For the first time there is a definition of casual employment written into the Fair Work Act

Over recent weeks the Federal Government has been trying to make changes to the Fair Work Act and get them through both houses of Parliament.

As is often the case it doesn’t matter which side of politics is in government, making changes to employment law will always bring howls of protest from the other side and so it has been with the current attempt. To get the Bill passed, key aspects from the original draft were ditched along the way but, in the end, the Bill as amended has made it into Law and several key changes have been brought about.

One of the landmark achievements has been the introduction of a definition of casual employment into the Fair Work Act 2009 (Cth) (FW Act) for the first time.

IMPORTANT: Casual employees now have a statutory right to request to be converted into permanent employees.

So, what is this new definition of Casual Employment all about?

With the new changes in the FW Act, if a person is described as:

                      1. Having been offered employment without a “firm advanced commitment to continuing                                and indefinite work”, and
                      2. The person accepts that offer,

then the person is a casual employee regardless of any changes in the employment relationship. This means that the assessment of a person being a casual employee is based on the offer of employment, not on any subsequent conduct of the employee or employer.

Should a claim be made that the employee is entitled to continuing and indefinite work, the Bill requires that the following are the only points to be considered by a court:

            • whether the employer can elect to offer work and whether the person 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; and
            • whether the person 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.

Is it possible for a casual employee to seek conversion to permanent status?

This is another key aspect of the new legislation.

Employers must offer to convert a casual employee to permanent status if:

            1. The employee has been employed for a minimum period of 12 month; and
            2. Over the last 6 months, the employee has worked a regular and systematic pattern of          hours without any significant adjustment.

The offer must be to convert to either full-time employment (where the casual has worked the equivalent of full-time hours) or part-time employment consistent with the casual’s regular pattern of hours (where the casual has worked the equivalent of part-time hours).

However, employers are not obliged to make an offer if there are “reasonable business grounds” to not make the offer. Such grounds must be known or reasonably foreseeable at the time of declining to make the offer.

The Bill defines reasonable business grounds to include:

          • where the conversion would require a significant adjustment to the employee’s hours of work for the employee to be permanently employed.
          • where the employee’s position will cease to exist in the 12 months after the conversion right arises. 
          • where the hours of work which the employee is required to perform will be significantly reduced in the 12 months after the conversion right arises; and
          • if there will be a significant change in either the days or times on which the employee’s hours of work are required to be performed in the 12 months after the conversion right

Where an employer determines not to make an offer of conversion, they must give notice of the decision to employees within 21 days of when the right to be offered conversion arose. If an employer fails to give this notice, the employee retains a residual right to request conversion at a later date.

Please note that these casual conversion provisions go further than the existing Award regime of provisions. This is because the existing Award regime entitles employees to request conversion. Under the amended Act, employers have an obligation to offer conversion regardless of any employee request. That is, there is a new proactive obligation on employers.

Casual conversion does not apply to small business employers

IMPORTANT: Following substantial debate and lobbying by business and unions, the Bill has been amended to confirm that casual conversion rights do not apply to employees of small business employers. That is, employers with a head count of less than 15 employees.

Do these rights to convert to permanent employment last forever?

The Bill makes clear that, where an employee refuses an offer to convert, they may not change their minds further down the track.

Equally, where an employer has determined that there are reasonable business grounds not to not make an offer of casual conversion and notifies the employee in accordance with the provisions of the Bill, then the employees also cease to hold a right to request conversion at a later date.

What updated information will casuals require?

The Bill requires the Fair Work Ombudsman to create a new Casual Employment Information Statement to be provided to each casual employee when they commence employment with each new employer.

This statement must supplement the Fair Work Information Statement that employers already need to provide employees.

If you are not aware of these requirements, we can offer advice and assistance. Simply follow this link to find out more.

What is a casual loading offset?

IMPORTANT: The Bill also deals with historical issues arising from the misclassification of employees as casuals when they are first employed and a failure to accrue leave entitlements for these employees.

Where an employee is found to have been incorrectly engaged as a casual (that is, they are at law a permanent employee), the Bill creates an express right for employers to offset any leave entitlements owed to the employee against the casual loading that is often paid to casual employees.

To have the benefit of this offset arrangement, the loading paid must have had components that can be identified as being paid to the employee instead of one or more leave entitlements.

How do you, as an employer, know what to do next?

For most employers, this is a great opportunity to investigate the employment conditions of all staff, specifically regarding employment arrangements and conditions governing casual employment.

Employers should be looking to:

            • introduce new casual contracts that align with the recent amendments; and
            • introduce processes for dealing with casual conversion that ensure the employer’s operational requirements are considered whilst simultaneously ensuring compliance with the FW Act.

It also offers the opportunity to reassess the structure of your workforce to determine whether these significant changes provide ways to reorder your staffing arrangements to provide improvements in workplace efficiency and better utilisation of staff.

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