How do the Casual Employee Changes Affect You?
Changes TO THE FAIR WORK ACT – MARCH 2021
In an effort to provide business with more confidence to employ people under casual and part time employment arrangements, a number of significant changes were made to the Fair Work Act, effective 27 March 2021, by the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021.
It appears that the Federal Parliament have taken the May 2020 decision in WorkPac Pty Ltd v Rossato (which was under appeal before the High Court at the time) into consideration in making changes to employment law.
The decision in Rossato had the effect that an employee who accepted casual employment, but was then engaged in such a way that they had either certainty about future work, or the days and hours of work that may be required of them, was in face a permanent employee entitled to paid leave entitlements.
Unfortunately, the Court went on to find that neither the contract of employment nor the law was sufficiently clear to allow the employer to off set casual loadings already paid to the employee against those leave entitlements.
The concerns raised after this decision revolved around an employee’s ability to effectively ‘double dip’ against entitlements paid and the potential cost to employers with large casual work forces.
WHO IS CONSIDERED A CASUAL EMPLOYEE?
Casual employment was not defined under the Fair Work 2009 and remained a term subject to interpretation of the Courts, until now.
This new definition of ‘casual employee’ applies across all Modern Awards, and all employment agreements not covered by an Award.
15A Meaning of casual employee
(1) A person is a casual employee of an employer if:
(a) 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
(b) the person accepts the offer on that basis; and
(c) the person is an employee as a result of that acceptance.
(2) For the purposes of subsection (1), in determining whether, at the time the offer is made, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person, regard must be had only to the following considerations:
(a) whether the employer can elect to offer work and whether the person can elect to accept or reject work;
(b) whether the person will work as required according to the needs of the employer;
(c) whether the employment is described as casual employment;
(d) 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.
(3) To avoid doubt, a regular pattern of hours does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
(4) To avoid doubt, the question of whether a person is a casual employee of an employer is to be assessed on the basis of the offer of employment and the acceptance of that offer, not on the basis of any subsequent conduct of either party.
(5) A person who commences employment as a result of acceptance of an offer of employment in accordance with subsection (1) remains a casual employee of the employer until:
(a) the employee’s employment is converted to full-time or part-time employment under Division 4A of Part 2-2; or
(b) the employee accepts an alternative offer of employment (other than as a casual employee) by the employer and commences work on that basis.
WHAT DOES THIS MEAN FOR SMALL BUSINESS?
As a small business owner, you can now employ someone as a casual with confidence that the casual loading you pay them (25% under most Modern Awards) as compensation for not accruing paid leave entitlements, can be applied against any leave entitlements the employee might seek to claim as a permanent employee in the future.
With clarity around the conversion from casual to permanent employee, the risk of employees claiming that they should be deemed a permanent employee in the future is also now reduced.
Conversion to permanent employment is now simpler
Under Part 2-2 of the Act, if you employ someone as a casual for 12 months and they have a regular pattern of employment during the last 6 months of that period, you must offer them conversion to permanent employment (attracting paid leave entitlements).
The offer of conversion should be made at the end of any 6 month period where the regular pattern of employment they have undertaken could be converted to permanent part time or full time employment ‘without significant adjustment‘.
The offer must be made in writing within 21 days of the end of the first 12 months of employment. This provision does place an obligation on an employer to offer a longer term casual who has secured a regular pattern of employment over 6 months after the initial 12 months of employment.
If an employee rejects the offer of conversion, they remain a casual employee.
The requirement to make an offer of conversion doe not apply:
- to small business operators with less than 15 employees
- if there are reasonable grounds not to make the offer (some examples are given in the Act).
If an employer decides not to offer conversion, the decision not to make an offer must also be given to an employee within 21 days of the end of their first 12 months of employment.
An employee retains the right to ask for conversion at the end of any 6 month period of regular pattern of employment after the initial 12 months, provided that:
- the employee has not previously rejected an offer of conversion
- the employer has not previously issued a notice of grounds for not offering a conversion
- the request is made more than 21 days after the employees first 12 months of employment
The Act specifically allows for employers and employees to reach agreement on conversion outside the provisions of the Act.
Casual Employee Information Statement – Fair Work
When do you have to give a CEIS to an employee?
As an employer you will be familiar with the obligation to provide an Fair Work Information Statement to new employees which explains the National Employment Standards (NES).
With the inclusion of a definition of casual employment, employers now also have the obligation to provide a Casual Employee Information Statement to new casual employees.
Small business employers (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 have to give their existing casual employees a copy of the CEIS as soon as possible after 27 September 2021.
Need help as an Employer?
If you are struggling to understand your obligations as an employer, or just want to check how the recent changes in law impact you, get in touch through our contact form or by booking an appointment.