While many problems remain with our complex industrial relations system, the Federal Government has at least managed to iron out a couple of issues related to casual employment with the passing of the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (“the Bill”), earlier this month (March 2021).
Definition of Casual Employment
The Bill introduces a definition of casual employment into the Fair Work Act. Essentially, a person is a casual employee if they are:
- 1.offered employment without a “firm advanced commitment to continuing and indefinite work”; and
- 2.they accept that offer.
In determining whether there is a “firm advance commitment to continuing and indefinite work”, a Court will under the legislation consider:
- > 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.
A key implication of this change is that the assessment as to whether an employee is casual or not hinges upon the agreement of the parties at the time of the person’s engagement, rather than their subsequent activities (which is to some extent currently the case).
The Bill also resolves the issue of “double-dipping”, by which some employers have in recent times been in the unenviable position of being found to have incorrectly regarded employees as casual only to have a court deem them full-time or part-time, with the result that the employee received payments relating to annual leave accruals AND retained their casual loading!
The Bill allows employers in this situation to offset any leave entitlements against casual loading payments that may have been made.
This makes it extra-important for employers to ensure any loading payments made to casual employers are separately-identifiable from their hourly rate of pay.
Changes to Casual Conversion
Most Awards currently include a “casual conversion” clause by which a casual employee engaged for “a pattern of hours on an ongoing basis” for a defined period (most typically 12 months), can request conversion to full or part-time employment, and the employer can only refuse that request “on reasonable grounds”.
As a result of the new legislation, this changes and employers (other than small businesses – refer below) must offer to convert a casual employee to permanent full or part-time employment (whichever is most appropriate) if the employee:
- has been employed for 12 months;
- during the last 6 months, has worked a regular pattern of hours on an ongoing basis, and;
- those hours could continue as a permanent arrangement without significant adjustment.
Employers are not obliged to make an offer of conversion where there are “reasonable business grounds” for them to not do so. These “reasonable business grounds” 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.
In cases in which the employer decides “on reasonable business grounds” to not make an offer of conversion, they need to provide the relevant employer with notice of their decision within 21 days of the employee being eligible for conversion. If the employer fails to provide this notice, the employee will generally be entitled to request conversion at a later date.
Where the employer does not offer casual conversion or an offer is made and the employee declines the opportunity to convert, the employee may be able to request conversion at a later date if they feel they meet the criteria. There generally needs to be at least 6 months between requests.
It’s important to note that this requirement to offer casual conversion does not apply to small business employers (ie. employers with fewer than 15 staff including “regular and systematic” casuals). Regular casuals in small businesses may however be able to request casual conversion if they feel they meet the criteria.
New Casual Employment Information Statement
The legislation has also resulted in a new Casual Employment Information Statement (CEIS) that employers need to provide to each casual employee upon their engagement. This is in addition to the Fair Work Information Statement that employers already need to provide to all new employees (regardless of whether they are casual, full-time or part-time).
As for casual employees already engaged before 27th March 2021:
- those employed by small businesses need to be given a copy of the CEIS as soon as possible after 27th March 2021, and
- those employed in other businesses need to be given a copy as soon as possible after 27th September 2021.
A copy of the Casual Employment Information Statement is available here.
A copy of the the updated Fair Work Information Statement (for ALL employees) is available here.
So What Should Employers Do Now?
As a result of the new legislation, we suggest that employers of casual staff:
- Review contracts for existing and potential new casual staff. Ensure casual employees are clearly identified as such, that there is a record of their acceptance of your offer of casual employment and that their casual loading payments are separately identified
- Ensure any new casuals receive a copy of the Casual Employment Information Statement (CEIS) (in addition to the updates Fair Work Information Statement)
- Determine when casual staff engaged prior to 27th March 2021 need to be given a copy of the CEIS and ensure this obligation is met
- If you have 15 or more staff (headcount), identify existing casual staff who may at some point be eligible to receive an offer of conversion, and consider whether in fact you are going to make that offer at that time (and if not, provide them with notice of your decision). Also, ensure that you have a procedure in place to manage this obligation on an ongoing basis.
We can help you understand and comply with these new obligations – let us know if you need assistance.
As a final point, this might also be a good time to review the structure of your workforce (ie. the “mix” between full-time, part-time and casual staff). Our recent video on the different types of employment may be of assistance, refer here (though note that some of the information relevant to casual employment pre-dates the changes referenced in this article).
This article provides general information only and should not be regarded as legal or specialist advice. If you need assistance please contact us.