Keeping it casual

Are you an employer who sometimes gets confused about whether your employees are causal or part time? Don’t fret, you’re not Robinson Crusoe.

Until last month, there was no legislative definition of what a “casual” employee was. The courts looked at the actual conduct of the employer and employer to determine whether there was a commitment from a employer to provide continuing and indefinite work in accordance with an agreed pattern of work.

Employers sometimes got the employment classification wrong to their own detriment (i.e. casual V permanent). This resulted in financial losses because employers were required to back pay employees for underpayment of entitlements without the right to offset the previously paid casual loading rates to those same employees.[1] In effect, enabling a double dip for some employees.[2]

The gazetting of the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 last month (“Amendment Act”) has changed all that. Now there exists a statutory definition of what it means to be a casual employee and guidance as to when such a casual relationship might become part time employment.

A person is now considered to be a casual employee if the employment contract between the employer and employer evinces an intention at the time they enter the arrangement that “no firm advanced commitment to continuing and indefinite work according to an agreed pattern of work” is intended.  

This assessment is therefore based on the form of the offer made and acceptance given – not the actual conduct of the employer or employer.

 Employers wanting to ensure the employment relationship remains casual should:

  1. Ensure the employment remains one in which it can offer, and the employee can elect to accept or reject the work;
  2. Ensure the employee works on a need only basis; and
  3. Describe the employment contract as casual and ensure the employee receives loading or a specific rate of pay for casuals.

The Amendment Act makes it compulsory for non-small employers to offer causal employees permanent part time or full-time roles upon certain conditions being met [3]. Employers have until 26 September 2021 to review their casual employment rosters and determine who to offer conversion to permanent employment. [4]

Employers would be well advised to understand what exceptions might exist to avoid the need to offer conversion to a casual employee – if that is indeed what they intend[5]. Whether an offer of conversion is made or not, employers must give employees notice why they are not giving conversion.

Significantly all casual employees now have the right to request conversion to permanency from their employers if they have been employed for at least 12 months, in the past 6 months have worked a regular pattern of hours on an ongoing basis and this pattern is likely to continue a permanent or part time basis without significant adjustment.[6]

Failure to comply with these conversion laws could attract significant fines as they are now contained within the National Employment Standards. The conversion rights are considered workplace rights for the purpose of the general protections provisions and hence an employer may be fined up to $66,000 and be sued for not only compensation if adverse actions taken by an employee is successful.

Next Steps

Employers should:

  1. Review the employment arrangements of their casuals and identify which of them will be entitled to an offer of conversion six months from the introduction of the Amendment Act i.e. 26 September 2021;
  2. Set up systems and processes to ensure the best performing casuals only become eligible for permanent roles;
  3. Review and amend existing causal employment contracts to ensure they meet the new definition of a casual employee under the Amendment Act;
  4. Provide to existing and new casuals the Casual Employee Information Statement. This includes information such as meaning of casual employment and the right to casual conversion.

If your business needs some guidance in complying with this new law, Dempseys Law Firm can help

[1] A part time employee is entitled to annual leave, compassion leave, notice of termination and even long service leave. Casuals on the other hand don’t enjoy such entitlements instead benefiting from loading on their hourly wage.

[2] WorkPac Pty Ltd v Skene [2018] FCAFC 131 and WorkPac Pty Ltd v Rossato [2020] FCAFC 84 

[3] if the employee has been employed for at least 12 months, in the past 6 months the employee has worked a regular pattern of hours on an ongoing basis and this pattern is likely to continue on a permanent or part time basis without significant adjustment.

[4] Employers with less than 15 casual employees don’t have this obligation.

[5] If employee’s position will cease or the hours significantly reduce or there will be a significant change in employee’s workday hours of work and the employee cannot accommodate these changes.

[6] To be eligible the employee must not have refused an employer’s earlier offer for conversion, not have received a written notice from their employer they will not be converted on reasonable grounds, employer has not refused a previous conversion request and the request is not made during the 21 days after an employer offer of conversion.

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