In brief

Does your workforce include casual employees? Laws relating to casual employment have undergone significant changes due to recent amendments to the Fair Work Act 2009 (Cth) (FW Act).

Several changes require employers to take action now, by or after 27 September 2021. We set these out below along with some recommended actions.

Recommended Actions for Employers

1. Review casual employment contracts

Review your casual employment contracts to ensure that they address the new definition of casual employment and the factors in the FW Act.

2. Converting casual employment to permanent employment (i.e. casual conversion)

  • Employers other than small business employers:
    • Review your casual workforce to determine if any offers of casual conversion are required by 27 September 2021 and make any offers required by that date.
    • Monitor your workforce and be prepared to make any offers of casual conversion after 27 September 2021 to employees who become eligible.
    • Be ready for eligible casual employees to make requests after 27 September 2021 to convert to permanent employment.
  • Small business employers
    • Be ready for eligible casual employees to request casual conversion at any time.

3. The Casual Employment Information Statement (CEIS)

  • Employers other than small business employers:
    • Provide casual employees employed before 27 March 2021 with a copy of the CEIS as soon as practicable after 27 September 2021.
    • Ensure any new casual employees employed after 27 March 2021 are provided with a copy of the CEIS before, or as soon as practicable after, they start employment.
  • Small business employers:
    • Ensure all casual employees are provided with a copy of the CEIS before, or as soon as practicable after, they start employment.

Background

Late last year, we provided you with an update on changes to the FW Act proposed by the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020 (Cth) ("Bill") in the article "Australia: All aboard the omnibus! What will proposed changes to the Fair Work Act mean for your business?".

Significant amendments were made to the Bill during its passage through Parliament. Ultimately, the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Act 2021 (Cth), was passed with the effect of amending the FW Act in relation to casual employment. The amendments differ between 'small business employers' and other employers. While changes commenced on 27 March 2021, some changes are subject to a 6-month transition period and do not commence until after 27 September 2021.

The significant changes, at a high level, are:

1. Definition of 'casual employee' in the FW Act

The FW Act's definition of 'casual employee' focuses on the following to assess whether an employee is a casual employee:

  • the terms of the offer and acceptance of the offer; and
  • the absence of a 'firm advance commitment to continuing and indefinite work according to an agreed pattern of work'. The FW Act now includes an exhaustive list of indicators of a 'firm advance commitment' which are:
    • 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.

The combination of the legislative changes and the decision of the High Court in Workpac Pty Ltd v Rossato [2021] HCA 23 (discussed in the article "Australia: Form over substance - High Court overturns WorkPac v Rossato") makes clear the importance of the terms of a casual employee's written contract of employment in determining the employee's status as a casual employee.

2. Conversion of casual employees to permanent employment

In some circumstances, a casual employee's employment can now convert to permanent employment under the FW Act as a result of an:

  • employee request; or
  • employer offer (which, in certain circumstances, is a requirement).

Employers must offer conversion to casual employees if:

  • the employee has been employed by the employer for 12 months;
  • the employee has worked a regular pattern of hours on an ongoing basis for at least the last 6 months of that period; and
  • regular pattern of hours (without significant adjustment), can continue to be worked as a full-time or part-time employee (as the case may be).

Equally, an employee may request conversion if the above factors apply and in the last 6 months:

  • the employee has not refused an offer to become a permanent employee;
  • the employer has not informed the employee that they will not offer conversion on reasonable grounds; and
  • the employer has not already refused a request from the employee (based on reasonable grounds) to become a permanent employee.

There are requirements in the FW Act to ensure that any request or offer is dealt with appropriately.

Employers have the ability to refuse a request or not offer conversion to permanent employment, if there are 'reasonable grounds' for doing so.

3. Casual Employment Information Statement from the Fair Work Ombudsman

Employers will now be required to provide casual employees with a copy of the new CEIS. This statement includes information about the new definition of 'casual employee', conversion to permanent employment and how to resolve conversion disputes. Dates for providing the CEIS depend on when the casual employee began employment and if the employer is a small business employer.

4. Protection against 'double dipping'

A new provision has been introduced which has the purported effect that amounts payable by an employer to a person for 'relevant entitlements' can be offset by the amount of any casual loading previously paid by the employer to compensate the casual employee for not having entitlements such as annual leave. Certain requirements need to be met in order for this provision to apply.

To discuss the changes or how the recommended actions may apply to your business, please do not hesitate to get in touch.

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