The Fair Work Act 2009 (Cth) (FW Act) was recently amended which significantly impacts workplace rights and obligations for casual employees throughout Australia.
What Has Changed?
The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (FW Amendment Act) introduced the following changes for casual employees:
- Employers must provide casual employees with a Casual Employment Information Statement;
- A new definition of casual employment is included in the FW Act;
- Casual conversion to permanent employment; and
- Casual loading offset.
Casual Employment Information Statement
Employers must provide every new casual employee a Casual Employment Information Statement (CEIS) before, or as soon as possible after, they commence employment.
Small business employers must provide their existing casual employees a copy of the CEIS as soon as possible after 27 March 2021. Other employers must provide their existing casual employees a copy of the CEIS as soon as possible after 27 September 2021.
It appears that the CEIS will supplement the Fair Work Information Statement that employers already need to provide employees.
Casual Employment Defined
For the first time, the FW Act has been amended to include the definition of a casual employee.
Under the new definition, a person is a casual employee if they accept an offer of employment from an employer knowing that there is no firm advance commitment to ongoing work with an agreed pattern of work.
When determining whether a firm advance commitment to continuing and indefinite work exists, the FW Amendment Act requires a Court to have regard to only the following considerations:
- 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.
Casuals who were employed immediately before 27 March 2021 and whose initial employment offer meets the new definition will continue to be casual employees under the FW Act.
Right to Casual Conversion
The FW Amendment Act adds a new entitlement to the National Employment Standards (NES) giving casual employees a pathway to become a full-time or part-time (permanent) employee. This is also known as ‘casual conversion’.
An employer (other than a small business employer) has to offer their casual employee to convert to full-time or part-time (permanent) when the employee:
- has worked for their employer for 12 months;
- has worked a regular pattern of hours for at least the last 6 of those months on an ongoing basis; and
- could continue working those hours as a permanent employee without significant changes.
Some exceptions apply, including:
- small business employers; and
- if an employer has ‘reasonable grounds’ not to make an offer to a casual employee for casual conversion.
The transitional provisions of the FW Amendment Act provide employers with a 6-month transition period following commencement (until 27 September 2021), during which employers are required to assess all casual employees to determine whether they are eligible to be offered permanent employment.
Casual Loading Offset Created
The FW Amendment Act also allows 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 provisions can be applied retrospectively.
These setting off provisions provide a safeguard for misclassified ‘casual’ employees who do not meet the statutory definition. This circumvents the Full Federal Court’s decision in Workpac v Rossato where a narrow view was adopted as to an employer’s inability to offset casual loading against permanent entitlements such as annual leave.
What Should Employers Do Now?
Employers should immediately review the existing contractual terms with their ‘casual’ employees, to determine whether it meets the statutory definition of casual employment. In most cases, casual contract terms will require careful drafting to ensure compliance.
Separately, employers should also commence assessing their casual workforce to determine which casual employees should be made conversion offers to permanent employment during the 6-month transition period ending 27 September 2021.
Please contact us if you would like us to assist.
