Recent Changes to Casual Employment

By Ceri Hohner, Senior Associate at FCB Workplace Law

The much-anticipated Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (Bill) has passed Parliament and received Royal Assent. The Bill is a stripped-down and vastly reduced version of its original form which proposed reforms in five key areas which intended to overhaul the Fair Work Act 2009 (Cth) (FW Act). The only surviving element of the Bill which has made it into the FW Act are the amendments to casual employment arrangements.

So, what has changed?

Definition of casual employment
The question of whether a casual employee is actually engaged on a genuine casual basis has historically caused confusion as there was previously no universal definition at law. The recent WorkPac v Skene and WorkPac v Rossato decisions suggested that employment status could be subject to gradual transition, where employees who have initially been engaged as casual may become ‘other than casual’ at an indeterminate point in time if a number of factors are triggered, and subsequently become entitled to paid entitlements such as annual leave that casuals do not receive (despite receiving a 25% casual loading intended to compensate for the absence of those entitlements).

As such, the legal framework previously required employers and employees to continuously evaluate their employment relationship to understand the nature of their entitlements and obligations at any point in time.

The Bill now provides a clear definition of casual employment, lending much-needed certainty to employers and employees alike: an employee is a casual employee if the employer offers employment to them on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work, and that offer is accepted.

Significantly, the hours the casual employee works after the employment has commenced will have no bearing on their casual status. To put it simply, the question of whether a person is a casual employee is assessed on the basis of the offer of employment and acceptance of that offer, not on the basis of any subsequent conduct of either party (including if the casual employee were to work a regular pattern of hours).

In determining whether the ‘employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work’ for the person, the following factors must be taken into account:

  • whether the employer can elect to offer work and whether the person can elect to accept or reject work;
  • whether the person will work only as required according to the needs of the employer;
  • whether the employment is described as casual employment; and
  • whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a modern award/enterprise agreement.

This definition will also apply to existing employees for whom offers of employment have already been made and accepted, and therefore it is important to assess the circumstances of that offer to determine if an employee is engaged as a genuine casual employee.

For new employees, the terms of any contract of employment will be particularly important to determining their employment status.

Offer of casual conversion

Employers (other than small businesses, which are those with less than 15 employees) now have an obligation to proactively offer a casual employee the opportunity to convert to full-time or part-time permanent employment, if the following criteria are met:

1. the employee has been employed by the employer for a period of 12 months;

2. during at least the last 6 months of that period, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full‑time employee or a part‑time employee (as the case may be); and

3. there is no reasonable business ground for refusing to make an offer of permanent employment, specifically:

  • the employee’s position will cease to exist in the next 12 months;
  • the hours of work which the employee is required to perform will be significantly reduced in the next 12 months;
  • there will be a significant change in the next 12 months in either or both of the following:
    -the days on which the employee’s hours of work are required to be performed;
    -the times at which the employee’s hours of work are required to be performed which cannot be accommodated within the days/times the employee is available to work;
  • making an offer of conversion would not comply with a recruitment or selection process required by law.

Employers must ensure the offer of permanent employment (or the notification that an offer is not being made because there is no regular pattern of hours or a reasonable business ground exists) is provided to the employee in writing and given to the employee within 21 days after they reach their 12 month anniversary.

The casual employee has 21 days to accept any offer, otherwise they are taken to have declined.

Where the casual employee accepts the offer to convert to permanent employment, the parties have 21 days of the acceptance to agree on the details of the permanent employment, including the hours of work and commencement date.

Employers have until 27 September 2021 to assess the eligibility and make offers/notifications to existing casual employees, although the offers/notifications must be made within 21 days of completing the assessment.

Casual employees of small businesses are still able to request conversion if the above eligibility criteria are met, however the administrative burden of having to actively offer conversion is removed.

Casual conversion – small claims procedure

Two new mechanisms have been established to resolve disputes regarding casual conversion eligibility and processes: where the parties have not resolved the dispute at the workplace level, it may be referred to the Fair Work Commission (if the applicable modern award/enterprise agreement or contract does not already contain a relevant dispute resolution procedure).

There is also a new small claims process which has been inserted by way of the Bill to resolve casual conversion disputes before the Magistrates Court or the Federal Circuit Court.

Casual Loading Offset Provisions (Double Dipping) Clarification

The Bill requires a Court to reduce the value of a claim made by a non-genuine casual employee for entitlements enjoyed by permanent employees (such as paid annual leave and redundancy pay), by an amount equal to the casual loading they were paid as a casual employee.

This will apply retrospectively, which means that businesses will be able to rely on this provision for permanent entitlement claims which have already been made.

Casual employment information statement

A new document, called the Casual Employment Information Statement, is required to be issued to all new casual employees before or as soon as practicable after the employee commences casual employment with the employer, in addition to the existing Fair Work Information Statement.

This document includes information about the definition of casual employment, casual conversion, and the dispute mechanism procedures.

Small businesses must issue the statement to all existing casual employees as soon as possible, while large businesses have a six month transition period such that they are required to issue it as soon as practicable after 27 September 2021.

Next steps

The Bill will be reviewed after 12 months of operation in order to assess its appropriateness and effectiveness in assisting businesses to recover from the impacts of the pandemic.

While the Bill provides certainty on the nature of casual employment, it also imposes a number of onerous burdens on employers that will need to be carefully navigated in the next six months and beyond.

Businesses can best protect themselves from the risk of non-compliance by taking the following steps:

1. Review and revise your casual contracts of employment to align with the new definition of casual employment

2. Develop internal processes and set calendar reminders to ensure compliance with new casual conversion provisions

3. Ensure that all new casual employees from 27 March 2021 onwards are provided with the new Casual Employment Information Statement before commencement of employment or as soon as practicable after the first engagement

4. Ensure that all existing casual employees are provided with the Casual Employment Information Statement as soon as practicable after 27 September 2021 (Small businesses are required to provide the Statement to existing casual employees as soon as practicable)

For more information on casual employment, please contact Ceri Hohner, Senior Associate, or Bianca Seeto, Partner, on 07 3046 2100.

Date: 15 April 2021

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