Employing casual staff or utilising the gig economy – which makes more sense?
If you are in retail and have not yet heard of the term “gig economy”, it’s time to find out what it means because it could potentially have a big impact on your business and your bottom line.
The term refers to employment where rather than staff being taken on as casuals or permanent employees, they are instead employed as contractors under their own ABN.
Investopedia explains the gig economy is often comprised of one-off, short-term contract roles including “driving for a ride-sharing service, painting someone’s house, freelance work, coaching, fitness training, and tutoring”.
This is distinctly different from casual (or permanent staff) who are employed by a business.
To make the distinction clear, let’s use the example of a pizza shop. We’ll call the shop Eddie’s Pizza. The staff who work inside Eddie’s Pizza – whether casual or permanent – taking the orders and making the pizzas are employees of Eddie’s Pizza.
The staff who are contracted by Uber Eats to deliver the pizza from Eddie’s to your home, using their own car and paying for their own petrol to do so, are self-employed and are part of the gig economy.
Increasing demand for retail staff
Retail, with seasonality of trade and tight margins potentially restricting the ability of employers to offer permanent roles, has always lent itself towards having a significant proportion of casual employees.
The Australian Bureau of Statistics (ABS) states around 10% of Australia’s workforce was employed in the retail sector in August 2022, or approximately 1,363,000 people according to the most recent data available; and it is growing.
In the three months to August 2022, employment in the retail sector increased by 5.7% (73,300 people) and 8.5% (105,400) in the year to August 2022, the ABS data reveals. This is expected to increase by 55,100 (4.3%) by November 2026.
But a shake-up of casual employment conditions under the Ombudsman’s Fair Work Amendment Act (FWAA), which came into effect in March 2021, may mean some retailers are looking toward gig economy employment rather than casuals.
Changes to casual employment
Australia’s Fair Work Ombusdsman (FWO) defines casual employment as work where there is no “firm advance commitment that the work will continue indefinitely with an agreed pattern of work”.
The FWAA was developed to provide a pathway to permanent employment for casual employees. Businesses with 15 employees or more, where casuals have worked set hours for a minimum of six months, must offer “casual conversion” to staff who request it.
This means these employees then become entitled to additional benefits such as employer superannuation contributions and personal and annual leave.
With swings and roundabouts in trading levels having a huge impact on how retailers employ staff and under what conditions, it’s understandable some may be looking for ways to avoid the onerous on-costs of employing formerly casual staff in permanent roles.
In these cases, attention will naturally turn to the gig economy and finding ways to outsource work and better utilise contractors.
And in some cases it will absolutely make sense. But for others, whose business will benefit more from having stable staffing and who may struggle to compete for retail staff in this current environment, this could prove to be disastrous for their company.
The key to making the right decision will come down to how well an owner knows their business and clientele and what is needed to make them thrive.