On 22 March 2021, new legislation was passed that significantly amended the casual employment regime in Australia.
The legislation goes on to include a clarified definition of the ‘casual employee’ and expands upon already existing casual conversion rights, including an obligation on employers to offer permanent employment in certain circumstances
New casual employment changes
New rules for casual employees
Federal Parliament has amended the Fair Work Act 2009 (Cth) in order to address the difficulties that have been created around casual employees by recent court decisions like WorkPac v Rossato. The new provisions will commence shortly, after the bill receives Royal Assent.
What are the five key changes to the new casual employment rules?
Good day and welcome to Source Legal and HR, where we talk everything employment from compliance to best practice relevant to any business, which has people. My name is Kelsey Hunter. I’m a senior employment lawyer at Source Legal. And I’m here today to talk to you about some recent changes to the Fair Work Act in relation to casual employees. So if you have casual workers in your business, this one’s for you. In a nutshell, five key changes to the Fair Work Act.
First change
First change is in relation to a casual employment information statement. The Fair Work Ombudsman has drafted up this new statement. So for any new casuals that you want to employ moving forward, you need to give them a copy of this statement at the time of offer. So when you give them a contract, make sure that it has the statement as well. For any existing casuals in your business, they need to get a copy of this statement within six months. So get cracking.
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Second change
Change number two is in relation to the definition of a casual employee. You may be aware that there’s been some conjecture in case law around what actually is a casual employee. So the federal government has now clarified this. We now know that a casual employee is someone who has been offered and accepted employment on the basis that the employer has made no firm advanced commitment to continuing and indefinite work in relation to any agreed pattern of work. So it just rolls off the tongue, doesn’t it? Some practical considerations for you though, please check your contracts, make sure they address this new definition. Make sure there’s a provision in there, for example, that the employee is not making any from advanced commitment to any indefinite and continuing work on any pattern of work or pattern of hours.
A key change here is that the time for assessment is at offer and acceptance. So a court’s going to consider whether someone’s a casual employee at that time, and they will remain a casual employee unless their employment has been converted to a permanent type of employment. So part-time, or full-time at a later a day. So that’s the third key change.
Third Change
Third key change is that the Fair Work Act now put in mandatory casual conversion provisions. So when your casual employees reached 12 months service, you have 21 days to undertake an assessment of whether or not their employment should be converted to a permanent type of employment. So part-time or full-time, and you have 21 days to do that assessment and tell them either way. So even if you’re not going to offer them casual conversion, you need to write them a letter to say that you’re not doing that and setting out the reasons why.
Now, there are two grounds for you to not offer casual conversion. The first reason is if there are reasonable grounds not to offer casual conversion. It would be really interesting to see what reasonable grounds are. There isn’t any case law on this point just yet, but I would suspect that this would be a key provision, particularly for my labor hire recruitment companies. And I have a lot of you as clients. The second ground for not providing casual conversion is if the employee has not worked a regular pattern of hours in the last six months, and you wouldn’t be able to offer them part-time or full-time employment without a significant adjustment.
Fourth change
So the fourth change is that for your existing casual employees, you need to undertake this assessment. So you don’t just get away and skip the assessment because they’re currently existing employees. You have six months to look at any casual employees who are reaching that 12 months service and decide whether or not you’re going to offer them casual conversion or not.
You have six months to undertake the assessment. And within 21 days of undertaking or completing that assessment, you need to write to them and let them know either way what you’re doing.
Fifth change
The fifth and final change is in relation to casual loading. So as you’re probably aware, casual employees get a 25% loading. In addition to the base pay. So say the base pays $20, a casual employee needs to get 25% more and that’s their casual loading. So in that case, 25% of $20 is $5. So the casual employee, their base rate would be $25. If a casual worker wants to argue that they are permanent and therefore entitled to something like annual leave or redundancy pay, a court or commission must offset casual loading. So this is a really big win for employers, but the normal rules of offsetting apply.
So for us setting to apply, you must make sure that the amount that you were paying and you intend to offset is a separately identifiable amount. You may want to consider an employment contract that says, for example, you will receive $25 an hour, which includes $20 base pay and $5 casual loading. So it’s a separately identifiable amount. And now the key practical tip is to be considering your payslips. Check, do your payslips include casual loading listed separately with an amount next to it? This will increase your chances of being able to offset any of that casual loading.
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