In a recent decision by the Morrison Government, the Industrial Relations Bill (the IR Bill) will provide the first statutory definition of casual work for the Australian Commonwealth.
Industrial Relations (IR) Minister Christian Porter has expressed no doubt over the fact that this development will resolve the “neglect” of the Labour Government in 2009 to include a statutory definition of casual employment in the Fair Work Act. The proposed IR Bill will also crucially respond to key gaps in the law highlighted in the recent case of Workpac Pty Ltd v Rossato & Ors [2020] FCAFC (the Workpac case), which, according to Mr Porter left:
‘2.3 million casual employees [in] need of certainty about their work arrangements and entitlements’.
In the Workpac case, the worker concerned had been employed under contract by the labour hire company as a ‘casual’ employee. He was paid the 25 per cent casual loading on his wage and was engaged to work on six successive contracts across four years. In the Federal Court of Australia, the Full Court determined that the worker was not a genuine casual but a permanent employee, who was entitled to paid annual leave, personal leave and compassionate leave despite having received the casual loading throughout his employment. Click here to read about the case in more detail in an article published by a member of the Employment Law Team, Lisa Qiu.
The Workpac case has informed the new IR Bill to provide:
- A clear definition of casual employment;
- A new minimum standard for casual conversion to permanent employment; and,
- A way to deal with the risk of ‘double dipping’.
A clear definition of Casual Employment
Under the new IR Bill, casual work will be defined as employment that is offered without any ‘firm advance commitment’, that will continue indefinitely and follow an agreed pattern of work. A ‘firm advance commitment’ will be determined by specific factors, including whether:
- the employee can elect to accept or reject work;
- the employment is described as casual employment; and,
- the employee will be entitled to a casual loading or specific rate of casual pay.
These and further relevant circumstances will be tested according to an ‘objective, common-sense test’ that looks at the circumstances existing between an employee and employer at the time of engagement.
This definition will apply from the date a casual employee commences their employment.
A new minimum standard for casual conversion
The IR Bill will provide some much-needed clarity on the minimum standard required for a casual worker to be able to convert to a permanent role.
Under the existing system, an employer must offer the chance to request conversion to a casual employee who has worked for six months according to a regular pattern of hours, on an ongoing basis. The employer may only decide not to make the offer to convert or to accept the employee’s request if they have reasonable grounds to do so. Such grounds may include that it is untenable for the employee to continue to work on any permanent basis (part-time or full-time) without significant adjustment to hours of work, or the employee’s employment will be ending within the next 12 months.
The new IR Bill will reflect the existing standard by allowing employers to continue to refuse casual conversion on reasonable grounds. However, a further right of casual employees to request this will become available every six months, so long as an employee remains eligible. In addition to being ‘an enhancement of the existing award rights of conversion’, Mr Porter has remarked that this will:
“effectively [give] regular casual employees the reasonable choice as to the status of their own employment”.
The risk of ‘Double Dipping’
According to existing workplace laws and the outcome to date of the Workpac case, employers face the risk of ‘double dipping’, whereby an employee is treated as a casual but later determined to be a permanent employee who is owed permanent entitlements.
The proposed IR Bill will mitigate this risk by allowing employers to offset any paid casual loadings under the National Employment Standards (NES), a Fair Work instrument or employment contract against future claims for permanent benefits.
Crucially, this amendment will apply to past and future employees, and will be enforceable by the courts.
Key Lessons
The introduction of an objective standard of casual employment will fundamentally address those gaps in casual employment law that have long been identified in the courts and by employees and employers in the workplace.
According to Mr Porter, the proposed developments are consistent with existing Federal Court decisions and “strike that essential balance” that has been needed for some time. That is, the new casual conversion rights will ensure those working regular shift patterns will have the opportunity to secure their job by converting to permanent work, whilst maintaining the rights of employers to refuse conversion where there are reasonable grounds for doing so.
Although the IR Bill is on track to introduce these changes, employers should be on notice that the High Court has granted special leave for the appeal of Workpac against the Federal Court ruling. This means that whilst the Workpac decision is current law, it may yet be overturned and should be treated with extreme caution.
If you have any questions about any of the above or would like some tailored advice about the conversion of your casual employees, please do not hesitate to reach out to a member of Coleman Greig’s Employment team, who would be more than happy to assist you.
