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Changes to the definition of ‘casual employee’

Victoria Quayle ||

Co-authored by Lara So

On 24 July 2023, Industrial Relations Minister, The Hon Tony Burke MP, announced that the Australian Government will reform the definition of a casual employee as a part of its next set of workplace reforms.

Minister Burke revealed that 75 consultation meetings have already taken place with more to come. Groups including businesses, trade unions, academics, and civil society have been consulted.

The ‘what’s really going on’ test

According to Minister Burke we can expect that the casual definition will revert back to its prior meaning before legislative changes from a couple years ago.

This proposal by the Government may therefore also overturn the High Court’s decision in Workpac Pty Ltd v Rossato (2021) and align with the Federal Court’s earlier decision in Workpac Pty Ltd v Rossato (2020).

The current legislative definition means that an employee’s work status is determined according to their contract, regardless of whether this is inconsistent with the reality of their working situation.

However, with this proposed change, the new definition would effectively ask the question ‘what’s really going on’. It will take a more practical approach, looking at whether the employee is in fact working as a casual or is working permanent hours.

Minister Burke predicts that this reform will provide more than 850,000 casual employees who have regular work arrangements a pathway to become permanent. The emphasis has been placed on choice with no forced change of working status.

Closing the loophole

The Government has indicated that its intention is to ‘close the loophole that leaves people stuck as casuals when they actually work permanent regular hours’.

Under the Government’s proposal, the current casual conversion framework will also remain in place. This includes an allowance for employers, on reasonable grounds, to refuse an offer or request a conversion. However, there is consideration of shortening the request timeframe from 12-months. This means that regular casual employees could have the choice to convert to permanent after six-months in the job, and every six-months after that.

Risks and concerns

Given the existing ambiguity, there are some general concerns with the proposal. One key concern is that the change particularly impacts small and medium business, and could incentivise employers to reduce the hours of their casual workers.

There are further fears that this decision will prevent employees from being appropriately paid based upon their skill and experience. This is despite Minister Burke’s assurance that such change will not entitle a new employee to receive the same pay and benefits as an experienced employee.

Most notably, concerns have been expressed that the proposal will mean businesses that misclassify permanent employees as casuals will be liable for backpay for annual leave or other entitlements. However, the Government has asserted that this will be a ‘proscriptive’ change and promised that it will not result in backpay.

Ultimately, the reality is that we won’t know the precise details of these proposed changes and their impact until the draft wording of the Bill is released.

For more information or to discuss the potential impact of these changes, please contact Coleman Greig’s Employment Law team.

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