On 27 March 2021 a number of amendments to the Fair Work Act 2009 (Cth) commenced operation that relate to employment of casual employees and rights and obligations of casual employment.
A number of the changes were introduced in an attempt to remove uncertainty around engagement of casual employees that has arisen in recent cases that deal with the definition of casual employees and their entitlements if a court rules they should properly be classified as a permanent employee.
The legislation includes the introduction of a statutory definition of casual employment, along with provisions that address the double-dipping and set-off implications of the Rossato decision. The amendments also include new casual conversion provisions.
Statutory definition of “Casual Employment”
The proposed statutory definition of casual employment draws on current terminology relied upon by the Federal Court, referring to the absence of any “firm advance commitment” between employers and casual employees that the work will continue indefinitely or follow an agreed pattern of work. The definition is based on the circumstances understood and agreed at the time of engagement, rather than based on the parties’ conduct during the period of employment, and there are examples included which are intended to act as a guide to assist employers and employees apply the definition.
Ability to Offset Casual Loading
In addition to the statutory definition of casual employment, the amendments includes provisions that will enable employers to offset any “identifiable” casual loading paid to an employee against a successful claim by that employee that they are entitled to permanent employee benefits such as paid personal leave and annual leave. The “offset” provisions recognise that the casual loading is paid to casual employees in lieu of paid leave entitlements that permanent employees are entitled to, and provides employers with certainty that, in the event an employee is incorrectly engaged and paid as a casual employee, the “loading” can be deducted from the amount owed for payment of those entitlements.
A key point here will be for employers to ensure that the casual loading component of the amount paid to a casual employee is “identifiable” so that there is no dispute about whether a casual loading has been paid and/or the amount of the casual loading.
Employer Offer (not applicable to Small Business Employers)
For businesses with more than 15 employees, there is a positive obligation to offer a casual employee conversion to permanent employment if the casual employee:
- has worked for their employer for 12 months;
- has worked a regular pattern of hours for at least the last 6 of those months on an ongoing basis; and
- could continue working those hours as a permanent employee without significant changes.
The employer can only decide not to make this offer based on reasonable business grounds. If the employee declines an offer to convert, there are further rights to request conversion every six months (provided the employee remains eligible).
Employers have a six-month transition period (until 27 September 2021) to assess the status of their casual employees and determine whether they are eligible to be offered permanent employment.
All casual employees have the right to request conversion to permanent employment if:
- They have been employed for at least 12 months; and
- During the previous 6 months, they have worked a regular pattern of hours on an ongoing basis that they could continue to work as a full-time or part-time permanent employee.
Casual employees can make this request under the legislation provided they have not, during the previous 6-month period, refused an employer’s offer to convert to permanent employment, been advised by the employer that it has reasonable grounds not to offer conversion, or had a conversion request refused by the employer.
Casual Employee Information Statement (CEIS)
The legislation places an obligation on employers to give every new casual employee (employed after 27 March 2021) the CEIS before, or as soon as possible after, they start their new job.
- Small Business Employers: must give existing casual employees a copy of the CEIS as soon as possible after 27 March 2021.
- Other Employers (more than 15 employees): must give existing casual employees a copy of the CEIS as soon as possible after 27 September 2021 (regardless of how long they have worked for the business).