Karl Luke and Bridget Nunn

Parliament passes casual employee definition and addresses casual employment uncertainty

Karl Luke and Bridget Nunn

23 March 2021

Employment Contracts Legislation Update

There has been significant press around the government’s agenda to reform large parts of the Fair Work regime, most of which failed in the Senate. There has been less press around one significant set of changes that did survive the political process: an introduction, for the first time, of a substantive definition of ‘casual employment’ into the Fair Work Act 2009 (Cth) (Act), and a scheme for managing casuals.

The change, which was passed on 22 March 2021, seeks to provide greater certainty around casual employment relationships in the wake of last year’s decision of the Full Federal Court in WorkPac v Rossato [2020] FCAFC 84 (see our previous blog on the case here).

Definition of casual employee

The Act now defines a ‘casual employee’ as someone who accepts an offer of employment made on the basis of no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.  In determining whether there is no such firm advance commitment, the Act permits a consideration of only:

  • whether the employer can elect to offer work and whether the person can elect to accept or reject work;
  • whether the employee will work only as required;
  • whether the employment is described as casual employment; and
  • whether the employee 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.

Just as importantly, the Act makes clear that these criteria can be considered only at the time of the offer and acceptance – ie when the contract is made.   Subsequent conduct may not be taken into account.

If an employee is a casual at the time the contract is made, the Act provides that the employee remains a casual employee until their employment is converted to full-time or part-time (see below) or the employee accepts an alternative offer of non-casual employment by the employer and commences work on that basis.

Casual conversion

The Act also now requires an employer to offer casual employees the opportunity to convert to full-time or part-time employment if they have been employed for 12 months and working a regular pattern of hours on an ongoing basis.  An employer is not required to make an offer of casual conversion if there are reasonable grounds not to make the offer, including if:

  • the employee’s role will cease to exist in the next 12 months;
  • the employee’s hours will be significantly reduced in the next 12 months;
  • there will be a significant change to the employee’s work days or work hours in the next 12 months, which cannot be accommodated within the employee’s available days or hours; or
  • the offer would not comply with a Commonwealth, State or Territory recruitment or selection process.

While employees will also have the right to request casual conversion after 12 months of employment in certain circumstances (as many already did under Modern Awards), the Act now shifts the impetus for the move, away from requiring an employee to ask for permanent employment, to requiring an employer to offer permanent employment or show good reason why that should not take place.

Casual loading set-off

If an employee thought to be a casual employee successfully makes a claim for entitlements on the basis that the employee is, in fact, a full-time or part-time employee, the Act now requires a court to reduce the amount of the employee’s claim by an amount equal to any casual loading paid to the employee.

The amount by which the claim is to be reduced must be determined by reference to any contract, Award or enterprise agreement terms that specify what the loading compensates for (eg the entitlement to annual leave) and the proportion of the loading attributable to each entitlement.  If the contract (etc) term does not specify the proportion attributable to each entitlement, then the court determines the attributable proportion in all the circumstances.  Clarity about what benefits of ongoing employment the casual loading incorporates will be an essential condition to assist in managing the risk of disputes about casual employment.

Casual information statement

The Act also now requires an employer to give a Casual Information Statement (to be developed by the Fair Work Ombudsman) to an employee it intends to engage as a casual employee.

Actions for employers

Following these amendments to the Act, it will be particularly important for employers to have written employment contracts in place for their casual employees which make clear:

  • that there is no firm advance commitment to continuing and indefinite work (including addressing the criteria that the Act says are determinative of this); and
  • the basis upon which any casual loading is paid to the employee.

Employers should review their casual employment templates to ensure they achieve these things.

Employers should also:

  • ensure they have processes in place to assist them to identify when an offer to convert to ongoing employment should be made to a casual employee; and
  • update their induction and on-boarding procedures to incorporate the Casual Information Statement, once available.

For further information, please contact our national Employment, Workplace Relations and Safety team.

Authors

Karl Luke | Partner | +61 8 8236 1280 | kluke@tglaw.com.au

Bridget Nunn | Special Counsel | +61 8 8236 1129 | bnunn@tglaw.com.au