Casual Employment Revamped according to Landmark development

After being stripped down and dissected over months, the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (the Bill), also known as the IR omnibus Bill, was finally passed in Parliament on 22 March 2021.

The originally proposed Bill sought to address perceived gaps in the legislation related to, for example, greenfields agreements, penalties for wage theft and casual employment. Across March of this year, intense Parliamentary negotiations led to the abandonment of all provisions in the Bill but for those concerning casual employment.

The landmark passing of the Amendment Bill on 22 March 2021 provides us with the first ever statutory definition of casual employment. It also provides for a right for casuals to convert to permanent employment after 12 months and for court-ordered offset of entitlements. These are explained in further detail below.

A copy of the Bill can be viewed here.

The New Definition of Casual Employment

Under the newly approved Bill, a casual employee is one to whom the following terms apply:

1. an offer of employment is made without a “firm advance commitment to continuing and indefinite work according to an agreed pattern of work”;
2. the offer is accepted by the person to whom it is made; and
3. the person is an employee as a result of that acceptance.

In determining whether a firm advance commitment to continuing and indefinite work is made, an employer must have regard to the following factors:

1. whether the employer can elect to offer work and whether the person can elect to accept or reject work;
2. whether the person will work only as required;
3. whether the employment is described as casual employment; and
4. 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.

The new provisions specify that a regular pattern of hours will not itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work. This is a crucial distinction that provides clarity as to whether consistent weekly hours as a casual worker will actually amount to permanent employment – the answer is that it will not.

Under the new Bill, a person who commences employment after accepting an offer in accordance with the above will remain a casual employee until either their employment is converted to full-time or part-time employment, or the employee accepts an alternative offer of employment by the employer, other than as a casual employee.

The Right to Casual Conversion

Prior to this Bill, some industrial instruments have provided applicable casual employees with a right to request conversion to permanent employment after a period of regular and ongoing employment with their employer (usually 12 months). This will still apply for casual employees under small business employers who have a head count of less than 15 employees. However, the Bill provides that all other employers will have an obligation to offer conversion to casual employees after they have performed at least 12 months of regular and ongoing employment, regardless of any other request. Specifically, employees working regular and ongoing part-time hours will be able to convert to permanent part-time employment, and the employees working regular and ongoing full-time hours can convert to permanent full-time employment. If an employer fails to make the offer after 12 months for any reason, an employee will retain a residual right to request conversion at a later date.

Under the new Bill, employees who wish to convert must make their request in writing. Employers must then provide a written response to a request within 21 days after the request is given. The response must state whether the employer agrees to or refuses the request, whether the conversion is to full-time or part-time employment, the hours of work of the employee after the conversion takes effect, and the day that the conversion takes effect.

An employer will be permitted to refuse a request only if the employer has consulted the employee, there are reasonable grounds to refuse the request, and the reasonable grounds are based on facts that are known or reasonably foreseeable at the time of the refusal. Reasonable grounds for refusing a request will include if:

1. it would require a significant adjustment to the employee’s hours of work to be employed as a full-time or part-time employee;
2. the employee’s position will cease to exist within 12 months of the request being given;
3. there will be a significant change in the following 12 months in respect of the days or times the employee’s hours of work are to be performed; and
4. granting the request would not comply with a recruitment or selection process required under law.

Casual Employees to have their own Fair Work Information Statement

The Bill has additionally required that the Fair Work Ombudsman prepare a Casual Employment Information Statement to go to casual employees at the commencement of their employment with a new employer. This appears to supplement the ordinary Information Statement that all employers have had to provide to casual employees to date, and will contain the following information about casual employment:

1. the statutory meaning of a casual employee;
2. the requirement for a casual conversion offer by the employer within 21 days of the employee completing 12 months of employment;
3. an employer’s ability to decide not to offer casual conversion if there are reasonable grounds to do so (of which the employer must notify the employee);
4. the residual right of some casual employees to request casual conversion; and
5. the Fair Work Commission’s ability to deal with disputes concerning these new casual employment provisions under the Bill.

Offset of Casual Entitlements

As a result of the decision in Workpac Pty Ltd v Rossato & Ors [2020], the effects of which you can read about here, the new Bill has been drafted to resolve existing problems created when employers have misclassified an employee as a casual. In essence, this historic problem has resulted in non-payment of leave entitlements to permanent employees performing work as a casual.

Under the new Bill, as the result of a conversion claim, an employer may be required to offset any relevant entitlements owed to an employee against the casual loading that is paid to casual employees to compensate for permanent entitlements such as sick or annual leave. For this provision, a relevant entitlement will include paid annual leave, paid personal/carer’s leave, paid compassionate leave, payment for absence on a public holiday, payment in lieu of notice of termination, and redundancy pay.

Take Aways

It is important that employers are across these provisions of the Bill so as they can comply with their obligations once the Bill comes into effect. In practical terms, employers of casual employees will need to ensure that:

1. their casual employment contracts accurately reflect the above changes, and
2. they have appropriate procedures in place in the workplace to manage casual conversion in accordance with these new provisions.

If you would like your casual contracts reviewed or have questions about how to manage the effects of this new Bill in your workplace, please contact a member of Coleman Greig’s Employment Law Team, who would be happy to assist you today.