Fair Work Casual Employment changes – everything you need to know!

There have been some massive changes in the casual employment landscape, and we are very pleased to keep you all informed.

What you need to know in a snapshot

• Finally… a new definition for casuals – hooray!
• Small businesses (under 15 employees) don’t need to offer casuals the right to convert to permanent employment, but employees can still request it.
• Businesses (15+ employees) must make an offer (rather than simply accept a request) to an employee for conversion where they are eligible, or inform them in writing of why they aren’t eligible, by 27/09/2021. Employers still have right to reasonably refuse.
• Rather than the standard “Fair Work Statement” that employers are required to give new employees, there is a new “Fair Work Casual Employment Statement” that you will need to provide (we’ve included it for you)

Overview

The Federal Government’s proposed Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (the Bill) has now passed both houses of Parliament in a revised and significantly reduced form.

The country breathes a collective sigh of relief with the end of what has been a very problematic feature of the industrial relations area for the past several years, by defining what is a true casual employee and negating (or significantly reducing) the threat of casual employees attempting to ‘double dip’ on annual leave and other entitlements which we saw in several high-profile cases.

We would like to bring 4 main changes to your attention:

1. The Bill introduced a definition of casual employment into the Fair Work Act 2009 (Cth) (FW Act) for the first time, being, if a person is:

• offered employment without a “firm advanced commitment to continuing and indefinite work”; and
• the person accepts that offer,
• then the person is a casual employee regardless of any changes in the employment relationship.

That is, the assessment of whether a person is a casual occurs on the basis of the offer of employment, not on the basis of any subsequent conduct of the parties.

Simple. Can we get a hallelujah!!

When determining whether a firm advance commitment to continuing and indefinite work exists, the Bill requires a Court to have regard to only the following considerations:

• 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.

2. The Bill confers a statutory right on long term casual employees to request conversion to permanent employment.

The second key aspect of the Bill is the inclusion of a casual conversion mechanism.  Employers 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.

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 in order for the employee to be employed permanently;
• 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 arises.

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.

Following substantial contests and lobbying by business and unions last week, 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.

Conversion right can be lost

The Bill makes clear that, where an employee refuses an offer to convert, they no longer hold a right to request conversion at a later date.

Equally, where an employer has determined that there a reasonable business grounds 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.

1. New Casual Employment Information Statement

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

You can download that here

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

1. Casual loading offset created.

Importantly, the Bill also deals with historical problems that have been created where employers misclassify employees as casuals and fail 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 the casual employees.

In order 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.

What next?

This is a great time for employers to better consider the working arrangements of staff, and to introduce processes to track and deal with casual conversion to ensure compliance with legislation.

PeopleStart are offering this service to our client so if you would like any further information please don’t hesitate to ask.

We hope this information has helped!