Fair Work Reforms Bring Certainty to Casual Employment

Fair Work Reforms Bring Certainty to Casual Employment

Recent reforms to the Fair Work Act 2009 (FW Act) offer greater certainty about the rights and obligations that govern casual employment.

On 26 March 2021, the FW Act was amended to introduce:

  • A new definition of casual employment;
  • A new NES (National Employment Standards) entitlement to convert from a casual to permanent full-time or part-time employment;
  • A new casual employment information statement; and
  • The ability for courts to make orders to avoid the “double dipping” of casual loadings and permanent entitlements.

The amendments are introduced under the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 and take effect from 27 March 2021.

Casual Employment Defined

The amendments introduce for the first time a statutory definition of a “casual employee.”

Prior to the reforms, the definition of casual employment was ambiguously treated by the Courts and Tribunals, which relied on established common law principles and definitions provided in applicable Modern Awards.

Under section 15A of the FW Act, a person is now defined as a casual employee if they accept an offer of employment on the basis that the employer makes “no firm advance commitment” to continuing and indefinite work with an agreed pattern of work.

The following considerations are relevant in determining whether the employer has made “no firm advance commitment”:

  • 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;
  • 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.

Notably, the absence of a firm advancement to ongoing work in the definition incorporates key aspects of the common law as expressed in the recent Full Court of the Federal Court decisions of WorkPac Pty Ltd v Skene [2018] FCAFC 131 and WorkPac Pty Ltd v Rossato [2020] FCAFC 84. Furthermore, section 15A(4) clarifies that emphasis is placed on offer and acceptance and not the subsequent conduct of either party.

Right to become a permanent employee (casual conversion)

The reforms also introduce a new NES entitlement to convert from casual to permanent full-time or part-time employment. This entitlement aligns with the tranche of amendments to the majority of Modern Awards introduced in October 2018, which enable a ‘regular casual’ employee to request to convert from casual to permanent employment.

However, the reforms go a step further. Under the FW Act employers now have an obligation to offer regular casual employees permanent full-time or part-time employment unless there are reasonable grounds not to do so. This obligation will arise where:

  • the employee has been employed for 12 months; and
  • the employee has worked a regular pattern of hours on an ongoing basis, without significant adjustment, during the last 6 months of their employment.

Mandatory notice of offer of conversion

Employers with casual employees who meet these criteria must make an offer to convert them to permanent employees in writing before 27 September 2021 or within 21 days after the employee’s 12-month anniversary, whichever is later.

Mandatory notice that no offer of conversion will be made

Alternatively, where casual employees have been employed for 12 months, but they have not worked an ongoing and regular pattern of hours, or reasonable grounds exist not to make a conversion offer, then the employer must give the employee a different notice, advising that a conversion offer will not be given, and detailing the reasons that the offer will not be made. Where relevant, this notice must also be given to relevant employees within 21 days of their 12-month anniversary or before 27 September 2021, whichever is later.

Employee’s right to request conversion

Where no offer is made after 27 September 2021, eligible casual employees have a residual right to request to be converted to a permanent employee. The employee can make this request in writing 21 days after the employee’s 12-month anniversary. The employer cannot refuse this request without first consulting the casual employee and without reasonable grounds to do so.

A small business employer (fewer than 15 employees) does not have to offer casual conversion, but eligible employees still have the right to make a request to their employer if they meet the requirements.

Obligation to provide a new Casual Employment Information Statement

Employers must give the Casual Employment Information Statement to new casual employees when they start work. The statement is published on the Fair Work Ombudsman website here.

Court orders to avoid “double dipping”

One of the criticisms of the court cases referred to above was that the Judges approved the ability of employees to convert to permanent employment in circumstances where they could retain the casual loading that had been paid to them during their employment while also being entitled to backpay or accrual of NES entitlements which are usually reserved only by permanent employees.

The legislative amendments enable courts to make orders to avoid this, so that where a court finds that an employee was described as a casual employee but was not actually employed as one, then any amount found to be payable to the employee for NES entitlements reserved for permanent employees must be discounted by an amount equal to the casual loading that was paid to the employee.

What actions should employers now take?

To ensure compliance with these new obligations, employers of casual staff should now:

  • review their casual employment contracts and amend them to bring them into line with the new statutory definition of “casual employee”;
  • assess existing casual employees to determine whether they need to be made a written offer of conversion to permanent status, or to provide notices that offers will not be made, by 27 September 2021;
  • update their employment procedures to ensure that:
    • new casual employees are given the Casual Employment Information Statement;
    • a structured approach is adopted to the assessment of permanent conversion after 12 months or when casual employees make a request for conversion to permanent status;
    • due dates are diarised so that written offers of conversion to permanent status are made when casual employees reach 12 months’ service (and records of responses are retained);
    • if decisions are made not to offer conversion to permanency, the time frames for the communication of this outcome must also be met (and properly documented).

Do you need help?

For assistance in navigating your rights and obligations under the reforms or to discuss further please contact our employment team.

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