Casual employment - finally a legislated definition
On 26 March 2021 the Fair Work Act was amended to include a statutory definition of “casual employee”. This is a person who:
is offered employment without a “firm advanced commitment to continuing and indefinite work”; and
accepts that offer.
This is a point in time test, to be assessed at the start of employment. The Fair Work Act prevents courts from considering the subsequent conduct of the parties. This should provide more certainty for employers as to whether their casual workforce is truly casual.
When determining whether a firm advance commitment to continuing and indefinite work exists, the Fair Work Act will require a court to only have regard to the following factors:
whether the employer can elect to offer work and whether the person can elect to accept or reject work;
whether the person will work 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 fair work instrument.
The amendments to The Act also included other very important changes including:
a new specific Casual Fair Work Information Statement;
clarification to ensure no casual double-dipping (ie - to receive casual loading and leave and other entitlements of permanent employees); and
the provision for casuals to convert to permanent employment.
New Casual Employment Information Statement
The Bill requires the Fair Work Ombudsman to create a new Casual Employment Information Statement that is to be provided to each casual employee when they start employment with their employer (see link below).
Employers will therefore need to provide both the usual Fair Work Information Statement and the new Casual Employment Information Statement to new casual employees.
Employers have to give every new casual employee a Casual Employment Information Statement before, or as soon as possible after, they start their new job.
Small business employers (those with less than 15 employees) need to give their existing casual employees a copy of the Statement as soon as possible after 27 March 2021. Other employers have to give their existing casual employees a copy of the Statement as soon as possible after 27 September 2021.
Download the Casual Employment Information Statement (PDF178.1KB).
Casual double-dipping rules fixed
Where an employee is engaged as a casual but it is later determined they are in reality a permanent employee, employers will be able to offset any casual loading paid to employees against any permanent entitlements that arise (eg annual leave, etc).
In order to have the benefit of this offset arrangement, the loading paid must have had components that can be identified as being paid to the employee instead of one or more permanent employee entitlements.
Rights for casuals to convert to permanent employment
The Fair Work Act now includes a new obligation for employers to offer casual employees a chance to “convert” to permanent employment after 12 months of employment so long as during the last 6 months they have worked a regular and systematic pattern of hours.
This is different from existing casual conversion clauses in modern awards which enable employees to request conversion. For the first time, employers will be required to pro-actively make offers of conversion to casual employees. However, no offer needs to be made if there are “reasonable business grounds” for not making the offer.
Reasonable business grounds are defined to include:
where the conversion would require a significant adjustment to the employee’s hours of work in order for the employee to be employed permanently;
where the employee’s position will cease to exist in the 12 months after the conversion right arises;
where the hours of work which the employee is required to perform will be significantly reduced in the 12 months after the conversion right arises; and
if there will be a significant change in either the days or times on which the employee’s hours of work are required to be performed in the 12 months after the conversion right arises.
Where an employer determines not to make an offer of conversion, they must give notice of the decision to employees within 21 days of when the right to be offered conversion arose.
Where an employee declines an offer to convert (or the employer determines that they cannot reasonably offer conversion) the employee loses the right to convert for the next 6 months.
The offer must be to convert to either full-time employment (where the casual has worked the equivalent of full-time hours) or part-time employment consistent with the casual’s regular pattern of hours (where the casual has worked the equivalent of part-time hours).
Importantly, for small businesses (ie. those with less than 15 employees), casuals can request to convert, but there is no obligation on the employer to proactively offer conversion.
The new law also contains complex “transitional” provisions regarding obligations that employers must take within the first 6 months of the amendments coming into effect, including assessing whether all existing casual employees are entitled to be offered permanent employment and notifying them of the result of the assessment.
What employers need to do
There are important processes employers will need to consider implementing including:
Have processes in place for issuing the Casual Employment Information Statement;
Have processes in place for assessing whether existing casuals are to be offered conversion;
Have processes in place for offering conversion to casual employment at the 12 month anniversary of employment, or issuing reasons for why making such an offer is not reasonable;
Updating employment contracts to meet the new definition of casual employment;
Updating employment contracts (and potentially payslips) to make sure casual loading is referable to a payment in lieu of permanent entitlements.
If you would like further information or assistance on this matter Easy Books for Better Business is equipped to help. Please feel free to make an appointment or call us on 0402 399 480 to discuss further.