. Many employer groups have pointed out that this will be a tax on employment and a disincentive to investment and economic growth.

Lessons for Employers:

• Some of the benefits to an employer of employing casuals – such as cost, flexibility and reduced obligations – can be illusory;
• Over the longer term, the costs to a business of a permanent part-time role, including all of the employment entitlements that come with it, are much lower than a casual rate.
• This is another reminder for employers to review their need for casuals and consider whether some casual roles can be converted to permanent part-time positions;

If you would like to discuss these or other workplace issues please contact Andrew Bland or call 02 9412 3077.