On 22 March, the long-awaited changes to the Fair Work Act (FW Act) in relation to casual employees were passed.

Since the recent Federal Court decisions of Workpac Pty Ltd v Skene* and Workpac v Rossato**,employers have been exposed to “double dipping” claims by casuals for permanent entitlements.

However, Parliament has now thankfully stepped in to amend the FW Act.

The changes came into effect from 27 March and include:

  • a new definition of “casual” employee
  • a requirement for a court to off-set any casual loading paid against a claim for permanent entitlements to reduce the total amount payable
  • a universal obligation to offer permanent employment to casuals under certain circumstances (which already exists in some EA’s and modern awards)

New definition of “casual”

The FW Act has been amended to include a statutory definition of “casual” employee, which has not existed before.

Most modern awards simply state that a casual is one who is “engaged and paid as such”, which has led to uncertainty in the past.

Under the new statutory definition, a casual employee is one who has been offered employment which makes no firm advance commitment that the work will continue indefinitely and follow an agreed pattern of work.

A number of specific factors are set out in the FW Act to determine firm advance commitment, as follows:

  • whether the employee 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
  • whether the employee is entitled to casual loading or a specific rate of casual pay

Importantly, the question as to whether an employee is a casual is asked at the time the employment offer is made and not through any subsequent conduct of either party, which is a significant change.

Casuals who were employed immediately before 27 March and whose initial employment offer meets the new definition continue to be casual employees under the FW Act.

Once employed as a casual, an employee will continue to be a casual until they either:

  • become a permanent employee through:
    • casual conversion; or
    • are offered and accept the offer of full-time or part-time employment, or
  • stop being employed by the employer.

Ability to off-set casual loading against any claim for permanent entitlements

The recent Workpac cases had also found that an employer could not off-set any casual loading previously paid to the worker during their employment against any amount owed to them in permanent entitlements.  This was the case even though the worker had been paid that loading to compensate them for not receiving permanent entitlements as a casual.  This meant that workers could essentially “double dip”.

Thankfully, the FW Act has now been amended to state that, in any claim for permanent entitlements, a court is required to reduce (but not below nil) any claim for permanent entitlements by the casual loading already paid during employment.

The court may reduce the claim amount by an amount equal to a proportion (which may be nil) of the loading amount the court considers appropriate, such as the portion of the casual loading attributable to the particular entitlement.

Universal right to conversion from casual to permanent

Some modern awards and EA’s currently contain a casual conversion clause which provides a right for regular casuals to convert to permanent after 6 or 12 months of employment.

The new laws have now introduced a universal obligation for an employer (other than a small business employer) to offer a casual employee conversion to either full time or part time employment if:

  • the employee has been employed for a period of 12 months; and
  • during at least the last 6 months, the employee has worked a regular pattern of hours on an ongoing basis that, without significant adjustment, the employee could continue to work as a full-time or part time employee.

There may be reasonable grounds upon which an employer can rely on to not offer conversion to permanent employment, such as:

  • in the next 12 months:
    • the employee’s position will cease to exist;
    • the hours of work that the employee is required to perform will be significantly reduced;
    • there will be a significant change in the days or times upon which the employee’s hours of work will be required to be performed;
  • making the offer to convert would not comply with a recruitment or selection process required under another law.

An employee also has an ongoing right to request conversion to either full time or part time employment if the above circumstances apply. Again, the employer can only refuse this request upon the reasonable grounds outlined above.

Where conversion is to occur based on either an offer by the employer or a request by the employee, the employer must within 21 days notify the employee of the following:

  • whether they are converting to full-time or part-time employment
  • their hours of work after the conversion
  • the day upon which the conversion will take effect

There is a new avenue to resolve some disputes about casual conversion through the Federal Circuit Court.

New casual employment information statement

A Casual Employment Information Statement has been introduced.  Download it here.

Employers have to give every new casual employee a Casual Employment Information Statement (the CEIS) before, or as soon as possible after, they start their new job.

Small business employers need to give their existing casual employees a copy of the CEIS as soon as possible after 27 March 2021. Other employers must give their existing casual employees a copy of the CEIS as soon as possible after 27 September 2021.

Where to now for employers?

Now that the new laws have passed, employers should start to understand what this may mean for them in engaging casuals in the future and making any necessary changes to employment contracts. You can contact our experienced employment law team for help.

 

 


[*] [2018] FCAFC 131.

[**] [2020] FCAFC 84.