Casual employment - a relief for employers
By Jenni Leonard
There has been some good news for national system employers following recent amendments of the Fair Work Act 2009. Many employers will be relieved to know that the amendments bring in a new legislated definition of what constitutes "casual" employment and an end to employers’ exposure to “double dipping” for underpayment claims from employees incorrectly classified as casual.
I spoke about the proposed national Industrial Relations reforms to farmers at our recent Rural Tour. What was originally scoped to be sweeping reforms to the Fair Work Act across a number of areas in order to speed up the country’s recovery from the pandemic have ended up quite narrow. Out of 5 areas under review, the only reforms to survive and be passed relate to casual employees.
These are significant reforms in what they mean for businesses. The new laws change everything about casual employment. And whilst overall the news is good for employers, the reforms bring with them a substantial increase in administration pertaining to casual employees.
These changes impact national system employers only. If you are a state system employer this won’t apply to you, unless of course the state government introduces amendments on the back of these national changes.
Let’s look at what’s changed.
New definition of casual employment
A new definition of casual employment has been introduced. Under this new definition, an employee will be casual if:
an offer of employment made on the basis that there’s no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for that person; and
the person accepts the offer on that basis.
So, what determines “no firm advance commitment and indefinite work according to an agreed pattern of work”?
The employer can elect to offer work;
The person can elect to accept or reject work;
The person will work as required according to the needs of the employer;
The employment is described as casual employment; and
The person will be entitled to a casual loading.
To avoid doubt, a person’s “casualness” is assessed at the time and on the basis of the offer and acceptance of employment. It’s not impacted by conduct that occurs after that time. What happens after this has no bearing, ie a casual employee remains so until they convert to permanent employment.
New rules for casual conversion
Significant changes to the casual conversion process have been introduced which create an onus on the employer to make an offer of permanent employment. These changes also bring with them a substantial increase in administration for businesses.
Non-small businesses (employers with 15 or more employees)
If you have 15 or more employees you must now take proactive steps to make an offer of permanent employment to a casual employee. The obligation to make this offer occurs when these 2 trigger points are reached:
If the employee has been employed by you for a period of 12 months; and
During the last 6 months of that period, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time or part-time employee.
The only time an employer does not have to make an offer is if there are reasonable business grounds not to make the offer. The reasonable business grounds are based on the facts that are known or reasonably foreseeable at the time of deciding not to make the offer.
The offer (or decision not to offer) must be given in writing within 21 days after the end of the 12 month period.
Small businesses (employers with fewer than 15 employees)
If you are a small business, there is NOT an automatic obligation on you to make an offer of casual conversion. Instead, when the 2 trigger points mentioned above have been reached, casual employees have the right to make a request for their employment to be converted from casual to permanent.
Employers are obliged to consult with these employees and can only refuse a request for conversion on reasonable business grounds. Responses must be made in writing within 21 days as to whether the request is approved or declined.
The casual loading offset to deal with underpayment claims
An important element of these changes is the casual loading offset. This change is designed to alleviate the potential liability that exists for current employers around “double dipping” – where casual employees were classified as casual and paid a casual loading but were then successful in claiming entitlements to paid annual leave, personal leave, compassionate leave and public holidays, notice of termination and redundancy pay because they were later deemed permanent employees.
There is now an obligation on the Court to reduce any amount payable to a casual employee for paid entitlements by an amount equal to the loading amount they were paid for those entitlements.
Fortunately, these provisions also apply retrospectively.
New - Casual employment information statement
A new “Casual Employment Information Statement” has been introduced by the Fair Work Ombudsman. Employers must give this to every new casual employee a before, or as soon as possible after, they start their new job.
Note that this is in addition to (and not in place of) the Fair Work Information Statement.
If you are a small business employer, you need to give this to your existing casual employees now. Non-small business employers have until 27 September 2021 to do this.
Take away tips
If you employ casuals:
Check the content of your letters of engagement or employment contracts to ensure they conform with the new definition of casual employment, ie that work is uncertain, that the employer has the right to offer or not offer work and the employee has the right to accept or not accept work
Be clear in your letter of engagement or employment contract that the casual loading is separately identifiable and spell out what it is compensating the employee for.
Need help with your Human Resources Management? Call us on 9841 1200.
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