Major amendments to the Fair Work Act 2009 (FW Act) will give employers much needed clarity around casual employment. The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 amends the National Employment Standards (NES) in the FW Act to make important changes to casual employment laws and arrangements.
The amendments:
- Define a ‘casual employee’ for the purposes of the entitlements in the NES;
- Protect employers from ‘double-dipping’ claims by casual employees and ex-employees who claim they are entitled to annual leave and other entitlements of permanent employment;
- Require employers to give each casual employee a copy of the Casual Employment Information Statement; and
- Give eligible casual employees the right to convert to permanent employment in certain circumstances.
The Fair Work Commission (FWC) will also be required to review the casual employment terms in all awards to ensure that they operate consistently or effectively with the amendments, within six-months of their commencement date.
The amendments to the FW Act operate from 27 March 2021.
What is the definition of a ‘casual employee’?
A new definition of ‘casual employee’ provides much greater clarity, as the question of whether a person is a casual employee will be assessed based on an offer and acceptance of employment, not on the basis of future conduct. If the offer of employment is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern, and the person accepts that offer on that basis, then they become a casual employee as a result of that acceptance.
Provided that there is no firm advance commitment to continuing and indefinite work at the time that the employment offer is made, the employee will remain a casual employee until they are converted to full-time or part-time work, or they accept an alternative offer of employment by the employer. Further, a regular pattern of hours does not indicate commitment to continuing and indefinite work according to an agreed pattern of work.
In order to determine whether the above conditions have been met, the following four issues are considered:
- 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.
How should employment contracts be worded for ‘casual employees’?
Now that there is a definition of ‘casual employees’, employers are strongly advised to ensure that an employment contract offered to a person who will be employed as a casual employee states:
- the offer is for employment as a ‘casual employee’;
- the offer of employment 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;
- the amount of the casual loading, or specifies a casual rate of pay;
- the employer can elect to offer work and that the employee can elect to accept or reject work; and
- the employee will work as required according to the needs of the employer.
How does the legislation protect employers against ‘double-dipping’ claims by casual employees?
A provision has been inserted into the FW Act that allows the amount of casual loading that has been paid to an employee to be ‘offset’ against any entitlements the employee claims are owed to them.
The amendments also clarify that service as a casual employee is not counted for the purposes of redundancy pay, notice of termination and various other entitlements of permanent employment if the casual converts to permanent employment.
What are an employer’s obligations to give casual employees the Casual Employment Information Statement?
The Fair Work Ombudsman has published a Casual Employment Information Statement (the Statement) which includes information about the definition of a ‘casual employee’ and conversion rights of casual employees.
As soon as practicable after 27 March 2021, a small business employer (defined as one that employs less than 15 employees) must give the Statement to each casual employee who started their employment before 27 March 2021.
All other employers have until 27 September 2021 to provide the statement to their casual employees.
All employers must give new casual employees the Fair Work Information Statement in addition to the Casual Employment Information Statement, before they start or as soon as practicable after.
What casual conversion rights are included in the legislation?
The NES has been amended to provide casual conversion rights to employees who are employed by employers that are not small business employers (see the above definition).
Although the new casual conversion provisions in the NES do not apply to small business employers, most modern awards contain casual conversion provisions that do apply to them. Further information about casual conversion rights in the NES and how these interact with awards can be read below.
The new casual conversion provisions are extremely detailed. Employers are encouraged to contact the Ai Group Workplace Advice Line to discuss any queries relating to these new provisions.
How does the definition of a ‘casual employee’ and the casual conversion rights in the NES interact with those in modern awards?
Most modern awards define a casual employee as ‘one engaged and paid as such’, and include provisions which give eligible employees the right to request conversion after either a 6 or 12 month qualifying period, with employers having the right to reject conversion requests on reasonable grounds.
The Amendment Act requires the FWC to review the casual employment terms in all modern awards to ensure they operate consistently or effectively with the amended NES within 6 months of commencement.
The NES overrides award provisions that are less generous to employees but not award provisions which are more generous.
Therefore, until the FWC reviews and varies each modern award, employers will need to be mindful of the entitlements that employees have under the NES and the applicable modern award.
For advice about the award that applies to your employees, please call the Ai Group Workplace Advice Line.
Further advice or assistance
For further advice or assistance on this topic, or any workplace relations matter, call the Ai Group Workplace Advice Line.
Call 1300 862 217 8.30 – 5.15pm AEDT Mon-Fri