Changes to Casual Employment

In March 2021, changes to the Fair Work Act 2009 (Cth) (FWA) significantly altered the definition and entitlements of casual employees. The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery Act 2021 (Cth) (Amendment), embodies the changes and introduces the following five key changes:-

1. a clear, legal definition of a casual employee;
2. a right to convert from casual to permanent employment;
3. a new Casual Employment Information Statement;
4. a simpler legal process for casual conversion disputes; and
5. a new rule about offsetting casual loading in court disputes about entitlements.

Clear, legal definition of a casual employee

Casual employee is defined in the Amendments as follows:-

“A person is a casual employee of an employer if:

1. an offer of employment made by the employer to the person 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 for the person; and
2. the person is an employee as a result of that acceptance.”

This means that an employee is a casual employee if they meet the following criteria:-

1. The individual is offered a job;
2. The employer makes no firm advance commitment that the work will continue indefinitely with an agreed pattern of work (more on this below); and
3. The individual accepts the offer knowing that there is no firm advance commitment and becomes an employee.

To determine that there is no firm advance commitment, the following factors are considered:-

1. The employer can choose to offer the employee work and it’s the employee’s choice whether to work or not;
2. The employee will be offered work when the employer needs the employee to work;
3. The employment is described as casual;
4. The employee is paid a casual loading or a specific pay rate for casual employees.

Not all four of these factors are required for there to be no firm advance commitment. The factors must be weighed up in order to make the decision that there is no firm advance commitment and the employee is therefore a casual employee. For example, where three of the four factors apply there is no firm advance commitment and the employee is a casual employee.

Conversion from casual to permanent employment

Casual employees can now access a pathway to a permanent role if they are eligible. This is called casual conversion. Employers that are not small business (i.e. have 15 employees or over) must assess all casual employees once they have been employed for 12 months. They must either then offer to convert the employee to permanent employment or give written reasons as to why not. The test is whether there is no firm advance commitment, and this can be determined by weighing up the four factors previously outlined in this article.

More information on casual conversion can be found on the Fair Work Ombudsman’s website.

Casual Employment Information Statement

Employers need to give all casuals a Casual Employment Information Statement (CEIS) before, or as soon as practicable after, the employee commences employment as a casual. The Statement helps casual employees understand their rights and entitlements.

Download the Casual Employment Information Statement here.

Simpler legal process for casual conversion court disputes

Whether an employer decides not to offer a permanent role, or decides not to accept a request for conversion to a permanent role and a casual employee disagrees with the decision, there are steps they can take.

Where a dispute resolution process doesn’t exist, the first step the employee should take is to discuss the decision not to offer, or to refuse the request for, permanent employment with their employer. An employer may also seek to have their concern resolved by a court.

Offsetting casual loading in Court disputes

An employee can apply to a court to make a decision about their employment status, if their employment is described as casual but they believe it is not. If a court determines that they are not a casual, the employer could be asked to pay any leave entitlements the employee did not receive. The court must now recognise identifiable casual loading payments and deduct them from any amount owed to the employee.

What happens if employers don’t comply?

The CEIS and casual conversion form part of the National Employment Standards. Civil penalties can be imposed for employers that do not comply with the requirements. These penalties can be up to $66,000 for a corporate entity and $13,320 for individuals involved in a breach.

Employers should also be mindful of the General Protections (Adverse Action) provisions of the FWA. The Adverse Action provisions prevent an employer from treating an employee less favourably because they have exercised, or chosen not to exercise, a right to casual conversion.

Recommendations for employers

1. Provide a copy of the Casual Employment Information statement to your casual employees. The current version can be found here. Please note that the statement is updated form time to time so it’s best to provide the Statement by way of link to the Fair Work website.
2. Review all existing casual employees and determine whether they are eligible for conversion.
3. Review any new casual employees after they have completed 12 months of work and determine whether they are eligible for conversion.
4. Make an offer for conversion to those eligible or advise the reason a conversion cannot be made.
5. Have a process in place to ensure you respond to a casual employee making a request for conversion within 21 days of the request.
6. Keep records to show you have complied with the requirements.

If you require assistance in understanding and/or complying with your new legal obligations as employers, contact Gavin Parsons of Gavin Parsons and Associates on (02) 9262 4471 or at gavin@gpalaw.com.au.