New statutory definition of ‘casual employee’ – clarifies previous uncertainty around casual employment
After much debate in the Senate, the Federal Government’s Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 has passed through Parliament but in a significantly reduced form.
While the Federal Government’s more broader reforms of the industrial relations system were not proceeded with, the casual employment reform provisions survived.
The Bill introduces into the Fair Work Act 2009 (Cth) (‘FW Act’) a statutory definition of ‘casual employment’ and provides long-term casual employees with a statutory right to request conversion to permanent employment.
The legislation amending the FW Act commenced on 27 March 2021 and creates more certainty for employers about the engagement of casual employees. The FW Act now provides more protection to employers against double-dipping claims by regular long-term casual employees who met the statutory definition of ‘casual employee’.
The legislation was brought to the Parliament following the WorkPac v Skene and WorkPac v Rossato cases.
What is the new statutory definition of ‘Casual Employee’?
One of the most significant amendments made to the FW Act is the introduction of a new definition of ‘casual employee’:
(1) A person is a casual employee of an employer if:
(a) 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
(b) the person accepts the offer on that basis; and
(c) the person is an employee as a result of that acceptance.
(2) For the purposes of subsection (1), in determining whether, at the time the offer is made, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person, regard must be had only to the following considerations:
(a) whether the employer can elect to offer work and whether the person can elect to accept or reject work;
(b) whether the person will work as required according to the needs of the employer;
(c) whether the employment is described as casual employment;
(d) 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.
Note: Under Division 4A of Part 2‑2, a casual employee who has worked for an employer for at least 12 months and has, during at least the last 6 months of that time, worked a regular pattern of hours on an ongoing basis may be entitled to be offered, or request, conversion to full‑time employment or part‑time employment.
(3) To avoid doubt, a regular pattern of hours does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
(4) To avoid doubt, the question of whether a person is a casual employee of an employer is to be assessed on the basis of the offer of employment and the acceptance of that offer, not on the basis of any subsequent conduct of either party.
(5) A person who commences employment as a result of acceptance of an offer of employment in accordance with subsection (1) remains a casual employee of the employer until:
(a) the employee’s employment is converted to full‑time or part‑time employment under Division 4A of Part 2‑2; or
(b) the employee accepts an alternative offer of employment (other than as a casual employee) by the employer and commences work on that basis.
The new casual employee definition focuses primarily on the establishment of the employment relationship, in that:
- There is an offer – an offer of employment has been made by the employer to a person on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work;
- There is an acceptance – the person accepts the offer on that basis; and
- An employment relationship is formed – the person is an employee of the employer as a result.
To be clear, the assessment of whether a person is a casual employee is based on the offer and acceptance of employment and does not include the subsequent conduct of the parties.
A casual employee remains a casual employee unless converted to permanent employment (full-time or part-time) or accepts and commences in an alternative offer of employment with the employer.
The legislation provides several specific factors to determine whether at the time an offer of employment was made, that the employer gave no firm advance commitment to continuing and indefinite work (or pattern);
- 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;
- 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 (such as a Modern Award).
Other changes to the FW Act include a new definition of ‘regular casual employee’ and the repeal of the previous definition of ‘long term casual employee’.
The new provisions operate retrospectively, so it is important that employers consider previous offers made to employees and whether such offers meet the statutory definition of casual employment.
What are the new casual conversion National Employment Standards (‘NES’)?
Casual Conversion Offer and Acceptance
The FW Act has also been amended to insert a new provision into the NES relating to Casual Conversions, Offers and Requests.
An employer (other than small business) must make a written offer to eligible casual employees to convert to permanent employment (full-time or part-time). An offer of permanent employment must be made to any employee, regardless of whether the employee is covered by an industrial instrument or not, where:
- the employee has been employed by the employer for a period of 12 months; and
- during the last 6 months of service, the employee worked a regular pattern of hours on an ongoing basis, that without significant adjustment, the employee could continue on a part-time or full-time basis; and
- unless the employer can establish reasonable grounds not to do so.
The Casual Conversion Offer must be:
- in writing;
- an offer to convert to full-time hours where the employee has worked the equivalent to full-time hours;
- an offer to convert to part-time hours where the employee has worked the equivalent to part-time hours; and
- given to the employee within 21 days after the 12-month period.
The Casual Conversion Acceptance must:
- be followed by written notice by the employer to the casual employee within 21 days after acceptance;
- be written notice confirming the basis of permanent employment (part-time or full-time); and
- include the employee’s hours and days of work to take effect.
A small business employer is not required under the new legislation to make a Casual Conversion Offer to an eligible employee. A small business is defined as any business with fewer than 15 employees (head count includes regular and systematic casual employees). Note however, the section below on Industrial Instrument compliance.
An employer required to make a Casual Conversion Offer may be exempt where the employer can establish reasonable grounds for not making an offer. Importantly, the reasonable grounds must be based on facts that are known or reasonably foreseeable at the time.
The new legislation provides several factors to be considered when determining whether reasonable grounds exist. The employer must be able to establish that within the 12-months from the date an employer is required to make a Casual Conversion Offer to an employee:
- the position will cease to exist;
- the employee’s hours of work will significantly reduce;
- there will be a significant change to the days (or times) of the employee’s hours of work that cannot be accommodated within the days (or times) the employee is available to work.
Casual Conversion Request
Regardless of whether an employee is engaged by a small business or not, an eligible casual employee under the FW Act may make a Casual Conversion Request to permanent employment (full-time or part-time).
Industrial Instrument Compliance
Even though an employer may not have an obligation under the FW Act concerning casual conversion provisions it is important that all employers (including small business) comply with obligations contained in relevant Modern Award or Enterprise Agreement regarding casual conversion.
Casual Conversion Disputes
The FW Act has been amended to include a new dispute resolution procedure to deal with casual conversion disputes that have not been able to be resolved at the workplace level.
Application can be made to the Fair Work Commission (‘FWC’) to deal with the dispute where the employee or employer do not have access to a procedure for settling disputes under an industrial instrument or other written agreement such as a contract of employment.
Casual Conversion Provisions and Enterprise Agreements
The FWC now has the power to retrospectively vary an enterprise agreement where an application is made by parties covered by an enterprise agreement to deal with uncertainties and difficulties arising from the new statutory definition of ‘casual employee’ and casual conversion provisions.
Casual Conversion Provisions and Modern Awards
New clause 48 of Schedule 1 to the FW Act requires the FWC to review and vary modern awards based on their interaction with the new statutory definition of ‘casual employee’ and the casual conversion provisions. The FWC has recently commenced the Casual Terms Review, and in doing so has indicated the review will take place in stages. The FWC has indicated that the first stage of the review will include the following modern awards:
- General Retail Industry Award
- Hospitality Industry (General) Award
- Manufacturing and Associated Industries and Occupations Award
- Educational Services (Teachers) Award
- Pastoral Award
- Fire Fighting Industry Award
- The FWC must complete the Casual Terms Review of all Modern Awards by 27 September 2021.
Casual Employment Information Sheet
Under the new changes to the FW Act the Fair Work Ombudsman was required to produce and publish a new Casual Employment Information Sheet (CEIS), a copy of the CEIS is available HERE.
Moving forward employers must ensure that a copy of the CEIS is made available to casual employees before, or as soon as possible after they commence. Small business employers must give their existing casual employees a copy of the CEIS as soon as possible after 27 March 2021. For all other employers, they must give their existing casual employees a copy of the CEIS as soon as possible after 27 September 2021.
Employers are still required to provide all new employees with a copy of the Fair Work Information Statement at the same time.
Employers must pro-actively consider industrial instruments and contracts of employment for casual employees to ensure compliance with the new statutory casual provisions. It is also paramount that contracts of employment specify the casual loading amount to be paid to the casual employees and properly identify what entitlements are compensated by the casual loading such as:
- annual leave;
- personal/carer’s leave;
- payment in lieu of notice of termination;
- redundancy pay;
- other entitlements of full-time or part-time employment that casual employees do not otherwise receive.
Aitken Legal recommend that employers seek advice from us regarding:
- the casual employment statutory reforms;
- assistance with any aspect of casual and permanent employment arrangements; and
- the drafting of casual and permanent contracts of employment designed to best protect your business.
Disclaimer: The information contained this article is general and intended as a guide only. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this update, Aitken Legal does not accept liability for any errors it may contain. Liability limited by a scheme approved under professional standards legislation.