Small Business faces $8bn holiday pay hit

DENNIS SHANAHAN
FEBRUARY 15, 2019
The Australian
Bill Shorten has moved to repeal a Coalition law aimed at protecting small and family businesses from up to $8 billion in “double ­dipping” holiday pay claims from more than one million casual workers.
Labor wants to overturn a Coaliti­on regulation in the Senate that headed off a union-backed move to allow casual workers who have been paid special holiday loadings to also claim annual leave entitlements going back six years.
Last night Australian Industry Group chief executive Innes Willox said it was “critical that all parliamentarians reject the dis­allowance motion”.
“The disallowance of the regul­ation would threaten the livelihoods of thousands of small-business people and those who work for them,” Mr Willox told The Australian.
The potential hit on small business is a new political front for Labor ahead of the election, which already includes contentious business and investor policie­s over housing investment and negative gearing, removal of tax credits on shares for retirees, a crackdown on trusts and limits to company tax cuts.
In August last year, the Federa­l Court ruled in favour of a union-backed and funded claim in the WorkPac v Skene case that casual workers were entitled to annual leave and redundancy payments, despite being paid specia­l leave loadings.
The AiG then said the court ruling could drive small enterprises out of business through potential claims of between $5.7bn and $8bn, and called on the government to negate the ruling with a regulation protecting small and family businesses.
In December, the Minister for Jobs and Industrial Relations, Kelly O’Dwyer, lodged a regula­tion in the Senate to stop “the crippling of many small businesses” by being forced to pay twice for leave entitlements.
“Every employer must comply with their legal obligations but being forced to pay for entitlements twice is unfair,” she said.
The regulation said that where an employer had paid “an identi­fiable casual loading to an ­employee engaged as a casual”, that loading would be offset against any claim for extra ­entitlements.
The government said employers must comply with their “legal obligations” but small ­business should not be forced to pay twice and the regulations do no more than declare the existing law in relation to the right of an employer to make a claim for offsetting leave payments.
But this week Labor’s skills spokesman Doug Cameron moved in the Senate to “disallow” the regulation, again exposing 3.3 million small and family businesses to claims from casual workers who had already been paid special loadings in lieu of holidays.
Senator Cameron lodged the motion without announcement in the Senate on Wednesday “to disallow the Fair Work Amendment (Casual Loading Offset) Regulations 2018” after the move passed through the opposition frontbench with backing from the CFMEU and ACTU.
The move to overturn the regulation is expected to be debated in the Senate on April 2 — the day of the budget.
Last night Mr Willox renewed his calls for the regulation to remain law and protect the viability of small businesses.
“ABS statistics show that 80 per cent of casuals work for small to medium enterprises, 50 per cent of casuals work for businesses with less than 20 employees, and over 80 per cent work for businesses with less than 100 employees,” he said.
“It is obviously unfair for an employee who applied for employment as a casual and who has been paid a 25 per cent casual loading throughout their employment to turn around years later and claim thousands of dollars in back-pay for annual leave,” he said.
“The significant potential costs involved could drive many businesses, small and large, into insolvency, leaving taxpayers to pick up the tab under the Fair Entitlements Legislation and trigger major job losses.’’