As the pandemic conditioned small businesses to become flexible and responsive to rapid external change, it is expected that there will be increasing engagement in temporary and contract labour to remain nimble.
At the same time, the continued uncertainty around “non-permanent” worker engagement, driven out of recent Court decisions and legislative change, shows that misinterpretation of worker contracts can snowball into unpredictable outcomes. This can put small businesses at greater risk of non-compliance with workplace laws. This also has wider implications for the general gig economy, as it begs the question of what it means to employ, contract or engage a worker in 2021.
Permanent employee vs. independent contractor
Businesses that operate on a more flexible model and have a greater mix of labour must pay close attention to the difference between a permanent employee and a contractor. The former will have access to entitlements such as annual leave and public holidays. These, however, do not strictly apply to an independent contractor, who is an agent by nature and is offering a type of service to a company, rather than being ‘employed’ to perform a job.
There is also a common misbelief that different types of rights are interchangeable. In the case of WorkPac vs Rossato, WorkPac paid Rossato a 25 per cent casual loading during his employment on the basis that he was a casual worker. However, the Court ruled that Rossato’s actual work patterns deemed him to be a permanent employee, notwithstanding the contract in place, affording him access to permanent entitlements that, in the Court’s view, could not be offset by the casual loading already paid.
Are employment laws keeping up with the gig economy?
The perplexity around worker rights is again highlighted in a number of cases involving food delivery companies as to whether their drivers are considered “contractors” or not. The contradicting nature of the decisions on these cases underlines the complexity of this issue, particularly given the rise of technology and “platform-based” service providers. The nature of this type of business model muddles the conventional benchmarks against which worker rights are measured, including non-monetary benefits, ability to subcontract work and the exclusivity of work.
New legislation to provide some clarity on casual employment
The silver lining is that legislation has recently been introduced to address such concerns. Last month, as part of the Omnibus Bill, the Morrison Government made changes to sections of the Fair Work Act. This includes enshrining a detailed definition of casual employment and the introduction of a Casual Employment Information Statement. It should be noted that it’s important for businesses to treat each worker engagement on its merits by carefully navigating the regulations set out each by the Fair Work Act and Independent Contractors Act.
Communication helps to build flexibility and legal compliance
As a natural outcome of increasing workplace flexibility in Australia, casual employment and contract engagement are on the rise. Businesses looking to top into this area have a lot to consider. From worker contracts and rights to legislation and Modern Awards, these are important factors for small businesses looking to build relationships outside the traditional permanent employment archetype.
Striking a balance between workplace flexibility and legal compliance is not easy. Employers are encouraged to invest in communication with their own workers, HR and payroll professionals and government bodies, to ensure they’re on the right track to building a compliant and flexible workplace.