Victoria's sick leave scheme: How will it impact employers?

From next Monday, casual workers in Victoria will be eligible for five days (38 hours) of sick leave paid at the minimum wage rate ($20.33 per hour), workers who sign up to the scheme via the governments ‘Service Victoria’ website will be eligible to claim up to $772.54 per year.

Victorian Premier, Daniel Andrews who announced the two-year trial scheme on Monday, said that the Covid-19 pandemic had highlighted the difficult choice casual workers had to make between feeding their family and looking after the health of themselves.

Heather Richardson, Partner and head of employment law at Kalus Kenny Intelex Lawyers, told HRD: “The scheme’s intention, which is to protect vulnerable employees, has merit. However, how the scheme will impact employers and employees as a whole is yet to be seen.”

The scheme is the first of its kind in Australia and Premier Andrews hoped that businesses would support the scheme because it would provide general productivity improvements from healthier workers and lower staff turnover rates, but within hours of the governments press conference, business leaders were hitting back saying that the scheme is ‘deeply flawed’. The reasoning for the expectation of reductions to workplace illness and injuries have not been released.

“In reality,” added Richardson, “the basis for workplace injuries is far more complex and generally related to safe working practices and adequate training.”

The two phase trial period is estimated to cost $245.6 million and would be paid for by taxpayers. If the trial period is successful, Andrews has suggested that an industry levy will pay for the scheme, but he has not released any information on what form that levy might take.

“How the payment would be funded beyond the initial pilot phase would need to be articulated,” Richardson told HRD. “It’s not yet clear whether all businesses registered in Victoria would be required to pay a levy to cover the payments or whether individual businesses would pay a levy per casual employee. Clearly, the basis for funding the scheme needs to be well thought out to avoid penalising employers and creating a reluctance to hire casual employees.”

Business leaders have labelled the proposal as “tax on employment” and a “sick-pay tax”. The Victorian Chamber of Commerce and Industry said casual workers already receive a 25% loading in lieu of entitlements like sick leave and they believe that there doesn’t need to be any addition to that.

Richardson added: “In reality, very few employees would put aside the casual loading portion of their wage as a buffer for when they are unwell. It remains the case that casual workers are some of the most vulnerable in the workforce.”

With state and federal elections impending, a political battleground has erupted over the scheme with the state opposition quickly jumping on the anti-bandwagon saying they will scrap the scheme if they are elected in November. However, the United Workers Union backed the scheme and called on other states to follow Victoria’s lead.

The first phase of the trial will open this Monday when 150,000 workers in hospitality, retail, aged and disability care, cleaning and laundry services, security and the supermarket and supply chain will be able to apply.