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Casual employment changes - what employers should know

Changes to the Fair Work Act regarding casual employees is a hot topic for employers with actions required

In March 2021 the Federal Government passed the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Cth). The legislative change within the Fair Work Act 2009 (Cth) (FW Act) includes reforms to workplace rights and obligations for casual employees and the obligations of business owners in dealing with these employees.

Key Points:

1. A definition of a ‘casual employee’

2. Expanded casual conversion rights

3. Requirements to provide a ‘Casual Employment Information Statement

4. Prohibition of double dipping protections

Please contact us if you would like to discuss your obligations to your casual employees under the Fair Work Amendment, or a modern award, including in the transitional period which ends on 27th September 2021.

1. The insertion of a definition of ‘casual employee’ into the FW Act

The FW Act now defines casual employment as an arrangement where an employee that accepts work where the employer makes no firm advance commitment to continuing and indefinite work and their roster could change each week to suit your business’s needs.

The significant change to note and manage is as follows:

  • A casual employee, who meets the definition of a ‘regular casual employee’ may make a request in writing for ‘casual conversion’ to a part- time or full-time role. All requests must be considered and responses made in writing within 21 days. Any refusal must be on reasonable grounds as described in the relevant award or appropriate instrument.

  • It is recommended you conduct a regular review of the casual employees in your business with respect to their pattern of work and their eligibility for casual conversion and address this accordingly.

2. Expanded casual conversion rights

The second key amendment to the FW Act introduced by the Bill was in respect to casual conversion of ‘long-term’ casuals. The requirement to offer casual conversion will not extend to small business employers with less than 15 employees (although such employees can still request it).

This change requires employers to offer eligible casual employees the opportunity conversion to a permanent (full time or part time) employment arrangement if:

  • the employee has been employed for a 12-month period; and

  • in the last 6 months of that 12-month period, the employee has worked: - a regular pattern of hours on an ongoing basis; and - the employee could continue to work this pattern of hours as a permanent employee, without significant adjustment.

The casual conversion offer must be made in writing to the employee within the 21 days following their 12 months of employment (regardless of pattern of work) and reflect the hours that the employee has worked. An employer may not be required to make an offer for casual conversion if there are reasonable business grounds not to make the offer based on facts that are known or reasonably foreseeable. In addition, an eligible employee may have a residual right to request casual conversion in certain circumstances.

Reasonable grounds to not offer casual conversion include:

  • The employee's employment will cease within 12 months of the refusal to offer casual conversion.

  • The hours of work will be significantly reduced in the 12-month period.

  • There will be significant change in days and hours in the following 12-month period which cannot be accommodated within the days and times the employee is available to work.

  • Making the offer would not comply with a recruitment process required by law.

Read Casual Employees: mitigating the risk of a retrospective claim >

3. Requirement to provide a ‘Casual Employment Information Statement’

This obligation is similar to the existing requirement for employers to provide Fair Work Information Statement to new employees upon commencement of employment.

Employers need to give every new casual employee a Casual Employment Information Sheet (the CEIS) before or as soon as possible after they start their new job.

All employers need to give existing casual employees a copy of the CEIS as soon as possible after the 27 March 2021.

View/download the Casual Employment Information Statement >

4. Double dipping will be prohibited

The reform includes provisions which will allow courts to set off any casual loading paid to an employee who has been misclassified as a casual against subsequent claims for leave and other entitlements. However, setting off will only be permitted where:

  • the engagement of the employee is specifically described as being for casual employment; and

  • the employer has expressly stated that the casual loading is being paid to compensate the employee for not having one or more of those entitlements.

Importantly, the setting off of provisions can be applied retrospectively. In other words, the reforms will allow courts to set off any casual loading paid to an employee before the Bill comes into operation against historical claims for leave and other entitlements, provided that the criteria above are met. This applies even if the employee's employment is terminated before the Bill commences or the employee is no longer employed by the employer.

It is important for employers to review all their casual employee arrangements, especially those 'long term casuals', as this will impact on your obligations according to the FW Act.

Action Plan for Employers

Moving forward, we recommend employers do the following:

1. Review current work arrangements with casual employees to determine if they are likely to be entitled to convert to permanency.

2. Implement processes to ensure compliance with the new casual conversion obligations.

3. Review the engagement of casual employees (including casual employment contracts):

a) Contracts need to accurately reflect the amended definition of casual employment and the new casual employment provisions.

b) Contracts need to include a well drafted clause that specifies the payment arrangement, including the fact that casual loading is payable.

4. Determine whether any employees are entitled to be offered casual conversion in accordance with the new provisions in the FW Act.

5. Review your workplace dispute resolution procedure. A procedure for dealing with a dispute about casual conversion will need to be considered either via the Fair Work instrument, employment contract or other agreement. The parties will need to first attempt to resolve the dispute at the workplace level. If not resolved, it can be referred to Fair Work Commission.

WorkPlacePLUS can help you meet your employer obligations in respect to casual employees and help draft any response to a request to become a permanent employee. For more information and tailored advice, please contact us today.