Casual employment clarified in new laws

The Real Media Collective’s General Manager of IR, Policy and Governance, Charles Watson, has written this update for the industry outlining the latest changes effecting casual employment law in Australia:

Over a decade after the Fair Work Act (the Act) and the related industrial relations system came into effect its limitations and complexities are clear.

Although the current IR system has been relatively functional there is certainly room for improvement.

Given the economic and societal effects of COVID last year, it was seen as a perfect opportunity to attempt a ‘come to Jesus’ moment to find consensus between government, employers and unions. At first the government created IR working groups and it looked promising, however by September the good faith seemed to have disappeared and the ghosts of the past returned. Nonetheless, by December the federal government released a Bill to amend various sections of the Act.

What was proposed

The aim of the Bill was to improve the operation of the national industrial relations system by providing greater certainty and flexibility to employers and employees to support economic recovery and growth.

The Bill contained various proposed amendments to the Act.

These included various Award related flexibilities, a clarified definition of casual employees and the avoidance of double dipping on entitlements, various flexibilities around hours of work and payrates for part-time employees, an amended Better Off Overall Test for enterprise agreements, and criminal offences for systemic wage underpayments.

To ensure the passing of the Bill, the government was going to need some crossbench support. So, let the political and positional games begin!

What occurred

The Bill moved through significant debate in the House, the Senate, underwent a Senate Committee, public critiquing, threatened High Court challenges, and crossbench deals.

The final Bill passed through Parliament on 22 March 2021 and looked like a murder of crows had been at work. Essentially, the government was effectively forced to drop every proposed schedule, except changes to casual employment matters.

What was left — a casual synopsis

Although most proposed aspects of the original Bill were cut out, the passing of the remainder has provided clarity in relation to casual employment issues.

Definition of casual employee

Under the amendments a person will be defined as a casual if:

  1. an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and
  2. the person accepts the offer on that basis, and is employed as a result of that acceptance.

A regular pattern of hours will not in and of itself dictate a firm advance commitment to continuing and indefinite work.

This particular issue will require some consideration on the drafting of any offer of casual employment, and the provision of a ‘Casual Employment Information Statement’ to new casual employees drafted by the Fair Work Ombudsman.

This is in addition to the pre-existing ‘Fair Work Information Statement’ currently required for all employees.

Essentially, a casual employee will remain casual unless and until they convert to permanent status.

Casual conversion

Casual employees will have a basic legislative right to permanency after 12 months whereby an employer must offer to convert a casual employee to permanent employment if the employee:

  • has been employed for 12 months; and
  • during the last 6 months, has worked a regular and systematic pattern of hours without significant adjustment.

Generally, an employer will not be required to make an offer of casual conversion if:
a. there are reasonable business grounds not to make that offer; and
b. ‘reasonable grounds’ are based on facts that are known or reasonably foreseeable.

If a casual employee converts, they will become permanent part-time or full-time on the day specified in a notice to the employee. However, if an employee does not accept an offer of conversion, they lose the right to convert for the next six months.

Small business exemption

Small businesses, with 15 or less employees, will be exempt from having to offer conversion after 12 months although their employees can still request to convert.

Casual loading offset

Where an employee has been incorrectly described as casual and later found to have been permanent, the new provisions effectively entitle an employer to offset leave entitlements against an identified casual loading. This will require some clarification in an offer of employment so as to make clear what the casual loading encompasses, ie, any and all annual and personal leave.

What’s next

Although the amendments only dealt with one issue, they have provided greater clarity and certainty on the nebulous issue of casual employment. Employers will need to consider the effects of these amendments on their casual arrangements and make appropriate revisions to their casual letters of offer and related internal processes.

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