“Not so casual”: What do the amendments to the Fair Work Act mean for casual employment?

HLS LEGAL | May 26, 2021

amendments to the fair work act mean for casual employment

Not So Casual

by Kara Main – Law Graduate

The Federal Parliament recently passed the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (the Bill) which amended the Fair Work Act 2009 (Cth) (the FW Act). The amendments took effect on 27 March 2021.

Definition of a casual employee

The Bill introduces a definition for the term “casual employee” to the FW Act (see section 15A of the FW Act). Prior to this statutory amendment, the definition used by courts and tribunals had its origins in the common law (judge made law).

The recent decision of WorkPac Pty Ltd v Skene [2018] FCAFC 131 (Skene) and WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (Rossato) significantly altered the widely accepted meaning of what constitutes a casual employee. Both decisions highlighted the difficulty associated with defining the parameters of employment relationships. We have previously outlined the effect of the Rossato judgement, which can be found here.

The new definition in the FW Act, sets aside the common law understanding and now stipulates that a casual employee must be assessed on the basis of the offer of employment that was offered and accepted, and not on any subsequent examination of how the work was performed by the employee.1

The new test is whether the offer of employment was made, and accepted, on the basis of ‘no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person’.2

When considering this, regard must only be had to whether:

  • the employer can elect to offer work and whether the employee can elect to accept or reject work;
  • the employee will work as required according to the needs of the employer;
  • the employment is described as casual employment; and
  • the employee 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.3

The FW Act now also states that a regular pattern of work does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work.4

The new definition of casual employee will apply retrospectively to casual employees. Therefore, it will apply to employees who started work before 27 March 2021.5

Casual conversion

The Bill also introduced a comprehensive scheme that requires employers to offer, and allows employees to request, casual conversion. Casual conversion occurs where the employment relationship has changed from being casual in nature. This conversion will be from a casual status to the status of full-time or part-time, equivalent to the hours that employee works.

These amendments put a large part of the onus back on to employers, who must now develop systems to ensure compliance with their obligations in offering casual conversions.

Employer’s offer

An employer must offer casual conversion to an employee where they meet the eligibility criteria, that is:

  • the employee has been employed for 12 months; and
  • during at least the prior 6 months, 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 (whichever the case may be).6

The offer must be in writing and be given to the employee within 21 days after they have been employed for 12 months.7

What has not changed is that there is no obligation on the employer to offer casual conversion where there are reasonable grounds not to make the offer, which are known or are reasonably foreseeable at the time of the request.

The reasonable grounds include where: (1) the employee’s position will not exist in the next 12 months or their hours will decrease in this time period; (2) there will be a significant change to the employee’s hours or days of work in the next 12 months; or (3) the making of an offer will not comply with recruitment or selection processes prescribed by law.8

With regard to notice of casual conversion, the FW Act contains further requirements as to the timeframes and the substance of the notice that an employer must give to the employee.

The employee must respond to the notice advising whether they accept or decline the offer. Where no response is provided within 21 days, the employee is taken to have declined the offer. Where the employee has accepted the offer, discussions must be held as to the conversion type (i.e. part-time or full-time), the hours to be worked and the date of conversion, followed by written notice of the accepted offer, all within 21 days of the acceptance.

Employee’s request

An employee may also request casual conversion where they meet the eligibility criteria.

However, the employee must also not have:

  • been notified by their employer that an offer has not been made because of reasonable grounds; or
  • rejected an offer to convert from their employer;

in the last 6 months.9

Where an employee requests conversion, the employer must grant or refuse the request in writing. As above, the employer may only refuse the request based on reasonable grounds which are known or reasonably foreseeable at the time of the request.

Again, where the employer grants the request, discussions must be held as to the conversion type, the hours to be worked and the date of conversion, followed by written notice, within 21 days.

Small business employers

‘Small business employers’ are exempt from the requirement to offer casual conversion10 but are not exempt from the requirement to respond to requests for conversion.11 ‘Small business employers’ are defined as having less than 15 employees.12

However, small business employers may have obligations under modern awards and should be sure to check relevant award provisions.

Orders relating to casual loading amounts

The Bill also introduced a new rule that applies in circumstances where an employee was paid on the understanding that they were a casual employee, but it is later found that the employee was wrongly-categorised, and the employee seeks a claim for the entitlements they did not receive.13

Where an employee was described as a casual, but was determined not to be a casual through court proceedings, the Court must reduce any amount that the employee could be entitled to by reference to casual loading amounts that have already been paid to the employee to compensate for those entitlements.14

These amendments address some of the issues raised in Rossato, in relation to restitution and set-off payments. In Rossato, the Court found that the casual loading amounts could not be counted in paying off the entitlements owed to wrongly-categorised employees.

These amendments attempt to strike a balance between the employees’ rights to receiving their correct entitlements, and protecting employers from having to pay wrongly-categorised employees “twice”.

Casual Employee Information Statement

Under the amendments, employers must also give every new casual employee a Casual Employment Information Statement (available here) before, or as soon as practicable after, they start their new job.15

Small business employers must give their existing casuals copies of the statement as soon as possible after 27 March 2021. Larger employers have until 27 September 2021.

“Watch this space”

The Fair Work Commission is required to review the relevant terms in modern awards in respect of their interaction with the changes to the FW Act regarding casual employees by 27 September 2021 (the Terms Review).16

The Terms Review is to take place in two stages:

  • Stage one involves a five-member Fair Work Commission bench who will review six awards as a sample, to consider the nature and the scope of the review. The Full Bench will then issue a decision on the outcome of the first stage, and determine the process for the second stage.
  • Stage two will involve a Full Bench of three members of the Fair Work Commission, who will review the remaining modern awards in convenient groupings.

Employers can likely expect changes to the provisions concerning casual employees in modern awards in the near future as a result of the Terms Review.

Next steps

These amendments shift the focus onto the original contractual agreement between employer and employee, rather than requiring a detailed review of the substance of the employment relationship. Therefore, employers must take care to ensure that offers of casual employment are drafted to clearly outline the employment relationship being engaged.

In future, it will be important that all employers of casual employees:

  • ensure letters of offer and employment contracts are drafted to clearly define the nature of the employment relationship, particularly with respect to casual employment;
  • implement mechanisms to identify where and when employees must be offered casual conversion; and
  • ensure that casual employees are being paid a sufficient casual loading.

If you have any queries about how these amendments will affect you or your business, please contact us HLS Legal – Employment Law Specialist on (08) 9322 5202.

This article is intended to be informative only and does not constitute legal advice. If you are concerned about your individual circumstances, please contact a lawyer.

[1] Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth) (‘Amending Act’) sch 1 items 1-2 creating s 15A(4) of the Fair Work Act 2009 (Cth) (‘the FW Act’).

[2] Amending Act sch 1 items 1-2; the FW Act s 15A(1).

[3] Amending Act sch 1 items 1-2; the FW Act s 15A(2).

[4] Amending Act sch 1 items 1-2; the FW Act s 15A(3).

[5] Amending Act sch 7 item 1; the FW Act sch 1 pt 10 cl 46(1).

[6] Amending Act sch 1 item 3; the FW Act pt 2-2 div 4A ss 66B(1), 66F(1)(a)-(b).

[7] Amending Act sch 1 item 3; the FW Act pt 2-2 div 4A s 66B(2)(c); and Amending Act sch 1 item 3; FW Act pt 2-2 div 4A s 66B(1).

[8] Amending Act sch 1 item 3; the FW Act pt 2-2 div 4A s 66C(2).

[9] Amending Act sch 1 item 3; the FW Act s 66F.

[10] Amending Act sch 1 item 3; the FW Act pt 2-2 div 4A s 66AA.

[11] Amending Act sch 7 item 1; the FW Act sch 1 pt 10 cls 47A(2).

[12] The FW Act s 23(1).

[13] Amending Act sch 1 item 6; the FW Act ss 545A(1), (4).

[14] Amending Act sch 1 item 6; the FW Act ss 545A(2)-(3).

[15] Amending Act sch 1 items 4-5; the FW Act s 125A.

[16] The FW Act sch 1 cl 48.