Employers throughout Australia are breathing a sigh of relief since the Government passed an amended version of the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020 (the Bill) on 22 March 2021. The current version of the Bill is much narrower in its scope than initially contemplated. Although, the provisions relating to casual employment will affect many employers who have casual workforces. This article provides an overview of the implications of the Fair Work Act 2009 (Cth) (FW Act) changes. These changes have been in effect since 27 March 2021. It also considers practical steps you should take, as an employer, to ensure your business reaps the benefits of these new provisions.
What Are the Changes?
The key changes resulting from the Bill are:
- the introduction of a statutory definition of a "casual employee" in the FW Act;
- increased casual conversion obligations;
- creation of a Casual Employment Information Sheet; and
- prevention of double-dipping for permanent entitlements where employers are paying staff casual loading.
Definition of "Casual Employee"
The Bill has introduced a statutory definition of a "casual employee" in the FW Act. The definition provides that a casual employee is a person who:
- is offered employment with no firm advance commitment of regular work; and
- accepts the offer of employment on that basis.
In determining whether an offer of employment makes no firm advance commitment of regular work, consider the following factors. Whether:
- an employer can elect to offer the employee work;
- the employee can elect to accept or reject the work that is offered;
- the employee will work as required according to the needs of the employer;
- employment is described as casual employment; and
- the employee will be entitled to a casual loading.
These changes focus on the offer and acceptance of employment rather than any subsequent conduct or the employee's actual work pattern.
This statutory definition will apply retrospectively to casual employees that met this definition even before the commencement of the legislation.
This definition represents a significant departure from the principles established in the recent case of WorkPac Pty Ltd v Rossato  FCAFC 84. Here, the courts assessed how the parties had actually conducted themselves during employment to determine whether the true nature of the engagement was of a casual nature.
Accordingly, this new statutory definition of a "casual employee" should provide more certainty for employers when considering whether your casual workforce consists of genuine casuals.
The Bill also places obligations on employers to offer casual employees the right to convert to permanent employment if:
- they have been in your business for at least 12 months; and
- they have worked a regular pattern of hours on an ongoing basis for at least the last 6 months of that period, which, without significant adjustment, they could continue to work as either a permanent full-time or part-time employee.
However, there will be no obligation for you to offer casual conversion if there are reasonable business grounds not to do so.
Importantly, your employees may still have a residual right to request to convert their employment at a later date. This is even if you have determined that you do not need to offer conversion.
Whilst the obligation to offer casual conversion does not apply to small business employers who have less than 15 employees at the relevant time, your casual employees are still entitled to request casual conversion.
Casual Employee Information Statement
The Bill requires the Fair Work Ombudsman to create a new Casual Employment Information Statement. New casual employees must receive this Information Statement before, or as soon as practicable after, their employment commences. Accordingly, you must provide new casual employees with both the usual Fair Work Information Statement and the new Information Statement.
It may be the case that you misclassify one of your staff as a casual employee, only to determine later that they are a permanent employee. The Bill includes provisions that will allow employers to set off any casual loading paid to a misclassified casual employee.
However, to reap the benefit of this set off arrangement, you need to:
- ensure the employment agreement specifically describes the engagement of the employee as being casual; and
- separately identify the casual loading as being an amount paid to compensate the casual employee for not receiving relevant permanent entitlements.
If you have not already, it is an excellent time to ensure your casual employment agreements are up to date.
Additionally, you can retrospectively apply these setting off provisions. Hence, you can set off any casual loading that you paid to a casual employee before the Bill came into operation, safeguarding you against historical claims for permanent entitlements.
If you have a casual workforce, you should take the following steps to ensure compliance with the new provisions of the FW Act:
- update your casual employment contracts to enable you to rely on the double-dipping provisions;
- review your casual workforce to determine which casual employees you can offer casual conversion; and
- ensure you have processes for issuing the Casual Employment Information Statement to both new and existing employees.