News

Are you up to date with your new obligations to casual employees? 

The Fair Work Act 2009 (FWA) was amended on 26 March 2021 bringing landmark changes to the rights and obligations surrounding casual employees.

Previous to these amendments, there was ambiguity as to the definition and subsequent rights of a casual employee. Furthermore, a Federal Court decision ruled some ‘casual’ workers were able to claim both annual leave and casual loading, allowing casuals to ‘double dip’ between two different employment categories.

New Definition

The FWA now stipulates a statutory definition of casual employment as a person who is

• offered employment without a “firm advanced commitment to continuing and indefinite work” and;
• accepts that offer knowing there is no firm advanced commitment to continuing and indefinite work.

When determining whether a “firm advance commitment to continuing and indefinite work” exists a court will take into account the following:

• 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.

Conversion Obligation

Employers also now need to be aware that the FWA includes a new obligation to offer casual employees a chance to “convert” to permanent employment after 12 months of employment if during the last 6 months they have worked a regular and systematic pattern of hours and could continue to do so. For small businesses (less than 15 employees) casuals can request to convert, but there is no obligation on the employer to proactively offer conversion.

The offer of conversion must be made in writing and giving notice to employees within 21 days of their 12 month employment.  If an employee does not accept, the employee loses their right to request casual conversion for 6 months. However, no offer needs to be made if there are “reasonable business grounds” for not making the offer and this must be put in writing to the employee.

Reasonable business grounds 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 hours of work are required to be performed in the 12 months after the conversion right arises.

If an employer is a small business (under 15 employees) they are not obligated to offer casual conversion.

If the employer does not make an offer of casual conversion due to reasonable business grounds and notifies the employee of this in accordance with the FWA, then the employee loses their right to request casual conversion for 6 months.

Casual Employment Information Statement

There is a new Fair Work Casual Employment Information Statement (CEIS). This statement must be attached to new casual employment contracts in the same way employers are obligated to attach a Fair Work Information statement.

Small business employers (those with less than 15 employees) need to give their existing casual employees a copy of the CEIS as soon as possible after 27 March 2021. Other employers must give their existing casual employees a copy of the CEIS as soon as possible after 27 September 2021.

Next Steps

It is recommended employers

1. Review the business structure to consider if casual employment is the most appropriate type for the relevant position.
2. Review employment contracts to include
   • the new definition of casual employment;
   • to make sure casual loading is referable to a payment in lieu of permanent entitlements.

3. Check payslip information.
4. Implement processes for issuing the Casual Employment Information Statement;
5. Implement processes for assessing whether existing casuals are to be offered conversion within 6 months of the new law being passed (by 27 September 2021)
6. Implement processes for offering conversion to casual employment at the 12 month anniversary of employment, or issuing a letter why making such an offer is not possible.
7. Offer conversion to current casual employees who qualify for casual conversion by the 27 of Sepetmber 2021.

These new FWA amendments to casual employment clarify the ambiguity surrounding casual employees, however, also place more burden on employers and their HR systems. To find out more on how these new obligations affect you please contact us.