The Victorian Government recently announced a controversial two-year trial of the ‘Victorian Sick Pay Guarantee Scheme’. In the scheme around 150,000 casual employees will be eligible for 5 days of paid sick and carer’s leave per year. Self-employed sole traders and freelancers are also eligible.

This trial intends to tackle the “toxic” nature of the insecure workforce after the pandemic highlighted the problem of insecure workers being forced to choose between coming to work sick or losing money. So, how does it work…

Who is eligible?

Initially, this scheme will only be eligible for casual workers in certain industries including:

  • Hospitality
  • Food Services
  • Supermarkets
  • Retail
  • Security
  • Aged and disability sector; and
  • Cleaning

Eligible casual and contract workers will receive up to 5 days of paid sick or carers leave at the minimum wage, currently $772.60 per week or $20.33 per hour.

There are some parameters around eligibility, including:

  • You must not have access to paid sick and carer’s leave entitlements across any job
  • Be aged 15 years or older (workers under the age of 18 must have parent or guardian permission to apply)
  • Physically work in Victoria
  • Have the right to work in Australia
  • Work an average of 7.6 hours per week or more in at least one of the targeted occupations

Additionally, if the leave is for over 15 hours in a row, a medical certificate is required. The 5 days per year do not rollover.

Who is footing the bill?

The Victorian Government have allocated $245.6 million worth of funding for this trial phase. Still, they have put forward a proposal for a business levy to fund the scheme in the future. This proposal has been met with heavy criticism by businesses and industry groups. Australian Industry Group Victorian head Tim Piper predicted it “will kill investment in Victoria and put a hand-break on the recovery” after the pandemic.

The pros – of casual sick leave

We understand the scheme’s intent is to minimise the number of workers that come to work when sick, and the pandemic highlighted the complexities of this. And removing the choice between health and wealth will obviously protect the individual and their workmates and families. It’s better to have one sick employee requiring time off, over the individual spreading it to their workmates and having five sick employees requiring time off. This outcome is surely the sole purpose of the scheme.

The cons of casual sick leave

The most obvious flaw of the scheme is the five days of paid sick and carers are ON TOP OF the 25% loading those casual workers are already entitled to. The same 25% loading those casual employees receive to compensate them for not receiving entitlements such as paid leave – makes sense, right? This oversight has been described as “naïve” and showing “a lack of understanding for how the system works” by Council of Small Business Organisations Australia Alexi Boyd. In essence, this scheme is allowing casual workers to double-dip.

This leads us to our next concern, if casuals are receiving the best of both worlds – paid entitlements and a casual loading – what incentive do they have to take up offers of permanent work? To take this even further, permanent workers are, in fact, disadvantaged by this arrangement as they now receive the same entitlements as a casual, but at a lower rate of pay.

Finally, businesses will likely feel the brunt of this scheme in situations where casual workers take advantage of this new entitlement. In a world where spare heads are hard to come by (especially in the hospitality industry), this will only be exacerbated with the absence of casuals.

Final thoughts on the casual sick leave scheme

Whilst we always support improvement in the IR space, particularly when it comes to the health and safety of workers, we are finding it difficult to overlook the design flaws in this scheme. It feels that there was insufficient consideration given to issues raised by industry groups and businesses regarding how this might operate in a practical sense. As Health Services Union national president Gerard Hayes put it, the scheme risks “overlooking the bigger picture of casualisation”. It has been observed that the scheme could have been implemented at the height of the pandemic rather than now, as businesses are trying to recover and recalibrate post lockdowns.

As much as we can empathise with casuals in this situation and support improvement in this space, the inequity of the scheme is undeniable, and we feel that this scheme has raised more questions than answers.

This may, however, spur more businesses to look at transferring their current casuals to permanent part-time, which is a good thing where possible. This is also a complicated topic and raises the question around the new definition of casuals and how that impacts your business. We already have some informative content on these topics you can check out the following blogs to learn more about:

  1. New casual conversion rules
  2. Casual definition and changes

So, if you need support in assessing how the new scheme impacts your business or would like to discuss any of the rules around casual employment then please reach out. In the meantime if one of your employees needs to make a claim under the scheme you can direct them to the Service Victorian Government website here.

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