Significant Changes to Casual Employment

By Jessica Hill (Special Counsel), Katherine Stewart (Senior Associate), Velocity Legal

The federal government’s stripped-down Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Act) recently came into force. The Act amends the Fair Work Act 2009 (Cth).

While proposed changes around enterprise agreements, awards and wage theft did not pass the Senate, the Act does introduce new workplace changes and rights for casual employees.

When approached correctly by businesses, the new laws will help provide certainty about their casual employment arrangements.

 

New definition of a casual employee

For the first time, a definition of a ‘casual employee’ is included in the Fair Work Act 2009 (Cth).

The new statutory definition focuses on the offer and acceptance of employment and draws on common law principles.

A person is a casual employee under the new definition if:

  1. an offer of employment is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work;
  2. the person accepts the offer on that basis; and
  3. the person is an employee as a result of that acceptance.

The Act sets out an exhaustive list of considerations for determining whether no firm advance commitment to continuing and indefinite work exists. These considerations include whether an employee can elect to accept or reject work and whether the employment is described as ‘casual employment’.

 

Point in time assessment

The new definition of a casual employee requires a point in time assessment. Subsequent conduct between an employer and employee is no longer relevant.

This is a significant departure from recent cases[1] where the totality of the employment relationship has been considered in determining whether casual employees were, at law, permanent employees.

Providing the offer and acceptance of casual employment meets the new definition, a casual employment relationship can only change through conversion or acceptance of a permanent employment offer.

These changes provide certainty to employers and casual employees about their entitlements and obligations. They will help prevent the time and costs associated with a continuous evaluation of a casual employment relationship.

 

Protections around double dipping

The Act creates new protections for employers from double dipping claims.

In the event a permanent employee is incorrectly classified as a casual, the Act enables casual loadings to be offset against claims for permanent employment entitlements (like annual leave or redundancy pay) in some circumstances.

Courts must reduce any amounts payable to an employee who successfully makes a claim for permanent entitlements by an amount equal to identifiable casual loadings.  

In effect, these provisions act as a second line of defence for employers who engage and pay an employee as a casual, but fail to meet the new casual employee definition.

 

Casual conversion

 The Act also introduces a new casual conversion mechanism that widens the net cast by casual conversion clauses in modern awards.

Unless an employer is a small business employer, or has reasonable grounds not to, it must make an offer to a casual employee to convert to permanent employment where:

  1. the casual employee has been employed for 12 months; and
  2. during at least the last 6 months, the casual employee worked a pattern of hours which the employee could continue to work as a permanent employee without significant adjustment.

Prescriptive requirements apply around making or refusing casual conversions offers. Casual employees also have the right to request to convert to full-time or part-time employment in some circumstances.

Businesses should note that they must not intentionally reduce or vary an employee’s hours or employment in order to avoid their casual conversion obligations.

 

Casual Employment Information Statement

Casual employees will be informed about the legislative changes through the new Casual Employment Information Statement (CEIS). For the first time, employers must give every new casual employee a CEIS before, or as soon as possible after, they start their new job.

Small business employers should give their existing casual employees the CEIS as soon as possible after 27 March 2021. Other employers must give existing casual employees a copy of the CEIS as soon as possible after 27 September 2021.

 

Practical guidance

The new changes around casual employees are significant. Businesses that currently engage or will engage casual employees should ensure:

  1. offers of casual employment meet the requirements of the new legislative definition;
  2. payment of casual loading is identifiable and meets the Act’s offset requirements;
  3. they assess if and when a casual conversion offer must be made; and
  4. the CEIS is provided to new and existing casual employees.

If you have any specific questions in relation your casual employees or casual employment contracts, please contact us. Our employment team is here to help you navigate these new changes in the law.

 

This article is general information only and in no way constitutes legal advice.

[1] See WorkPac Pty Ltd v Skene [2018] FCAFC 131 and WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (on appeal to the High Court).

Insight Authors…

JESSICA HILL

Special Counsel

Jess is not your average lawyer. She works tirelessly to help her clients to achieve their objectives, and she is genuinely passionate about her work. Jess also has a green thumb. Whether it is in the garden or at work, Jess is always prepared to methodically solve any challenges that arise.

0418 338 292 •  VIEW DETAILED PROFILE   •  READ ALL OF JESSICA'S ARTICLES

KATHERINE STEWART

Senior Associate

Katherine knows employment law. She loves tackling complex workplace problems and guiding clients through the ever-changing employment law landscape. You might find Katherine cooking up a storm in her spare time (the more chilli the better). If your workplace is feeling the heat, Katherine will help calm things down.

0477 439 153 •  VIEW DETAILED PROFILE   •  READ ALL OF KATHERINE'S ARTICLES

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