Changes to casual employment laws: is your organisation compliant?

Until the recent legislative amendments, the term “casual employee” was not defined in the Fair Work Act 2009 (Cth) (FW Act) and its common law meaning had to be relied upon.

The amendments to the FW Act commenced in March 2021 with the enactment of the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021, which provide greater clarity about the status of casual employees, both when they commence work and throughout the duration of their employment. Broadly speaking, the amendments to the FW Act include:

1. a statutory definition of “casual employee”;
2. a statutory “offsetting rule”;
3. an entitlement to casual conversion under the National Employment Standards (NES); and
4. an obligation on employers to give a Casual Employment Information Statement under the NES to each casual employee.

Statutory definition of casual employee

The newly introduced section 15A of the FW Act simplifies the casual workforce landscape by providing a statutory definition of “casual employee”. Under section 15A, an employee will be a casual worker if:

1. an offer of employment is made on the basis of “no firm advance commitment to continuing and indefinite work, according to an agreed pattern of work”;
2. the offer is accepted on that basis; and
3. the person accepting the offer is a casual employee as a result of their acceptance.

In determining whether there is “no firm advance commitment to continuing and indefinite work according to an agreed pattern of work”, the factors to consider include whether the employee can elect to accept or reject work, whether the employment is described as casual employment and whether the employee is paid casual loading.

Under the new definition, the time for assessing the status of an employee is the time that the offer of employment is made and accepted.

The new statutory definition applies retrospectively, subject to very limited exceptions. This means that employers (other than small business employers) need to consider whether the new statutory definition changes the status of any employees who were engaged prior to the March 2021 amendments and if so, whether there are implications for entitlements owed to those employees.

Statutory offsetting rule

Circumstances may arise where an employee is misclassified as a casual employee and is later deemed by a court not to be a casual employee. Prior to the amendments, when this occurred, an employer was unable to offset casual loading paid to a misclassified employee who sought reimbursement of the minimum entitlements owed to them under their newly classified status, such as annual leave or payment in lieu of annual leave. This meant that misclassified employees were in effect able to ‘double-dip’ on their entitlements.

The newly introduced section 545A of the FW Act creates a “statutory offsetting rule.” Under this rule, if an employee is misclassified as a casual employee and later makes a claim seeking reimbursement of entitlements owed to them under their newly classified status, the courts must reduce any amount payable to the employee for those entitlements by an amount equal to the identifiable casual loading paid to the employee in the past.

Entitlement to casual conversion under the NES

The newly introduced Division 4A of Part 2-2 of the FW Act amends the NES to include an entitlement for all casual employees to convert to full-time or part-time status if they meet certain eligibility criteria. The eligibility criteria include that:

1. the employee has been employed for not less than 12 months;
2. the employee has worked a regular pattern of hours on an ongoing basis for not less than six months; and
3. no significant adjustments are required to facilitate the conversion.

Prior to the amendments, the entitlement to casual conversion was only afforded to employees covered by a modern award or enterprise agreement containing a casual conversion clause.

Under the new casual conversion entitlement, there is an obligation on all employers (other than small business employers) to offer eligible casual employees a conversion to permanent employment. Eligible casual employees of all employers (including small business employers) are also entitled to request conversion to permanent employment in certain circumstances.

The amendments provide for a six-month transition period which ends on 27 September 2021. During the transition period, employers (other than small business employers) must assess all existing casual employees against the eligibility criteria for casual conversion. If an employee meets the criteria, employers must provide written notice either offering casual conversion or providing reasonable grounds as to why casual conversion will not be offered. Reasonable grounds not to make an offer include that:

1. the position will cease within 12 months;
2. the hours worked by the casual employee will significantly reduce within 12 months; or
3. the days and times worked by the casual employee will significantly change.

Entitlement to receive Casual Employment Information Statement under the NES

The newly introduced section 125A of the FW Act amends the NES by requiring that all employers provide each new casual employee with a copy of the Casual Employment Information Statement which has been developed by the Fair Work Ombudsman. The Casual Employment Information Statement explains the new statutory definition of casual employee, the entitlement to casual conversion and the dispute resolution process to be followed if there is a disagreement about casual conversion.

Review of modern awards

Under the transitional arrangements, the Fair Work Commission will review all modern awards against the changes to casual employment and may vary any modern awards to remove inconsistencies.

Failure to comply with requirements imposed by the amendments may result in the imposition of civil remedies, including financial penalties. If you need support to navigate the amendments to the FW Act and ensure that your organisation is compliant, the experienced Workplace Relations team at Coulter Legal can assist.

Employers have until 27 September 2021 to ‘get their casuals in a row’ and ensure compliance.