A heavily amended version of the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020 (the "IR Reform Legislation") has been passed by both houses of Federal Parliament. The primary changes in the IR Reform Legislation are centred around casual employment, including the introduction of a definition of casual employment.

The changes provide a greater degree of clarity around the issues of casual employment and provide a clear impetus to employers to ensure that they have their casual employee arrangements in order.

Changes made to the original IR Reform Legislation

The original draft of the IR Reform Legislation contained a wide raft of changes to the Fair Work Act 2009 (Cth) (the "FW Act"), including provisions allowing employers to offer part-time employees additional shifts without having to pay overtime rates.

The most contentious aspect of the original draft of the IR Reform Legislation were the proposed changes to the better off overall test, which would have allowed the Fair Work Commission to approve enterprise agreements which may have disadvantaged employees in comparison to their entitlements under the relevant modern award.

The original draft had also contained amendments which would have criminalised wage theft, creating offences where an employer was found to have dishonestly engaged in a systematic pattern of underpaying one or more employees.

Due to political pressure and scrutiny from the opposition and crossbenchers, the Government stripped back the majority of the changes made under the IR Reform Legislation, with the eventual bill primarily containing changes pertaining to casual employment.

Casual employment

The IR Reform Legislation introduces a definition of "casual employee" into the FW Act, as well as mandating that employers offer full or part-time employment to casual employees after 12 months subject to certain conditions.

A person will be a casual employee for the purposes of the FW Act if:

  • 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
  • the person accepts the offer on that basis; and
  • The person is an employee as a result of that acceptance.

Employers must make an offer to a casual employee for full or part-time employment provided that:

  • the employee has been employed for a period of 12 months; and
  • during at least six months of their employment period they have worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time employee or a part-time employee.

The IR Reform Legislation will also introduce provisions which seek to reduce the capacity for casual employees (who are subsequently found not to be casual), to 'double dip' in circumstances where they have been paid a casual loading. The IR Reform Legislation will require the Courts to reduce any amounts payable to an employee who successfully makes a claim for relevant entitlements (which include annual leave, personal leave and redundancy pay) by an amount equal to the casual loading amounts that they received.

The framework for casual employment established by the IR Reform Legislation creates a new platform for employers to audit and assess their casual employee arrangements and practices. With greater clarity surrounding how casual employment practices will be regulated, employers will need to review their processes and arrangements to mitigate areas of risk. Employers should be prepared to face scrutiny over these areas, for example from regulators or auditors assessing risk profiles concerning areas such as casual conversions and potential legal claims.

Key takeaways

  • Casual employment is employment offered and accepted 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 employee.
  • Unless one of the limited exemptions apply, employers will now be required to offer full-time or part-time employment to casual employees who have been employed for at least 12 months.
  • While Courts will now be required to reduce the value of successful claims by the amount of any separately identifiable casual loading paid to the employee, employers should now review their employment arrangements and practices, including in anticipation of greater scrutiny from regulators, auditors, unions and employees.