Examining and quantifying the range

of issues associated with increased

casual labour use in the red meat

processing industry

Disclaimer: This publication is published by the Australian Meat Processor Corporation Ltd ABN 67 082 373 448. Care is taken to ensure the accuracy of the information contained in this publication. However, AMPC cannot accept responsibility for the accuracy or completeness of the information or opinions contained in this publication.

No part of this work may be reproduced, copied, published, communicated or adapted in any form or by any means (electronic or otherwise) without the express written permission of Australian Meat Processor Corporation Ltd. All rights are expressly reserved. Requests for further authorisation should be directed to the Company Secretary, AMPC, Suite 1, Level 5, 110 Walker Street Sydney NSW.

Project code: 2014-1001

Prepared by: SG Heilbron Economic and Policy Consulting

Date Submitted: February 2015

Date Published: XXX

Published by: XXX

2

Table of contents

Executive Summary ........................................................................................................................ 3

1.0 Introduction .............................................................................................................................. 8

1.1 Project Objectives ............................................................................................................................ 8

1.2 Methodology .................................................................................................................................... 8

2.0 Employment categories in Australia .......................................................................................... 9

2.1 Characteristics of employment categories ...................................................................................... 9

2.2 Temporary employment ................................................................................................................ 12

2.3 Summary ........................................................................................................................................ 16

3.0 Factors influencing employment of non-permanent workers in the red meat processing sector 17

3.1 Employment characteristics .......................................................................................................... 17

3.2 Trends in non-permanent employment ........................................................................................ 17

4.0 Costs and benefits of non-permanent employment ............................................................. 23

4.1 Benefits of non-permanent employment ...................................................................................... 23

4.2 Costs of non-permanent employment .......................................................................................... 25

4.3 Cost-effectiveness of non-permanent employment ..................................................................... 27

4.4 Conclusions and implications......................................................................................................... 28

Appendix 1 – Detailed Methodology ............................................................................................. 30

Appendix 2 – Survey instrument ................................................................................................... 31

Appendix 3 – Meat Industry Award (2010) – classifications ........................................................... 35

3

Executive SummaryThe Australian Meat Processor Corporation (AMPC) sought to identify the key issues associated with the

employment of casual staff in the red meat processing industry and identify the true costs and benefits to the

industry of casual versus permanent employment. The findings of this study have been drawn from a review of

relevant literature and statistics, a survey of industry representatives and discussions with labour hire companies

and representatives of the Australasian Meat Industry Employees Union (AMIEU).

Casual employment is generally defined as those persons who were not in receipt of paid holiday leave or paid

sick leave in their main job. They do however receive a loading above the ordinary hourly rate which, under the

Meat Industry Award 2010 (the Award), is a 25% loading. Individuals can be employed under a casual contract

on either a full time or part time basis. Casual employment is also not necessarily “temporary” – there are many

casual employees who work a full 38 hour week on a continuing basis.

Moreover, whilst casual employment is normally taken to mean that employment of a casual worker terminates

at the end of each working day, in practice there are many people employed on a “permanent” casual basis.

The scope of this study has thus been expanded beyond the formal definition of casual employment to include

all variations of non-permanent employment. This particularly includes daily hire employment, which whilst

“quasi-permanent” can be subject to variations in the number of days when work is available during the year.

Temporary overseas workers holding 417, 462 or 457 visas have also been addressed as part of this study. These

employees, whilst temporary, are employed under one of the definitions of non-permanent employment i.e.

either daily hire or casual. Therefore, the following definitions of employment categories also include temporary

overseas workers, to a greater or lesser extent.

Employment categories in red meat processing

Employment in the red meat processing industry is primarily governed by the Award or by a facility-specific

Enterprise Agreement (EA), generally negotiated between the employer, employees and the AMIEU and

approved by Fair Work Australia.

Employment under the Award or the relevant EA is generally divided into the following categories:

Full-time employment “permanent” - defined as an employee who is engaged to work an average of 38

hours per week. The employee accrues paid annual and personal leave and is paid for public holidays.

In practice, in the red meat processing sector, a permanent full-time employee is generally a salaried

employee working in various administration positions, employed as a line manager or supervisor or as a

tradesperson in maintenance roles.

After allowing for payment of annual leave, a permanent employee can be expected to be paid for 52

weeks in a year in normal situations.

Full-time salaried positions are generally only applicable to supervisory and administrative staff, so this

category generally does not apply to the major proportion of the workforce employed as process

workers.

Part-time employment - part-time positions may apply to each of permanent employees, casual

employment and daily hire.

4

Daily hire employment - these employees are “quasi-permanent” in that they accrue annual leave,

personal leave and long service leave for the hours worked and receive pay for public holidays, provided

that they attend work on the day immediately preceding or following the public holiday. However, in

theory their employment terminates at the end of each day or shift. As a consequence of the likelihood

of short-term cessation of work at the discretion of the employer, daily hire workers receive a 10%

loading above the ordinary time hourly or daily rate.

Daily hire employment is the single most common category of employment of process workers in red

meat processing facilities, accounting for up to 80% of the workforce.

The key difference between a daily hire employee and permanent, or salaried employee, is that the

former may not be guaranteed to be paid for a full 52 weeks depending upon prevailing conditions in

terms of throughput.

Daily hire employment for process workers is in effect the de facto equivalent of full time employment

in the meat processing sector and also in the construction industry. The positions are recognised under

the relevant awards or Enterprise Agreements as approved by Fair Work Australia, which notes that

positions are similar to full time employment. These positions are necessary in both industry sectors as

they can both be impacted by uncertainty of operation as a result of climatic conditions.

Casual employment – casual employment accounts for approximately 20% of the processing workforce

in red meat processing facilities. The minimum period for employment is four hours in any one shift,

meaning that the worker can be terminated on any given day part way through a shift. Based on the

survey undertaken for this Project, there is no evidence that casual employment in the red meat

processing industry is increasing, a similar trend to that found across the wider economy.

The above definitions of casual and daily hire employment have been adopted throughout this report. They

include, where relevant, employment of overseas workers holding temporary work visas who may be employed

under either category depending upon the individual facility. The characteristics of temporary employment are

outlined below.

Employment of temporary overseas workers in red meat processing

Whilst not a separate employment category, there has been a noted increasing reliance on temporary workers

holding either 417 or 462 visas. They may be employed on either a daily hire or casual basis. The increased

reliance on workers in this category is a reportedly a result of an apparent reluctance of local workers, and

particularly young people, to enter the industry, as well as the fact that many of the 417 / 462 visa holders already

have appropriate skills, particularly knife skills. It was reported that 417 / 462 visa holders from Taiwan, South

Korea and the Philippines were particularly in demand in the red meat processing sector. All businesses surveyed

indicated that they employed 417 / 462 visa holders to a greater or lesser extent, suggesting that these people

make an important contribution to the red meat processing industry workforce.

The Temporary Work (Skilled) visa (subclass 457) is designed to enable employers to address labour shortages

by bringing in genuinely skilled workers where they cannot find an appropriately skilled Australian. The 457 visa

allows skilled workers to come to Australia and work for an approved business for up to four years.

Employers in the meat processing sector seeking to recruit skilled overseas workers must enter into a labour

agreement with the Australian Government. The Meat Industry Labour Agreement (MILA) is a ‘template’

5

arrangement which means that the same terms and conditions are offered to all employers across the industry

and the parameters around the pay, skill and English language levels of sponsored workers are non-negotiable.

The template ensures a level playing field across an industry by cementing the terms, conditions, concessions

and occupations which will apply to all future labour agreements in that industry.

The MILA enables meat processing companies to employ overseas workers in the classification “Skilled meat

worker” which is not an ANZSCO classification but a hybrid of the occupation classifications of Slaughterer and

Boner & Slicer. To be considered for a 457 Visa under the MILA, the overseas worker must be assessed as having

a minimum level of a Certificate III in meat processing and demonstrate a minimum of three years skilled work

experience at a suitable meat processing facility.

Analysis of available statistical data suggests that 457 visa holders do not form a significant proportion of

employees in the red meat processing sector and this is supported by information obtained from industry

respondents. The main reasons provided for not seeking to employ 457 visa holders, despite reported difficulties

in attracting permanent local workforce, include:

Cost of negotiating a MILA – in comparison with other industry sectors, the process required to employ

457 visa holders in the red meat processing sector is particularly onerous and lengthy, incurring high

costs to potential employers; and

Remuneration – 457 visa holders working in the red meat processing sector must be paid the Temporary

Skilled Migration Income Threshold (TSMIT), currently set at $53,200 and indexed annually. This is

perceived to result in significant discrepancies in pay rates compared with the local workforce who are

paid under the Award or a negotiated EA. Payment under either option is generally lower than the TSMIT.

Reasons for employing non-permanent workers

The principle reason noted for employing persons on a casual basis, which forms part of the category of non-

permanent employment, was the ability for the business to assess the employee’s suitability for permanent

employment. One industry respondent indicated that all new employees are hired on a casual basis for the first

six months of employment. On satisfactory completion of that probationary period, the employee is generally

offered daily hire employment, the de facto equivalent of full time employment amongst the majority of red

meat process workers.

Employment of workers on a casual basis also permits flexibility in employment numbers on a daily basis. Whilst

the daily hire category permits flexibility of number of persons employed on a day to day basis, casual

employment allows flexibility within a shift, which can be important in addressing any unexpected variations in

production. The daily hire classification is also designed to enable the industry to respond to variations in supply

in a sector which is subject to the vagaries of climatic conditions.

Employment of temporary workers holding work and holiday visas is reported to result primarily from a difficulty

in attracting, and more importantly retaining, local employees, particularly amongst the younger age groups. It

was noted that many people employed in this category have significant experience in the red meat processing

sector and obtain their visas primarily to work in local plants, where wage rates are generally higher than in their

origin country, rather than simply seeking a working holiday in Australia.

Similarly, amongst those respondents employing 457 visa holders, the primary reason given was an inability to

attract suitably skilled local workers. This appears to be particularly prevalent in locations offering competing

employment in the higher paying resources sector.

Impacts of employment of a non-permanent workforce

6

Industry survey participants were asked to comment on any perceived negative impacts of casual employment

in relation to their business. No respondent noted any specific negative impacts associated with employing casual

workers. There was no noticeable impact on food safety, quality control or WHS incidences reported. It should

be noted that employment of process workers on a casual or daily hire basis is an integral part of the meat

processing industry to provide flexibility in employment numbers when operation is variable. It does not

necessarily mean that employment is short-term in nature. People employed as “permanent” casuals may well

have a similar level of experience to those employed as full time workers.

Costs and benefits of non-permanent employment to the employee

Firstly, it must be recognised that there are employees in the red meat processing workforce who prefer casual

employment. This may be a work-life balance preference or the fact that “more money in their pocket” is

provided on an hourly basis. Hourly pay rates for a casual employee are 25% higher than a permanent employee

and 13.6% higher than a daily hire employee on the same level.

The costs to the casual employee relate to the fact that they do not accrue any paid personal or annual leave

and do not get paid for public holidays. In addition, it has been suggested that those employed in casual positions

have considerably greater difficulty in accessing loans from financial institutions than those in permanent

positions.

Costs and benefits of non-permanent employment to the employer

The hourly rate of employing both casual workers and those employed in the daily hire category exceed that of

employing permanent workers as a result of on-costs being applied to total wages and salaries. These costs

include:

Compulsory superannuation;

Workers compensation insurance; and

Payroll tax.

Making no allowance for public holiday payments or personal leave allowances, employing a worker on a casual

basis costs the company, on an average hourly basis, almost 9 per cent more than employing the same individual

on a permanent basis. Similarly, employing a worker on a daily hire basis costs the company 10 per cent more

than employing the same individual on a permanent basis.

However, this does not take into account the flexibility in employment numbers that can be addressed by either

casual or daily hire employment.

The fluctuations in throughput that have to be addressed on a daily basis, and even on an individual shift basis,

impact on the levels of employment of staff on a casual or daily hire basis. The impact of variable throughput

suggests the difference in costs to the company of employing workers on a daily hire or casual basis, rather than

as permanent employees, would lead to a meaningful reduction in total wage-related costs.

The key factors influencing employment of workers on a daily hire basis and as casual employees, from the

perspective of the employer, is flexibility of staffing levels and the associated cost savings.

Conclusions

There is no evidence to suggest that casual employment, defined as not accruing paid annual or personal leave

and with a minimum period of employment of four hours in any given shift, is increasing in the red meat

processing industry. However, daily hire employment is the most prevalent employment category resulting from

7

the practicalities of an industry sector strongly influenced by the impact of climatic conditions on supply.

Consequently, the majority of employees in the sector are not employed as “permanent” salaried staff, whereby

they can reasonably expect to be paid for 52 weeks in a year.

Currently there are reported difficulties in attracting local residents to work in the sector, resulting on a growing

reliance on temporary overseas workers. In order to make this more cost-effective for red meat processing

facilities the following recommendations are suggested:

Extension of time allowed with one employer for 417 / 462 visa holders – currently restricted to six

months work with any one employer, the costs associated with facility-specific induction and training

would be proportionally reduced if these workers could be employed for the twelve month period with

one company; and

Bringing 457 visa requirements in line with other industry sectors, reducing the impost on the company

in application costs and minimising the disparity in remuneration levels.

8

1.0 IntroductionThe Australian Meat Processor Corporation (AMPC) sought to identify the key issues associated with the

employment of casual staff in the red meat processing industry and identify the true costs and benefits to the

industry of casual versus permanent employment. The research project undertaken aimed to provide a detailed

list of factors that individual plants should consider when structuring their workforce. The information to assess

these implications was drawn from secondary data combined with primary data derived from the industry. The

project also highlighted the different experiences between small, medium and large enterprises and between

those in a metropolitan or regional / rural location.

1.1 Project Objectives

The key objectives of the study were to determine the following:

1. The prevalence of casual and temporary employment in the red meat processing industry;

2. The benefits of employing workers on a casual basis, including flexibility of staffing numbers;

3. The potential costs of employing a casual workforce including issues related to WHS costs, recruitment,

training, quality control and food safety; and

4. Developing a series of cost benefit analyses to determine the benefit cost ratio of casual and temporary

employees compared with a permanent workforce.

1.2 Methodology

The methodology to achieve the Project Objectives incorporated the following steps:

1. A detailed literature review was undertaken to identify the key costs and benefits associated with the

employment of casual labour in Australia. The definition of casual employment encompassed not only

local residents employed on a casual basis, but also transient workers, including the temporary

employment of international visa holders and the domestic backpacker market and itinerant workers.

The literature review also incorporated analysis of available statistical data pertaining to casual

employment in Australia.

2. Industry consultation through distribution of a comprehensive questionnaire across a range of red meat

processing facilities. The questionnaire was designed to gather data related to the number of employees

by category, wage rates and costs associated with recruitment, training and WHS issues with particular

emphasis on casual and temporary employees.

3. Analysis of data collected throughout the project to provide a profile of the industry in terms of

employment by category and activity / task, and associated costs.

4. A series of cost benefit analyses have been undertaken to determine all the costs and benefits associated

with permanent versus casual employment, including flexibility of employment; wages; WHS costs; food

safety; quality control; training and recruitment.

A summary of the detailed Methodology is supplied at Appendix 1 of this report.

This is the Final Report for this Project. It provides a complete analysis of the findings and outcomes from the

previous Milestone reports as well as a comprehensive Executive Summary.

9

2.0 Employment categories in Australia This section reviews the various categories of employment available in Australia with specific reference to the

red meat processing sector. It is based on a review of available literature and statistics and information obtained

through survey and discussions with employers in the red meat processing sector, labour hire companies and

representatives of the Australasian Meat Industry Employees Union (AMIEU).

With regard to types of employment, the Meat Industry Award 2010 (the Award) defines four types of

employment for meat processing establishments, namely:

“Permanent” full-time;

Part-time;

Casual; and

Daily hire.

Temporary overseas workers holding 417, 462 or 457 visas have also been addressed as part of this study. These

employees, whilst temporary, are employed under one of the definitions of non-permanent employment i.e.

either daily hire or casual. Therefore, the following definitions of employment categories also include temporary

overseas workers, to a greater or lesser extent.

2.1 Characteristics of employment categories

The definitions of the various employment categories with particular reference to the red meat processing sector

are summarised below.

2.1.1 Full-time employment “permanent”

This is defined as an employee who is engaged to work an average of 38 hours per week. In practice, in the red

meat processing sector, a permanent full-time employee is generally a salaried employee working in various

administration positions, employed as a line manager or supervisor or as a tradesperson in maintenance roles.

2.1.2 Part-time employment

Part-time positions may apply to each of permanent employees, casual employment and daily hire. A part-time

employee is an employee who:

works less than full-time hours of 38 per week;

has reasonably predictable hours of work of not less than four consecutive hours on any day; and

receives, on a pro rata basis, equivalent pay and conditions to those of a full-time employee who

performs the same kind of work.

2.1.3 Daily hire

Employment in the category of daily hire is the most common employment classification in the red meat

processing industry. Such employees are “quasi-permanent” in that they accrue annual leave, personal leave and

long service leave for the hours worked and receive pay for public holidays, provided that they attend work on

the day immediately preceding or following the public holiday. However, under the Award “the daily hire

employee will be employed by the day or shift or part thereof as the case may be, without breaking service for

the purposes of the award and the National Employment Standard as to payment for public holidays, personal /

carer’s leave and annual leave. Employment will terminate at the end of each day or shift on which the employee

is employed.”

10

Daily hire employees are paid at the relevant daily or hourly rate plus a loading of 10% to make up for days when

there is no work when they consequently receive no pay and no leave accruals.

Daily hire employment for process workers is in effect the de facto equivalent of full time employment in the

meat processing sector and also in the construction industry. The positions are recognised under the relevant

awards or Enterprise Agreements as approved by Fair Work Australia, which notes that positions are similar to

full time employment1. These positions are necessary in both industry sectors as they can both be impacted by

uncertainty of operation as a result of climatic conditions.

Amongst those surveyed in this study, daily hire employment accounted for almost 80 per cent of processing

employees with the balance being employed on a casual basis. Discussions with labour hire companies and the

Union would support this distribution as being typical of the red meat processing sector as a whole.

2.1.4 Casual employment

The generally accepted definition of casual employment in Australia is those persons who were not in receipt of

paid holiday leave or paid sick leave in their main job. Individuals can be employed under a casual contract on

either a full time or part time basis. Casual employment is also not necessarily “temporary” – there are many

casual employees who work a full 38 hour week on a continuing basis. Fair Work Australia2 states that the casual

worker:

has no guaranteed hours of work;

usually works irregular hours;

does not get paid sick leave or annual leave; and

can end employment without notice, unless notice is required by a registered agreement, award or

employment contract.

It further states that a casual employee is entitled to the following:

a higher hourly pay rate than equivalent full-time or part-time employees. This is called a 'casual loading'

and is paid because they don't get benefits such as sick or annual leave;

2 days unpaid carer's leave and 2 days unpaid compassionate leave per occasion;

unpaid community service leave; and

After 12 months of regular employment, and if it is likely the regular employment will continue, a casual

employee can request both flexible working arrangements and parental leave.

In general, the “casual loading” amount is nominated in the relevant award. Under the Award, applicable to the

majority of process workers in the red meat processing industry, the key characteristics of casual employment

are:

the minimum period of work for casual employees is four hours per day or shift3;

1 http://www.fairwork.gov.au/employee-entitlements/types-of-employees/daily-hire-and-weekly-hire

2 http://www.fairwork.gov.au/employee-entitlements/types-of-employees/casual-part-time-and-full-time/casual-employees#2096-2097-70-110

3 Exceptions to this include casual cleaner employed to clean premises in any establishment where the minimum work period may be two

hours on any day or shift and a casual clerk employed as a book keeper where the minimum work period may be three hours on any day or

shift

11

ordinary hours of work must not exceed 38 hours per week; and

the hourly rate of pay for a casual employee is 1/38th of the appropriate weekly rate plus a loading of

25% to make up for not being eligible for payment for annual leave, personal leave or public holidays.

Whilst the definition of casual employment means that employment of a casual worker terminates at the end of

each working day, in practice there are many people employed on a “permanent” casual basis.

It should be noted that many businesses in the red meat processing sector have negotiated their own Enterprise

Agreement which may differ from the above entitlements. For example, one Enterprise Agreement stipulates a

lower casual loading than the Award but notes that, after a period of 26 weeks, all casual employees shall be

offered a permanent employment position.

Analysis of data from the Australian Bureau of Statistics4 indicates that at November 2013, almost 20% of the

total Australian workforce was employed in casual positions. There has been little variation in the percentage of

the workforce employed on a casual basis over the past six years. However, there was significant variation

between the proportion of people employed in casual positions when examined by gender, age, occupation,

industry and workforce status (full time compared with part time).

Casual employment was more prevalent in the following sectors of the workforce:

females, with almost 24% of all women employed on a casual basis compared with 17% of all males in

the workforce;

workforce status, with 44% of all persons employed on a part time basis being casual employees

compared with 9% of full time employees;

age of the employee, with more than 70% of those in the workforce aged between 15 and 19 years being

employed on a casual basis and 39% of those aged between 20 and 24 years;

occupation, with more than 40% of people employed as either Labourers or Sales Workers working in

casual positions; and

industry, with the Accommodation and Food Services and Retail Trade sectors having significantly above

average levels of casual employment.

In the red meat processing sector, as noted above, it is estimated that approximately 20% of the process

workforce is employed on a casual basis, although this varies between individual facilities. This may include

persons employed on a temporary basis sourced from overseas visitors holding one of a range of temporary

employment visas as outlined below.

Within the red meat processing sector there has been no discernible increase in the number of persons employed

on a casual basis according to the survey results, a factor supported by discussions with labour hire companies

and the AMIEU. This is also in line with the evidence derived from statistical data for the Australian workforce as

a whole.

The above definitions of casual and daily hire employment have been adopted throughout this report. They

include, where relevant, employment of overseas workers holding temporary work visas who may be employed

under either category depending upon the individual facility. The characteristics of temporary employment are

outlined below.

4 ABS Cat. No. 6105.0, Australian Labour Market Statistics, 8th July 2014

12

2.2 Temporary employment

Australia offers a wide range of temporary visas for overseas visitors, permitting them to work while in the

country. Those of particular relevance to temporary employment in the red meat processing sector include:

417 Working holiday;

462 Work and holiday; and

457 Temporary work (Skilled).

The characteristics of each of these are briefly summarised below.

2.2.1 Working holiday visa – subclass 417 and subclass 462

The Working Holiday visa (subclass 417) is a temporary visa for young people who want to holiday and work in

Australia for up to a year. It is a temporary visa that encourages cultural exchange and closer ties between

Australia and eligible countries. Eligibility requirements are that the applicant is at least 18 but not yet 31 years

of age, does not have a dependent child accompanying them at any time during their stay in Australia and holds

a passport from an eligible country.

This visa allows the holder to:

stay in Australia for up to 12 months;

work in Australia for up to six months with each employer;

study for up to four months; and

leave and re-enter Australia any number of times while the visa is valid.

The Work and Holiday (Temporary) visa (subclass 462) is similar to the Working Holiday visa (subclass 417). The

key variations relate to the countries with which Australia has a reciprocal agreement. In addition, 417 visa

holders may be eligible for a second visa provided that they have undertaken 88 days of specified work (including

work in the agricultural, mining and construction sectors) in regional Australia during their first visa. This initiative

is not available to 462 visa participants.

It has been reported during the study that there is an increasing reliance on temporary workers holding either

of these visas in the red meat processing sector. The reasons for this, and implications for the sector, are outlined

in the following section of this report. Depending upon the facility and occupational position, these workers may

be employed on a casual or daily hire basis.

2.2.2 Temporary work (skilled) – subclass 457

The Temporary Work (Skilled) visa (subclass 457) is designed to enable employers to address labour shortages

by bringing in genuinely skilled workers where they cannot find an appropriately skilled Australian. The 457 visa

allows skilled workers to come to Australia and work for an approved business for up to four years.

The applicant must be sponsored by an approved business. A business can sponsor someone for this visa if they

cannot find an Australian citizen or permanent resident to do the skilled work. There is a list of approved

occupations which can qualify under the standard business sponsorship arrangement which are categorized at

the six digit ANZSCO5. There are several requirements which must be met for approval of the business as a

sponsor, including provisions for training of Australians.

5 Australian and New Zealand Standard Classification of Occupations 2006 – Australian Bureau of Statistics

13

The regulations governing employment in the meat processing sector (and employment for labour hire

operations) differ from the regulations applying to other industries. Employers in the meat processing sector

seeking to recruit skilled overseas workers must enter into a labour agreement with the Australian Government.

A labour agreement is a formal arrangement negotiated between an employer and the Australian Government.

It provides a flexible, tailored skilled migration arrangement for businesses and sectors with specific needs that

sits outside the mainstream skilled migration program. A labour agreement is only considered where a genuine

skills shortage exists and there are no suitably qualified or experienced Australians readily available. Labour

agreements also require additional regulation beyond a standard business sponsorship to ensure that employers

satisfy their obligations regarding training and employing local workers, and avoid the exploitation of overseas

workers. Payment and conditions must be at the same rate that would apply to an equivalent Australian in the

same position, provided this is higher than the Temporary Skilled Migration Income Threshold (TSMIT). However,

the overseas worker may then be paid under the relevant award.

The Meat Industry Labour Agreement (MILA) is a ‘template’ arrangement which means that the same terms and

conditions are offered to all employers across the industry and the parameters around the pay, skill and English

language levels of sponsored workers are non-negotiable. The template ensures a level playing field across an

industry by cementing the terms, conditions, concessions and occupations which will apply to all future labour

agreements in that industry.

The MILA enables meat processing companies to employ overseas workers in the classification “Skilled meat

worker” which is not an ANZSCO classification but a hybrid of the occupation classifications of Slaughterer and

Boner & Slicer. To be considered for a 457 Visa under the MILA, the overseas worker must be assessed as having

a minimum level of a Certificate III in meat processing and demonstrate a minimum of three years skilled work

experience at a suitable meat processing facility.

Businesses seeking access to an MILA need to demonstrate a “genuine and significant demand for skilled meat

workers and that this demand cannot be met from within the Australian labour market”. Furthermore, the

number of overseas workers sought must represent a minority proportion of the meat employer’s workforce.

Alongside requirements regarding training of Australians and demonstration of workforce demand, 457 Visa

holders in the meat processing sector must be paid the Temporary Skilled Migration Income Threshold (TSMIT),

currently set at $53,200 and indexed annually. However, if Australian workers are paid a higher salary, overseas

workers must be paid the same. It should be noted that, under the Meat Industry Award 2010, annual minimum

wages for all skill levels are significantly below the TSMIT.

The Department of Immigration and Border Protection notes in its booklet providing information to employers

about MILAs that the “negotiation of a MILA may be lengthy and places onerous obligations on the employer”6.

Notwithstanding this, a report produced by the Australian Workforce and Productivity Agency7 notes that in 2013

there were 22 MILAs in effect and a further five under negotiation.

The Department has commissioned an independent review into the integrity of the 457 Visa programme. In its

submission8, the Australian Meat Industry Council (AMIC) notes the following issues associated with the current

regulations associated with MILAs:

6 http://migrationblog.immi.gov.au/files/2013/08/MEAT-INDUSTRY-Labour-Agreement-information-booklet-September-2013.pdf 7 http://www.awpa.gov.au/our-work/sector-specific-skill-needs/Documents/Food%20and%20beverage%20workforce%20study.pdf 8 http://www.immi.gov.au/pub-res/Documents/reviews/amic.pdf

14

the costs associated with negotiating the MILA and the lengthy processing times are causing difficulties

in addressing immediate skills shortages;

the requirement to pay 457 Visa holders at the TSMIT can create inequity between overseas and local

workers. Many meat processors have a registered Enterprise Agreement which generally has more than

a simple rate of pay. Indexing the TSMIT to the annual increase in Australian ordinary time earnings, as

calculated by the Australian Bureau of Statistics, can further exacerbate this inequity when the 457 Visa

holder has a guaranteed minimum income;

the requirement for 457 Visa holders to have a minimum level of English at IELTS 59 is an unnecessary

imposition in an industry which has traditionally been an employer of immigrants to Australia who have

limited English. This requirement is arguably the greatest impediment to accessing the system.

The AMIC submission argues that the difficulties in accessing new 457 Visa holders as a result of these factors

has meant that existing holders are “employer shopping” particularly when it comes to seeking employer-

sponsored permanent residency.

There has been considerable controversy about employment of overseas workers in the meat processing sector.

However, much of this appears to relate to misconceptions in the wider community. It has been argued that a

significant proportion of employees in the sector are temporary foreign workers, displacing employment

opportunities for Australian residents. However, available statistical data does not support this contention.

Analysis of data from the 2011 Census regarding citizenship of the workforce does indicate that a lower

proportion of employees in the meat processing sector hold Australian citizenship than is found in the total

workforce at that time, as illustrated in Table 2.1.

Table 2.1: Proportion of workforce holding Australian citizenship by occupation, 2011

Occupation Total workforce Meat processing workforce

Managers 91.5% 92.0%

Professionals 89.1% 88.3%

Technicians & Trades

Workers 89.3% 81.6%

Community & Personal

Service Workers 88.9% 86.8%

Clerical & Administrative

Workers 91.9% 88.9%

Sales Workers 91.4% 85.2%

Machinery Operators &

Drivers 89.1% 85.0%

Labourers 85.7% 74.1%

Total 89.8% 78.3%

9 International English Language Testing System – Band 5 “Modest user - Has partial command of the language, coping with overall

meaning in most situations, though is likely to make many mistakes. Should be able to handle basic communication in own field”.

15

Overall, just over three quarters of persons employed in the meat processing sector in 2011 held Australian

citizenship compared with almost 90% in the Australian workforce overall. However, this is strongly influenced

by the distribution amongst occupations classified as Labourers which make up almost two thirds of the

workforce in meat processing. Less than three quarters of those employed in this occupation category in meat

processing held Australian citizenship compared with almost 86% across all industry sectors. However, it should

be noted that the above table does not reflect employment of persons who have permanent residency status in

Australia.

Data published by the Department of Immigration and Border Security10 regarding 457 Visa holders would also

suggest that these people do not form a significant proportion of the workforce in meat processing. Table 2.2

summarises the number of 457 Visa holders in occupations of relevance to the meat processing sector.

Table 2.2: Number of 457 Visa holders in meat processing occupations

Year

ending

March

Number of 457 Visa holders

Skilled meat

worker

Slaughterer Meat boner

&slicer

2007 46 252 -

2008 119 246 <5

2009 721 229 13

2010 930 15 20

2011 937 <5 20

2012 1,085 <5 38

2013 921 9 61

2014 721 25 58

Based on the above data, it would appear that, at the time of the 2011 Census, only approximately 10% of

persons employed as Meat Boners and Slicers or Meat Process Workers were holders of 457 visas.

This is supported by informants consulted during this study. Only two respondents from the red meat processing

sector indicated that they employed 457 Visa holders, although an additional respondent noted that the

company was looking to employ persons in this category in the coming year. Labour hire companies and

representatives of the Union also noted that the number of people employed on 457 visas was not significant,

although could provide an important source of skilled workers in the industry.

An assessment of the advantages and disadvantages of employing persons holding 457 Visas is provided in the

following section of this report.

10 http://www.immi.gov.au/media/statistics/statistical-info/temp-entrants/subclass-457.htm

16

2.3 Summary

Data derived from the industry survey indicates that approximately 20% of persons employed in the red meat

processing sector work on a casual basis whereby they have no entitlements to paid annual leave or personal

leave, but do receive a loading on the ordinary hourly rate to make up for this.

The proportion of people employed on a casual basis is in line with the Australian workforce overall and, as with

employment economy-wide, there has been no discernible increase in casual employment in the red meat

processing sector.

The most common employment category in red meat processing facilities is daily hire employment, accounting

for approximately 80% of all process workers. Whilst this employment category may be viewed as “quasi-

permanent” in that the employee accrues paid annual leave and personal leave entitlements, employment

theoretically terminates at the end of each day or shift. However, it forms a necessary employment category in

an industry which can be impacted by uncertainty of operation as a result of climatic conditions.

Red meat processing facilities do employ a significant number of temporary workers holding work and holiday

visas, primarily as a result of difficulties in attracting local resident workers. However, there is no evidence that

457 visa holders, defined as skilled temporary workers, form a significant proportion of employees in the red

meat processing sector.

17

3.0 Factors influencing employment of non-permanent workers in the red meat

processing sectorThe following analysis is derived from survey responses and commentary provided by representatives from red

meat processors (industry survey respondents), labour hire companies and the AMIEU. It is notable that with

regard to the factors influencing the employment of a non-permanent workforce , recent trends in this and the

impact on the industry overall, there were no discernible differences in opinion between the three groups.

Results from the survey have been presented as an average value from those respondents who answered the

question. It should be noted that not all survey respondents provided an answer to each question or individual

component of a question, as it was not deemed relevant to their business.

Where relevant the coverage of casual employment includes temporary overseas workers employed under that

classification. Similarly, references to daily hire encompass the employment of temporary overseas workers

employed under that classification.

3.1 Employment characteristics

Industry survey respondents were asked to indicate the number of employees working on an average day by

location in the plant and category of employment. Clearly, total numbers are not relevant to the analysis as this

is influenced by the size of the facility and number of head processed per day.

Respondents overall indicated that there was a relatively even distribution of employment between the

slaughter floor and boning / packing rooms. However, this is influenced by the level of processing and value

added undertaken. Processors primarily supplying the domestic market are more likely to have higher levels of

employment in the boning / packing room than those whose main markets are predominantly export.

Distribution of employment by skill level, as defined under the Meat Industry Award 2010 (the Award) across all

processors surveyed falls into the following categories:

Levels 1 to 3 – 42.5%;

Levels 4 and 5 – 33.4%; and

Level 6 and above – 24.1%.

A summary of the relevant tasks and skills associated with each employment level is provided at Appendix 3.

Persons employed at Levels 1 to 3 are generally employed in a labouring capacity whereas those in higher Levels

will have attained competencies in particular areas that may comprise a component of a trade qualification. Five

of the respondents to the survey have their own Enterprise Agreement, meaning that the skills and competencies

associated with some levels may vary slightly from those in the Award.

3.2 Trends in non-permanent employment

The definition of casual employment used in this report encompasses not only local residents employed on a

casual basis – the traditional measure of casual employment, but also temporary employment in the casual

workforce category, including the employment of international visa holders and the domestic backpacker market

and itinerant workers.

It should be noted that, with regard to employment of 417 / 462 Visa holders, some respondents noted that they

were employed on a casual basis whilst others indicated that they were employed as daily hire.

18

Industry survey participants were asked to indicate whether the level of casual employment had changed over

the past twelve months. It was generally reported that the number of casual employees from the local workforce

had either remained the same or decreased, with two respondents reporting zero or negligible levels of casual

employment. This was supported by discussions with representatives of labour hire companies and the AMIEU

who also noted that there had been no demonstrable change in the level of casual employment amongst local

workers.

When examined by size of establishment or location, there appears to be no significant differences with regard

to the proportion of persons employed on a casual basis.

There has reportedly been an increased reliance on workers holding 417 / 462 Working Holiday visas. Currently

417 / 462 visa holders are restricted to six months work with any one employer during their first year in Australia.

Holders of 417 visas may be eligible for a second visa provided that they have undertaken 88 days of specified

work (including work in the agricultural, mining and construction sectors) in regional Australia during their first

visa.

The increased reliance on workers in this category is a reportedly a result of an apparent reluctance of local

workers, and particularly young people, to enter the industry, as well as the fact that many of the 417 / 462 visa

holders already have appropriate skills, particularly knife skills. It was reported that 417 / 462 visa holders from

Taiwan, South Korea and the Philippines were particularly in demand in the red meat processing sector. All

businesses surveyed indicated that they employed 417 / 462 visa holders to a greater or lesser extent, suggesting

that these people make an important contribution to the red meat processing industry workforce.

Similarly, some companies indicated that they employed workers who were employed under 457 visas. This is

addressed further in Section 3.2.3 of this report.

3.2.1 Reasons for employment of casual workforce

Industry survey participants were asked to indicate the importance of a range of factors in employing people on

a casual basis. The results of this analysis are illustrated in Figure 3.1, where a rating of 1 was deemed to be very

important and 5 of little or no importance.

The most important factor noted with regard to employment on a casual basis was to enable the company to

assess the employee’s suitability for permanent employment. As the definition of casual employment means

that the tenure for a casual worker ceases at the end of each working day, this method of employment effectively

allows the business to terminate an employee with no notice if they are deemed to be unsuitable for the work.

19

Figure 3.1 Reasons for employing workers on a casual basis

One participant indicated that every new employee is employed on a casual basis for the first six months of

employment. On satisfactory completion of the initial period they are then offered full time daily hire positions.

Conversely, another participant noted that the company did not employ any workers on a casual basis because

they perceived that casual employees “did not feel part of the team”.

The second most important reason for employing people on a casual basis was reported to be a difficulty in

attracting permanent employees. This relates in particular to the employment of 417 / 462 visa holders under

this employment classification.

As noted earlier, and addressed in more detail in the report for Project 2014-1002 Investigation into influencing

factors for human resource retention, acquisition and selection in the red meat processing industry, the red meat

processing sector experiences difficulty in attracting, and more importantly, retaining local workers, particularly

in younger age groups. This has resulted in an increasing reliance on 417 / 462 Visa holders to fill the gap.

Many of these people have significant experience in the red meat processing sector and obtain these visas, either

through labour hire companies or as individuals, primarily to work in local plants. As one informant noted “while

the 417 visa is designed for eligible people who want to holiday and work in Australia, in practice it attracts meat

workers who want to work”.

Employment of workers on a casual basis also enables flexibility of employment on a daily basis, an important

factor in an industry which can be subject to variable throughput and where employment costs are the second

biggest contributor to operating costs after the purchase of livestock. Clearly, in operations working on a service

kill basis, wages and salaries are the single largest factor in operating costs.

Whilst the employment of people on a daily hire basis allows flexibility of employment on a day to day basis,

casual employment permits flexibility of the number of people employed within a shift. As the minimum period

of work for a casual employee is four hours per day, any unexpected variations in production can be addressed

by terminating employment after four hours.

Cost effectiveness was viewed as the least important factor in employing people on a casual basis. On an hourly

basis, the costs to the company of employing people on a casual basis are greater than employing either

permanent or daily hire workers. However, when analysed on an annual basis, this may not necessarily be the

case depending upon the level of fluctuation in throughput for any given operation. These factors are addressed

further in Section 4 of this report.

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

Allows the company to assess the employee’s suitability for permanent employment

Difficulty in attracting permanent employees

Flexibility in employment levels

Cost effectiveness

20

It should be noted that casual employment amongst the local resident workforce may also be influenced by the

individual employee. Some employees have been reported to have a preference for casual employment for a

variety of reasons.

One respondent noted that a particular employee, who is highly skilled and has worked with the company for a

number of years, preferred to work on a casual basis as it suited his particular circumstances. Despite not being

paid for public holidays or accruing leave, this individual was happier working casually and the company was

content to accommodate this requirement to retain a valued employee.

Others prefer to work on a casual basis because, on an hourly basis, they receive a higher wage than either daily

hire or permanent employees. The “cash in hand” factor is seen to be more important in some sections of the

workforce than the stability of permanent employment or “quasi-permanent” employment offered by daily hire

positions, notwithstanding the fact that they are not entitled to either paid annual leave or personal leave.

3.2.2 Impacts of employment of a non-permanent workforce

Industry survey participants were asked to comment on any perceived negative impacts of casual employment

in relation to their business. No respondent noted any specific negative impacts associated with employing casual

workers. There was no noticeable impact on food safety, quality control or WHS incidences reported. It should

be noted that employment of process workers on a casual or daily hire basis is an integral part of the meat

processing industry to provide flexibility in employment numbers when operation is variable. It does not

necessarily mean that employment is short-term in nature. People employed as “permanent” casuals may well

have a similar level of experience to those employed as full time workers.

However, when specifically considering temporary employment of 417 / 462 visa holders, commentary was

made regarding the negative impact of restrictions regarding work tenure of a maximum of six months.

Whilst many of these employees are already skilled in red meat processing tasks, it is still necessary to ensure

that they have undertaken appropriate induction and WHS training that is plant specific. One respondent noted

that “while 417 visa holders are an important source of workers in an industry that is unattractive to many locals,

six months with one employer is too short”.

3.2.3 Employment of 457 Visa holders

The Temporary Work (Skilled) visa (subclass 457) is designed to enable employers to address labour shortages

by bringing in genuinely skilled workers where they cannot find an appropriately skilled Australian. The 457 visa

allows skilled workers to come to Australia and work for an approved business for up to four years.

The principle reason given for employing, or considering employing, 457 visa holders were noted to be an

inability to attract suitably skilled local workers, as illustrated in Figure 3.2. These average rankings reflect a

ranking of 1 being very important and 5 being of little or no importance.

Employment of 457 visa holders was also perceived to reduce absenteeism and provide workers who are more

likely to remain in long term employment.

Cost saving was not perceived to be an important issue when considering employment of 457 visa holders and,

in fact, it was noted to be significantly more expensive than employing local workers. However, the inability to

attract skilled workers locally, particularly in areas impacted by the resources boom, was instrumental in hiring

457 Visa holders to maintain the level of productivity.

21

The majority of 457 visa holders employed in the red meat processing sector are employed under a daily hire

contract rather than on a casual basis.

Figure 3.2 Reasons for employing 457 Visa holders

Cost was also cited as the main reason for not employing 457 visa holders. There are significant differences

associated with the employment of 457 visa holders in the meat processing sector compared with other industry

sectors. Other industry sectors seeking to employ 457 visa holders can do so under a relatively simple business

sponsorship program. However, the meat processing sector is required to apply under a Meat Industry Labour

Agreement (MILA) which contains additional requirements relating to the demonstration of need for workers,

competencies and English language skills. The process of negotiating a MILA is particularly onerous and lengthy,

with the associated high costs to potential employers, as noted by the Department of Immigration and Border

Protection.

An additional reason for not employing 457 visa holders was the requirement that they be paid the Temporary

Skilled Migration Income Threshold (TSMIT), currently set at $53,200 and indexed annually. This was perceived

to potentially create unrest amongst the existing local workforce who are paid either under the Award or under

a negotiated Enterprise Agreement. In most cases, payment under either option is generally lower than the

TSMIT.

It has been suggested that more meat processing facilities might utilise the 457 visa system if the process was

more streamlined and in line with other sectors, employees were paid at the relevant Award or Enterprise

Agreement rate.

3.2.4 Summary

Despite concerns about increasing casualisation of the workforce in the red meat processing sector, no real

evidence of this has been derived from the industry informants. Whilst some facilities may choose to employ all

new recruits on a casual basis for the first three to six months, they are normally employed on a daily hire basis

subsequently.

The primary reason given by employers for employing people on a casual basis on commencement of

employment with the company is that it enables them to assess the employee’s suitability for a more permanent

(generally daily hire) position.

However, particularly in packing positions, the flexibility afforded by casual employees within a shift can be an

important factor.

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Inability to attract suitably skilled local workers

More reliable e.g. reduced levels of absenteeism

More likely to remain in long term employment

Cost saving

22

As the minimum period of work for a casual employee is four hours per day, any unexpected variations in

production can be addressed by terminating employment after four hours.

It should also be noted that some employees prefer to be employed on a casual basis. It may be that they too

seek flexibility of working conditions or are influenced by the higher hourly rate of pay provided by casual

employment.

The 25 per cent loading associated with this form of employment, which flows through to higher compulsory

superannuation, can be more attractive than an employment category with lower hourly rates on a week to

week basis but which provides payment for public holidays and accrues annual and personal leave allowances.

Whilst there appears to have been no real increase in casual employment amongst the local workforce, there

has been a growing reliance on temporary workers derived from 417 / 462 Working Holiday visa holders. This is

primarily attributed to difficulties in attracting and retaining local workers, particularly from younger age groups.

Generally persons employed in the red meat processing sector holding 417 / 462 visas have experience in the

industry. They are, however, restricted to working with any one employer for a maximum of six months. When

facility-specific induction and training is taken into account, many employers would prefer if this could be

extended to incorporate the twelve months of their visa, and the subsequent extension that may be granted to

eligible applicants.

The number of persons employed under the Temporary Work (Skilled) visa (subclass 457) in the red meat

processing sector is relatively small. The primary reason for employing workers in this category is a lack of suitably

skilled local workers, particularly in areas offering competing employment opportunities in the higher paying

resources sector.

The restrictions and processes applicable to obtaining 457 visas in the meat processing sector appears to be a

deterrent to many businesses in the industry. Similarly, the requirement to pay 457 visa holders under the

Temporary Skilled Migration Income Threshold rather than the relevant Award or Enterprise Agreement rate can

result in wage disparity when compared with local workers.

23

4.0 Costs and benefits of non-permanent employmentAs noted earlier, the prevalent employment category in the red meat processing sector is as a daily hire employee

who accrues annual and personal leave for the days worked and may receive payment for public holidays. This

is reported to account for approximately 80 per cent of employees in processing tasks in the sector.

The remaining 20 per cent of employees are employed on a casual basis with no entitlements to annual leave,

personal leave or payments for public holidays. In lieu of this, those employed on a casual basis generally receive

a loading of 25 per cent on top of the hourly rate for the position in which they are employed.

There are several costs and benefits associated with casual employment which impact on the employee and the

employer. This is irrespective of whether the employee is an Australian resident or a temporary overseas worker.

4.1 Benefits of non-permanent employment

4.1.1 Benefits to the employee

The benefits of casual employment to the employee primarily relate to increased “money in their pocket” in the

short term. Table 4.1 below illustrates the level of taxable income received by an individual, on an hourly basis,

employed under the various levels of the Award. It should be noted, however, that this does not take into

consideration the annual accruals of annual leave and associated loadings, the ability to accrue personal leave

or payments for public holidays.

The casual employee, on an hourly basis, receives a rate that is 25 per cent higher than a permanent employee

and 13.6 per cent higher than a daily hire employee at the same level.

Table 4.1: Hourly taxable income, base excluding leave and public holiday payments, Meat Industry Award,

2010

Meat Industry Award 2010 Level

Permanent full time

Daily hire full time Casual full time

1 $16.87 $18.55 $21.08

2 $17.46 $19.21 $21.83

3 $17.68 $19.45 $22.10

4 $18.12 $19.93 $22.65

5 $18.45 $20.30 $23.07

6 $18.85 $20.73 $23.56

7 $19.64 $21.60 $24.55

However, when allowances for annual leave and the associated leave loading are factored in, the variations are

less marked. This again does not include any allowance for personal leave or payment for public holidays.

As shown in Table 4.2, the differential between those employed on a casual basis and those on a daily hire basis

at the same level reduces to less than 4 per cent. The differential between a casual employee and permanent

employee at the same level reduces to just over 14 per cent.

24

Table 4.2: Hourly taxable income including accrual of annual leave and associated loading, Meat Industry

Award, 2010

Meat Industry Award 2010 Level

Permanent full time

Daily hire full time Casual full time

1 $18.44 $20.29 $21.08

2 $19.09 $21.00 $21.83

3 $19.33 $21.27 $22.10

4 $19.81 $21.79 $22.65

5 $20.18 $22.20 $23.07

6 $20.61 $22.67 $23.56

7 $21.47 $23.62 $24.55

Perhaps, even more importantly, when taking into consideration the annual allowances and working the same

number of days per year, the difference between a casual employee and a permanent employee is minimal at

just over 1 per cent.

Assuming that a permanent and daily hire employee utilises their four weeks of annual leave and takes advantage

of the 10 days of paid personal leave allowed, the employee will work for a maximum of 230 days per year.

Most meat processing plants have an annual shutdown period during which permanent and daily hire employees

would be expected to take annual leave which is clearly not applicable to the casual employee. A direct

comparison of annual wages assuming all categories of employment work for 230 days per year is provided in

Table 4.3.

Table 4.3: Annual income, excluding public holiday payments, Meat Industry Award, 2010

Meat Industry Award 2010 Level

Permanent full time

Daily hire full time Casual full time

1 $36,444 $40,089 $36,852

2 $37,730 $41,502 $38,151

3 $38,201 $42,022 $38,629

4 $39,151 $43,066 $39,589

5 $39,873 $43,861 $40,319

6 $40,726 $44,799 $41,182

7 $42,432 $46,675 $42,907

Under these assumptions, the daily hire employee continues to earn 10 per cent more than the permanent

employee and almost 9 per cent more than the casual employee. However, this does not take into account the

25

likelihood of either the daily hire or casual employee being “stood down” for certain periods during the year.

This is addressed further in Section 4.3.

Other benefits of casual employment to the employee include flexibility to meet personal lifestyle preferences.

4.1.2 Benefits to the employer

The key benefit of casual employment, in the short term, to the employer is to enable them to assess the

suitability of a new employee to the workforce. This is in effect a probationary period which may last for up to

six months. Industry survey participants, labour hire companies and the AMIEU indicated that this was common

practice in the red meat processing sector and, provided the term did not exceed six months, felt it was an

appropriate method of assessing new employees. None of the three groups indicated that initial employment on

a casual basis was influential in new recruits leaving the industry voluntarily. That factor was reported to be more

heavily influenced by the employee recognizing their unsuitability for the job or industry sector and seeking

alternative avenues for work.

Initial employment on a casual basis, in theory, enables the employer to terminate the employee’s contract

without being liable for either redundancy or unfair dismissal claims. However, given the reported difficulty in

attracting and retaining local workers in the industry, it seems unlikely that this would be a motivating factor for

plants who have successfully retained an employee for six months or more.

A more important benefit to the employer for longer term employees is flexibility in staffing levels when

throughput is impacted by variable supply of animals or unforeseen circumstances such as equipment

breakdown. This applies to both casual employees and those employed on a daily hire basis. The potential

economic impact on the plant’s operations is addressed further in Section 4.3 of this report.

4.2 Costs of non-permanent employment

4.2.1 Costs to the employee

The costs of casual employment to the employee centre around factors related to various allowances. These

include:

Personal leave – an employee working on a casual basis is not entitled to accrue any personal leave,

currently provided as a maximum of 10 days per year for a permanent employee and assessed on a pro-

rata basis for daily hire employees. This means that if the employee is sick, or needs to take time off for

other personal reasons, they do not receive any remuneration for those days. This in turn can have a

negative impact on the facility’s operations as casual employees who are sick may be more likely to

attend work when unfit to do so.

Annual leave - an employee working on a casual basis is not entitled to accrue any personal leave,

currently provided as a maximum of 20 days per year for a permanent employee and assessed on a pro-

rata basis for daily hire employees. As many red meat processing plants have a shutdown period,

prescribed by the company, the casual employee will receive no pay during this period. This does not

apply to an individual employed on a daily hire basis as they accrue annual leave based on the days

worked.

26

Furthermore, it was suggested by informants that persons employed on a casual basis generally have much

greater difficulty accessing loans from financial institutions than those in permanent (including daily hire)

positions.

4.2.2 Costs to the employer

From the employer’s perspective, the hourly rate costs of employing workers on a casual basis, and indeed daily

hire, exceed those for permanent salaried employees. On-costs to the business, associated with payment of

wages and salaries, are based on the total wages and salaries paid, including annual leave payments.

Some key factors in the costs of employing casual workers, from the employer’s perspective, are summarised

below.

Compulsory superannuation contributions by the employer – currently assessed at 9.5% of the

employee’s taxable income. Therefore, for a person employed on a casual basis at any given level under

the Award or relevant Enterprise Agreement, the cost to the business in superannuation contributions

is 25% higher than for a permanent employee. Similarly, the cost to the business with respect to a daily

hire employee is 10% higher than for a permanent employee. This however is based on the hourly rate

and does not take into consideration the flexibility of employment conditions addressed further in

Section 4.3.

Workers Compensation insurance – whilst the premiums payable in regard to this may be augmented

by an individual facility’s record of WHS claims, the base rates are calculated based on wages and

salaries plus compulsory employer superannuation contributions. Loadings associated with

employment on either a casual or daily hire basis again have a compounding effect. The base premium

rates for the meat processing industry differ between States and the rates for 2014-15 are outlined

below:

o New South Wales – 6.49%;

o Queensland – 5.38%;

o South Australia – 7.50%;

o Tasmania – 9.83%;

o Victoria – 6.25%; and

o Western Australia – 4.46%.

Payroll tax – payroll tax also varies between States but again is calculated based on wages and salaries

plus compulsory employer superannuation contributions. Therefore the loadings associated with

employment on either a casual or daily hire basis have a compounding effect. The payroll tax rates for

2014-15, by State, are outlined below:

o New South Wales – 5.45%;

o Queensland – 4.75%;

o South Australia – 4.95%;

o Tasmania – 6.10%;

o Victoria – 4.85%; and

o Western Australia – 5.50%.

27

When analysed on an hourly basis the costs to the company of employing people on a casual or daily hire basis

are clearly higher than employing permanent staff. Table 4.4 illustrates the total costs to the company using an

employee at Level 4 under the Award as an example. The data makes no allowance for personal leave or public

holidays or for variations in days, or hours, worked as a result of variations in throughput.

Table 4.4: Hourly costs to employer by employment classification, Level 4, Meat Industry Award, 2010

State Permanent full time

Daily hire full time Casual full time

New South Wales $25.54 $28.09 $27.76

Queensland $25.13 $27.64 $27.31

South Australia $25.66 $28.22 $27.89

Tasmania $26.45 $29.10 $28.75

Victoria $25.35 $27.89 $27.55

Western Australia $25.09 $27.60 $27.27

The assessment of costs to the company provided in the above table indicates that employing a worker on a

casual basis costs the company, on an average hourly basis, almost 9 per cent more than employing the same

individual on a permanent basis. Similarly, employing a worker on a daily hire basis costs the company 10 per

cent more than employing the same individual on a permanent basis.

However, this does not take into account the flexibility in employment numbers that can be addressed by either

casual or daily hire employment, as outlined below.

4.3 Cost-effectiveness of non-permanent employment

4.3.1 Daily hire compared with permanent employee

The preceding analysis would suggest that the red meat processing sector would operate in a more cost-effective

way by employing staff on a permanent basis. However, this does not take into account the fluctuations in

throughput that have to be addressed on a daily basis and even on an individual shift basis. Clearly, the

implications of these variations would need to be analysed at the individual plant level. However, as an example,

the following scenarios have been examined.

Addressing the potential daily variations, the following scenario has been assumed:

The plant operates for 250 days per year on average. It should be noted that this differs from the

maximum of 230 days worked by any individual permanent employee addressed in Section 4.1.1;

Reduced throughput is experienced as a result of a shortage of animals for 10 per cent of the normal

operating time;

The plant employs 215 full-time workers distributed across Levels 2 to 7 in accordance with the average

derived from the industry survey;

Assuming these employees are full-time daily hire, they are stood down for the period in which the plant

experiences a shortage of supply; and

Assuming these employees are permanent full-time, they continue to be paid for those periods.

28

The comparative impact on the facility’s wages and salaries bill is illustrated in Table 4.5. The assumptions

relating to payroll tax and Workers Compensation insurance premiums relate to New South Wales charges. Based

on the above assumptions, the difference in costs to the company of employing workers on a daily hire basis

rather than as permanent employees would be a reduction in total wage-related costs of 6.5 per cent. This

analysis makes no allowance for the impact on accrual of personal leave, as this may vary between individuals.

However, including personal leave allowances could serve to increase the differential.

Table 4.5: Scenario – impact of 10% reduction in operating days

Payment category Permanent full time

Daily hire full time

Total wages payable incl.

annual leave $7,522,753 $7,036,847

Superannuation $714,662 $668,500

Payroll tax $448,939 $419,941

Workers Compensation $534,279 $499,769

Total cost to plant $9,220,632 $8,625,058

If the red meat processing sector experienced a constant supply of animals and was not subject to occasional

unexpected stoppages in work flow, permanent employment would be more cost effective.

However, as the industry is impacted by factors outside its control, such as climatic conditions, daily hire

employment in processing facilities appears to be the most suitable approach for employers and employees alike.

4.3.2 Casual compared with daily hire employee

As noted earlier, casual employees represent only 20 per cent of the workforce in red meat processing facilities

and this, in some instances, includes people on 417 Visas. However, the ability to employ casual workers in parts

of the plant which may be impacted by variations in throughput within a shift can be advantageous. For example,

if a facility has 20 people employed in casual positions at Level 3 and needs to stand them down for half a shift,

the cost to the company in terms of wages is zero. If the same people were employed on a daily hire basis the

costs for that shift would be an additional $2,190.

4.4 Conclusions and implications

The assessment of costs to the company provided in the above analysis indicates that employing a worker on a

casual basis costs the company, on an average hourly basis, almost 9 per cent more than employing the same

individual on a permanent basis. Similarly, employing a worker on a daily hire basis costs the company 10 per

cent more than employing the same individual on a permanent basis.

The implication of this is that the red meat processing sector would operate in a more cost-effective way by

employing staff on a permanent basis. However, this does not take into account the fluctuations in throughput

that have to be addressed on a daily basis and even on an individual shift basis. Clearly, the implications of these

variations would need to be analysed at the individual plant level. However, the scenario analysed for the

purpose of this study, which incorporates the impact of variable throughput, suggests the difference in costs to

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the company of employing workers on a daily hire basis rather than as permanent employees would lead to a

meaningful reduction in total wage-related costs.

Therefore the key factors influencing employment of workers on a daily hire basis and as casual employees, from

the perspective of the employer, is flexibility of staffing levels and the associated cost savings.

As far as the employee is concerned, the loadings associated with casual employment may be more attractive

than lower hourly payment for permanent or daily hire positions, at least in the short term.

There is no discernible evidence of increased numbers of casual employees and, given the wage differentials,

this is unlikely to change. Whilst employing workers on a casual basis theoretically enables the employer to

terminate the work contract on a daily basis, the difficulties in attracting and retaining local workers in the red

meat processing sector means that this is unlikely to occur.

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Appendix 1 – Detailed MethodologyThe initial approach intended to garner information from processors was to undertake a comprehensive survey

with representatives of the sector. However, after consultation with AMPC, and in light of the fact that this study

is being run concurrently with AMPC Project 2014-1002, it was decided that a questionnaire be developed which

addressed both Projects. This was undertaken to minimise survey fatigue which, in turn, can result in significantly

reduced response rates and willingness to participate, both in terms of these Projects and future studies that

AMPC may wish to undertake.

The survey instrument was designed to elicit data and perceptions for this Project that related to the following:

Levels of casual employment and trends;

Reasons for casual employment;

Significance of temporary employment; and

Cost implications of casual or temporary employment.

AMPC distributed a letter to a selection of processors outlining the purpose of the study and seeking their

participation in the Project. After sign-off on the questionnaire by AMPC, it was distributed to 11 processors via

email with a link to an on-line survey. A copy of the questionnaire is provided at Appendix 2.

Overall, a total of 7 processors completed the survey, either in whole or in part, representing a response rate of

64 per cent. This may be viewed as a very good response rate, given the confidential nature of some of the

information sought.

Responses were received from the following:

Two cattle processors;

Two lamb and sheep processors; and

Three multi-species processors.

In order to maintain confidentiality, it has not been possible to analyse the data by species processed, nor by

State, as was originally intended. However, where relevant and achievable without breaching confidentiality,

commentary on differences has been provided.

It is worth noting that the majority of responses were not obtained via the on-line survey but through follow-up

telephone interviews. Whilst this was more time-consuming, it did have the added benefit of eliciting additional

information than might otherwise have been gained.

The Consultants also contacted two labour hire companies and three representatives of the Australasian Meat

Industry Employees Union (AMIEU). Information obtained from these sources has been incorporated in the

relevant sections of the analysis rather being addressed in isolation, again to ensure that individual responses

remain confidential.

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Appendix 2 – Survey instrument

AMPC Projects

2014/1001 – Casual labour use in the red meat processing industry and

2014/1002 – Human resource attraction, retention, acquisition and selection in the red meat

processing industry Thank you for agreeing to participate in these projects by way of this survey. The outcomes of these projects will assist in

developing recruitment and retention strategies for your plant and the red meat processing sector as a whole. They will

also assist in determining the range of costs and benefits associated with employment of casual workers, compared with

permanent employees. All data and commentary will be treated in the strictest confidence and individual responses will

not be divulged to AMPC or any other party. Please exclude managerial and administrative staff from your responses.

Should you have any questions regarding this survey, please do not hesitate to contact Lesley Arthur on 02 6337 9407 or

by email at lesley@redeconsult.com.au .

Name of plant - ______________________________________

Location - ___________________________________________

Species (please tick one) –

Cattle

Sheep / lambs

Both

Number of shifts per operating day ___________

Does the plant have a current Enterprise Agreement - Yes

No

If Yes, please provide the name of the Agreement __________________________

1. Please indicate how many people are employed per day in the following:

Slaughter Floor

Boning Room

Packing

Other

2. Please indicate how many people are employed per day in the following categories:

Permanent full-time

Permanent part-time

Casual full-time

Casual part-time

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3. Please indicate how many people are employed per day at the following skill levels (based on the Meat Industry

Award – if you have an Enterprise Agreement with different levels, please approximate to these levels):

Level 1

Level 2

Level 3

Level 4

Level 5

Level 6

Level 7

Above Level 7

4. Now, thinking specifically about persons employed on a casual basis, please indicate how the number compares

with twelve months ago:

Number has increased

Number is about the same

Number has decreased

5. Please indicate how important the following factors are in employing people on a casual basis on a scale of 1 to 5,

with 1 being very important and 5 being of little or no importance (please circle the response):

Allows the company to assess the employee’s suitability for

permanent employment

1 2 3 4 5

Cost effectiveness 1 2 3 4 5

Flexibility in employment levels 1 2 3 4 5

Difficulty in attracting permanent employees 1 2 3 4 5

Other (please specify)

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

6. Please indicate what proportion of casual employees are sourced from the following sectors:

% of casual

employees

Labour hire companies

Direct from the local resident population

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Itinerant workers from elsewhere in Australia

Overseas workers holding working holiday visas (417 or 462)

Other (please specify)

7. Please provide a commentary on any perceived negative implications of casual employment (e.g. WHS issues,

quality control, food safety, training costs etc.)

8. Does the company employ staff holding Temporary Work (Skilled) 457 Visas? Yes

No

(please go to Q23)

9. Please indicate in what positions 457 Visa holders are employed?

10. Please indicate how important the following factors are in employing 457 Visa holders on a scale of 1 to 5, with 1

being very important and 5 being of little or no importance (please circle the response):

Inability to attract suitably skilled local workers 1 2 3 4 5

Cost saving 1 2 3 4 5

More reliable e.g. reduced levels of absenteeism 1 2 3 4 5

More likely to remain in long term employment 1 2 3 4 5

Other (please specify)

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

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11. Please provide a commentary on how effective, in your opinion, the 457 Visa program is for the red meat

processing industry.

Thank you for completing this survey.

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Appendix 3 – Meat Industry Award (2010) – classifications There are seven levels of employment classification under the Award that are relevant to the red meat processing sector which also

impact on rates of pay. These are summarised below.

Meat Industry Level 1

An employee at this level will be a person with no experience in the industry undergoing on-the-job training for an initial period of at

least three months.

Meat Industry Level 2

An employee at this level will be performing the following indicative tasks:

Meat manufacturing

establishment stream

Linker, table hand;

Slaughterer’s assistant;

Washing, drying, smoking section assistant;

Retort;

Employee in lard section.

Meat Industry Level 3

An employee at this level will be performing the following indicative tasks:

Meat manufacturing

establishment stream

Filerman;

Packing-room hand.

All meat industry streams Employee directly connected to the slaughter floor—tasks such as moving cattle/sheep up the race;

Employee indirectly connected with the slaughter floor—tasks such as cleaning tripe by machine/hand;

Separating and/or handling offal at the eviscerating table;

Removing head meat;

Bagging lambs;

Labourers associated with boning and slicing activities;

Labourer associated with by-product activities;

Strapping or wiring-machine operator or vacuum machine operator;

Operating Whizzard Knives;

Wrapping, weighing, pricing, packing and packaging uncooked meat;

Salter and/or pickle pumper (arterial or stab);

Chiller room/Freezer room hand;

Loading and unloading labourer;

Storing and packing labourer in or about storage works;

Drover/yardperson/stockperson; Cleaners;

Labourers involved in tanning or other treatment or processing of skins or hides;

Assistants in buffing, fluffing, curtain coat, splitting, pasting, setting out and sammying;

Machine operators/machinists in tanning or other treatment/processing of skins or hides not elsewhere classified;

Yard person in tanning and/or treatment/processing of skins or hides;

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An employee performing clerical and/or office tasks such as

maintenance of basic records, basic word processing, typing and

filing, collating, photocopying, handling and distributing mail,

delivering messages, operation of keyboard and other allied and

similar equipment.

Meat Industry Level 4

An employee at this level will be performing the following indicative tasks:

Meat manufacturing

establishment stream

Silent-cutter operator;

Mixing machine operator;

Cutter up, guillotine operator, derinding machine operator

Meat processing

establishment stream

Slaughterer (calves and beef) Class 3 (feeding cattle from race into box; tying weasands (not in shackling area); washing anus and pit; rodding weasands; removing horns; removal of fore hooves; removing heads by severing spinal cord and placing on table or chain; remove first hind foot; change first leg; remove second hind foot; change second leg; pulling tail; split paddy whack and drop; placing and removing chains on hide stripper and removing tail skin from hide; hide puller; saving sinews from forelegs; push to saw; pull from saw; trimming sides; trimming forces, trimming hinds);

Slaughterer (sheep) Class 3 (operate restrainer and stun, shackle to fixed

hook, gambrel and slide; insert spreader, rod weasands, remove spreader,

opening up, clear rectum gut and bladder, strip rectum gut, tie rectum gut,

trimming).

All meat industry streams Trimmer;

Using knives for cleaning or preparing meat immediately prior to packing;

Use of non-licensed product handling equipment;

Basic operation of data processing equipment in or about storage works.

Driver of motor vehicle not exceeding 6 tonne carrying capacity;

In tanning and other treatment/processing of hides or skins, the task of fleshing, buffing, fluffing, curtain coat operating, skating, shaving, glazing, spraying, hand tipping, setting out, sammying

In addition to the clerical and/or office tasks listed under Meat Industry Level

3 an employee at this level performs tasks such as more advanced word

processing, typing and filing, generating simple documents, date entries,

calculating functions, maintenance of records, operates more than basic

telephone equipment and message taking.

Meat Industry Level 5

An employee at this level will be performing the following indicative tasks:

Meat manufacturing

establishment stream

Slaughterer;

Tunnel boner.

Meat processing

establishment stream

Slaughterer (calves and beef) Class 2 (knocking; shackling (chaining and

hoisting); pithing; tying weasands (in shackling area); cheeking; skinning

heads; removing forefeet including skinning foot and saving sinew; cleaning

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and dropping rectum gut and bungs; mark or strip tail; remove muzzle piece;

remove fore shanks; cut aitch bone; mark and saw briskets.

All meat industry streams Slicer;

Sawyer;

Bench power saw operator (breaking up);

Employee directly connected to the slaughter floor—tasks such as knocking and making tallow;

Employee indirectly connected with the slaughter floor – tasks such as making tallow;

Operator of rendering machinery;

Operator of other by-product machinery;

Driver of motor vehicle exceeding 6 tonne carrying capacity;

Use of licensed product handling equipment;

Tractor driver;

Auto-truck or tow motor drivers;

More advanced operation of data processing equipment than in Meat Industry Level 4 in or about storage works;

In tanning and other treatment/processing of hides or skins, the task of currier, colour matching/mixing, chemical mixing, splitting and classing/sorting not elsewhere covered;

In addition to the clerical and or/office tasks listed in Meat Industry Levels 3

and 4, an employee at this level performs more detailed tasks such as:

retrieving data; maintaining appropriate records; transcribing into records;

producing more advanced documents; applying knowledge of clerical and/or

office operating procedures; sorting and processing and recording from

original source documents; identifying and extracting information from

internal and external sources; and computer program applications

commensurate with tasks.

Meat Industry Level 6

An employee at this level will be performing the following indicative tasks:

Meat processing

establishment stream

Slaughterer (calves and beef) Class 1 (sticking including removing sweetbreads; skin first leg; skin second leg; pocketing silverside; resetting; flanking; clearing brisket and venting; siding; necking; rumping; backing off; skinning briskets and fore shanks; operating air or conventional knives on hide strippers; operating downward hide-puller; fronting out; sawing down);

Slaughterer (beef)—bed and cradle;

Slaughtering (sheep) Class 1 (stick, first leg (including papering), second leg

(including papering and hanging up second leg, cheek, open neck and spear

cut, clear neck and forelegs, clear briskets, free and tie weasand, splitting

down and removing trotters, flanking, paunching, and/or additional task

where no restrainer is used, catch, stick and shackle).

All meat industry streams Boner;

Carcase grader;

Skin classer;

In addition to the clerical and/or office tasks listed in Meat Industry Levels 3

to 5, an employee at this level requires only some general guidance after

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training and there is scope for discretion/judgment at this level to provide

assistance to clerical persons in clerical levels below.

Meat Industry Level 7

An employee at this level will be performing the following indicative tasks:

All meat industry streams Trade qualified slaughterer;

General butcher.