Casual Employees - Certainty for Employers

The Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2021 (Bill) has now passed Parliament and provides more certainty for employers in relation to casual employees.

The Bill, as passed, is a much more limited version of the bill that was initially tabled by the Attorney General in December 2020. Proposed changes to enterprise agreements, modern awards and penalties for underpayments were abandoned by the Federal government following Senate opposition.

What should employers do?

Employers should take the following steps as soon as possible to review their casual employment arrangements to ensure they comply with the Bill when it commences.

Step 1: audit their casual arrangements to determine if any employees meet the Casual Conversion Criteria (as defined below);

Step 2: prepare letters offering to convert to permanent employment in accordance with the Bill or notices of the reasonable grounds not to make the offer for each employee who meets the Casual Conversion Criteria;

Step 3: review their casual employment contracts to ensure they meet the test for a genuine casual under the Bill and vary the contracts as required.

Statutory definition of casual employment

As noted in our December 2020 update,  the Bill introduces a statutory definition of casual employment. A person will be a casual employee if the employee accepts an offer of employment that “makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person.” This definition will apply to casual employment offers made before or after the commencement of the new laws.

Importantly, whether a person is a casual employee will be assessed at the time the engagement is entered into and is not based on “any subsequent conduct of the parties”. A number of factors must be considered when determining whether the employer makes a firm advance commitment to continuing and indefinite work. A regular pattern of work is not alone indicative of this commitment. Other relevant factors include:

• the ability of the employee to accept or reject work;
• whether the employee will work only as required;
• whether the job is described by the employer as being casual; and
• whether the employee is entitled to be paid a casual loading.

This makes the terms of casual employment contracts paramount in determining whether the person is a genuine casual employee.

The Bill provides employers more certainty in respect of casual employment given the Full Federal Court outcomes in Skene and Rossato, both currently on appeal to the High Court.

Casual conversion

The Bill requires employers to make a written offer to casual workers to convert to a permanent role if the employee:

• has worked for the employer for a period of 12 months;
• has worked a regular pattern of hours on an on-going basis for the previous six months which the employee could continue to work as a full-time or part-time employee (whichever is applicable), without significant adjustment.

(Casual Conversion Criteria)

The written offer

The offer is not required to be made if the employer has given written notice to the employee stating that it is not making a casual conversion offer and specifies the reasonable grounds for not making the offer, based on the facts known or reasonably foreseeable at the time. Reasonable grounds include:

• the position will cease to exist in the next 12 month
• if the hours and/or days or time required to be worked will significantly change for genuine operational reasons and cannot be accommodated within the days or times the employee is available to work

An offer to convert to a permanent role, must be made in writing within 21 days of the end of the relevant 12 month employment period. If the offer is accepted by the employee, the employer must then discuss with the employee:

• whether the employee is converting to full-time or part-time employment
• the work hours after conversion and when that employment commences, which must be the first day of the full pay period after the day the notice is given (unless the employee and employer agree to another day).

These matters must be confirmed in writing within 21 days of receiving the employee acceptance of the conversion offer.

A casual employee who meets the Casual Conversion Criteria and has not refused an offer to covert to permanent employment made in accordance with the Bill or received a written notice as to why it cannot be made on reasonable grounds, can request conversion every six months, provided they continue to meet the conversion criteria. Employers must respond in writing to any such request within 21 days although they will retain the ability to refuse such a request on reasonable grounds, provided they have consulted with the employee and have reasonable grounds to refuse as outlined above.

New casual employees are required to be given a Casual Employment Information Statement published by the Fair Work Ombudsman, before or as soon as practicable after the employee starts as a casual employee.

The provisions of the Bill dealing with casual conversion do not apply to small business employers.

Further, while the Bill has provided a means for employees to request casual conversion, employees are not prevented from requesting to convert to full-time or part-time employment by other means.

Disputes in relation to casual conversion will be dealt with under a dispute procedure in a fair work instrument, employment contract or another written employer and employee agreement. If there is no such dispute procedure then after discussions between the employer and employee the parties can refer the dispute to the Fair Work Commission by agreement. Certain disputes about the casual conversion provisions can be dealt with as small claims proceedings from a magistrates court or the Federal Circuit Court.   

Double dipping

A new mechanism will allow employers to set off any claim for paid entitlements (e.g. annual leave, personal/carer’s leave, compassionate leave, redundancy pay) against any casual loading paid to prevent ‘double dipping’.

These provisions will have retrospective application so they will apply to all current employees from the commencement of their employment.

High Court challenge

Class action law firm Adero is considering a High Court challenge to the constitutionality of the Bill’s double dipping provisions. However, at the time of no publication, no such challenge has been filed.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).