How do the Casual Employee Changes Affect You?

How do the Casual Employee Changes Affect You?

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. 

Legally Binding Contracts: What You Need To Know

Legally Binding Contracts: What You Need To Know

Legally Binding Contracts: What You Need To Know

LEGALLY BINDING CONTRACTS: WHAT YOU NEED TO KNOW

There is no doubt that running a business has risks. These risks may come from your employees, your contractors, your suppliers or customers.

As a business owner, you need to take control of your business by assessing these risks and determining how to reduce these risks. One of the best ways to protect your business is to understand contracts. The terms and conditions on your website document the contract between you and every user of your website. If you don’t have any written terms and conditions, you are guessing about the agreement you have with your website users. 

When you sell your product or services, you need a written sales contract to be certain that you are protecting your interests. If you operate an online platform to market or sell your products or services, you need a contract for use of your website (usually terms and conditions). Or, if you want to protect your confidential information such as your client list and trade secrets, then you need a confidentiality deed.

Contracts are an essential part of all businesses as they form the basis of the majority of business relationships and transactions. It is, therefore, crucial for you to know when you do and do not have a binding contract. A binding contract is something that is legally enforceable. So for example, having fun with your friends in a pub is not going to be a binding contract, it’s going to be a bit of a joke and a bit of fun. In order to get a binding contract, you have to have all of the essential terms agreed and an intent to create legal relations. You also need to be able to give evidence of the terms of the agreement.

CASE STUDY

We recently had a client who entered into a contra deal with another service provider, each expecting to complete between $3,000 – $5,000 of work for the other party. Our client wasn’t able to, or wasn’t prepared to trawl through historical emails to specify the details of what they had committed to provide, and they had not invoiced periodically. (An invoice with a credit applied can assist in evidencing that an agreement was made.)

The other party provided a written engagement for services and invoiced regularly. After 12 months, the other party claimed they had received nothing from our client and took legal action to seek payment in full of their invoices. Because our client was not organised, wasn’t able to specify the agreement made or clearly identify the work produced, they ended up in a position of having to either invest in legal services to defend a court matter, or compromise the claim and pay the other party.

A bitter pill to swallow!

For a contract to be legally binding in Australia, it must contain at least the following elements:

 

1. offer

A contract is essentially a promise between people to do or not do certain things, and it starts with an offer.

An offer must be clear, unambiguous, and contain the essential terms that are to be agreed upon between the parties. That might include the parties to be involved in the contract, the timing of the contract, payment terms under the contract, and any other essential terms necessary to make sense of the purpose of the contract.

When you communicate to another person your promise, you are making an offer. For example, if you promote your services in three different packages on your website, then you are making an offer to each person who views that webpage.

When thinking about business contracts, a company that prepares a proposal is making an offer. If the business looking at that proposal accepts it, that is the first step toward a binding contract, but if they come back and says, “we want something different,” then that offer no longer stands as the offer It’s a counteroffer and the counteroffer takes the place of the original offer.

This will go on until the parties reach a point where there is an offer that is capable of being accepted, and that’s where you get acceptance.

 

2. acceptance

There must also be acceptance of the offer through a clear statement or conduct in response to the offer. Acceptance can be evidenced in a variety of ways, so it could simply be an email, a telephone conversation, or the signing of a formal written contract.

For online services, acceptance will be when your customer clicks on that button that says, ‘Buy Now’. That is accepting the offer that has been made available on the website.

Contracts are commonly accepted by signature, or by checking a box next to a statement that says you agree to the terms and conditions.  Many contracts are binding without a signature, but not all contracts can be legally binding without being signed. Contracts for the sale of land must be in writing and signed. Wills must also be in writing and signed to be enforceable without needing court intervention.

A form of signature is preferred because even if the parties did not read the contract before signing it, their signatures indicate that they have read and understood and are bound by the terms.

However, this does not mean that if your contract is not signed, it is not valid and therefore not enforceable. Parties can also accept the contract terms through their conduct or other circumstances. It all depends on the circumstances and intention exhibited by the parties. As long as it has been sufficiently communicated, it will be valid acceptance.

For example, completing work referred to in the contract signals acceptance of the contract terms, and that person will be entitled to seek payment under the contract.

A counteroffer is not acceptance, it is a new offer that needs acceptance.

 

3. consideration

A person must give some value in return for a promise to create a legally binding contract. In other words, each party must receive a benefit.  The most common form of consideration is payment in exchange for goods or services.

With the online example, you’ve clicked the ‘Buy Now’ button. The consideration is the payment of money, and as soon as that consideration has passed, there is a binding contract in place.

Using the example of a proposal, once the terms of the proposal are agreed and accepted by one party, either the payment of money or the start of work or both, will be consideration. The essential terms of the contract must be agreed before the point of consideration to be binding.

So, if you ask a client to pay first and then give them terms and conditions after payment, then the terms and conditions won’t be binding because the consideration has occurred before those elements of the contract are agreed. This can be different where a deposit is conditional upon certain terms being accepted.

Terms and conditions of a contract given to a purchaser only after the contract was formed will not be binding.

 

4. Intent to create legal relations

As entertaining as it might be to dare a friend in a pub to do something, if they do it, your payment to them is only enforceable based on your goodwill and is not legally enforceable.

This is different to a restaurant promising that a huge meal is free if you can eat it all. That can be enforceable because the restaurant intends people to rely upon that promise in ordering the meal in the first place.

    other elements of a binding contract

    Aspects of contracts that can affect whether or not a contract is binding include capacity, mistake, illegal intent, fraud, misrepresentation, duress or no intent to create a legal contract.

     

    capacity

    Capacity is whether somebody has the legal capacity to make a contract. Only an adult can enter into a contract; that is somebody over the age of 18 years. A person under 18 years does not have legal capacity to form a binding contract.

    A person with a disability or an older person who has lost capacity through dementia or Alzheimer’s disease may not have capacity to make a contract, or may have only intermittent capacity.

     

    mistake

    A mistake in a contract can sometimes invalidate a contract. Typographical errors are generally not fatal mistakes.

    Usually, a party will be bound by the documents they signed, whether or not they’ve read or understood them. However, where a party signs a contract that they fundamentally believe to be something different to what it is, this may be a mistake sufficient to affect the binding nature of the contract. For example, if a person believes that they are purchasing a copyright work (say a painting) where in fact, what they’re signing is only a limited license to use that copyright work for a limited purpose (hanging  the painting in their office). In those circumstances, there is quite a significant difference between what the first person understands they are paying for, and what they are actually getting under the contract.

    That may give rise to a doctrine of what’s called a non est factum, which means, ‘it’s not my deed’ or ‘it’s not my contract’ or ‘I didn’t agree to this’. It is very rare to argue this type of mistake.

    There are other types of mistakes, for example, one party could be mistaken about what it is they are buying. A party might think they are buying a website with all the existing content and so on, where in fact, what they’ve done is entered into a contract to buy a domain name.

    Now, it is likely that the seller in that circumstance knows that they are only selling a domain name and they probably have a level of awareness that the purchaser is mistaken as to what they are actually getting.

    In those circumstances the purchaser may not be able to end the contract, there might not be a remedy under contract law or common law, but there may be a remedy in equity. In equity, the party who knew the other party was mistaken as to what was involved in the contract, may be required to allow the other party to revoke the contract or to have rectification of the contract.

    Rectification is amendment to the contract to make it reflect what was understood to be the terms of the contract. Occasionally, both parties to a contract have mistaken some aspect of the contract, but different aspects.

    There have been some recent cases in Queensland regarding property development, where two parties to a development contract had different understandings of different aspects of the contract and they were ventilated when it went to court. Again, it is rare to have a circumstance where there is a unilateral mistake by both parties about different issues to the contract.

    A common mistake is where both parties are mistaken about something to do with the contract. A good example is where both parties think a description of a property refers to a visual address they agree upon, only to find in a property title search that the property they thought they were transacting is the property next door.

    For online content, the contracting parties might both think that the website is built with a particular programming language, for example, HTML, when it is built on a different system or with different programming language.

    Where there is common mistake, all party’s expectations around the contract are altered because something has risen that none of them were aware of when they first went into the contract. Again, the remedy is more likely to be an equity in terms of a rescission of contract or rectification of the contract, rather than a specific ability to terminate the contract. However, if all parties are mistaken and they have a mutual agreement to end the contract, then that is not a problem at all. It is only a problem when the parties are in dispute.

     

    illegal purpose

    Another aspect that will affect the binding nature or enforceability of a contract is whether or not it’s for an illegal purpose. A contract for the purpose of committing a crime is not enforceable. There are differences in criminal law in the different states and territories of Australia.  There are also proposed changes around Australia regarding slavery laws at the moment.

    Consider modern slavery, such as people immigrating from overseas and then having their passports taken from them and essentially going into indentured labor services. An offer to find work for someone in exchange for their payment to get help in immigrating will not be enforceable if it results in indentured labor.

     

    fraud or misrepresentation

    If there is misrepresentation or fraud before the contract is made, which influences one party to enter into the contract, then the contract may be challenged. Fraud is a deliberate untruth that can be relied upon to void a contract. Misrepresentation is something less.

    Consider an IT Service Provider. They say that they will be able to provide you a secure computer system and a phone system (being very simplistic, obviously), for a set monthly fee and an installation cost. Then you find out halfway through installation that it simply will not work with your existing systems, unless additional products or services are purchased, or there is some variation to what needs to be done.

    This may be misrepresentation, particularly if you have asked the service provider to review what your requirements are and tender on that basis, then you have accepted the tender and they can’t deliver what they said they would deliver. A remedy for misrepresentation is likely to be damages.

     

    duress

    Coercive control is a form of domestic violence that is very topical at the moment, and difficult for the legal system to articulate. Duress or coercive control is putting someone in a position where they feel they have no choice but to enter into the agreement.

    In a business situation, holding up payment pending an agreement can be a form of duress if the party withholding payment knows that it will have an adverse effect on the party due to be paid, and they intend to use that as leverage for future negotiations. It is effectively holding the company that is owed money to ransom for money it is already owed.

    Although the creditor company might have remedies in terms of taking the debtor to court for recovery of payment, the time involved in recovering that payment may be sufficient to effectively put the creditor out of business without the payment due being received.

    A threat can also form duress, unless there is a term of the contract that was agreed which supports it. “If you don’t sack that person, we will terminate this contract” is a threat unless the contract includes a provision that you can require the contractor to replace people if you are not happy with them.

     

    spoken contracts, or partly spoken and partly written

    An oral contract can also be valid and enforceable. A contract can be partly written, partly verbal and partly included in an exchange of emails. [https://onyx.legal/articles/contract-dont-have-to-be-in-writing/]

    For this reason, you need to be aware of when you’re making promises to other people and when you might be creating binding contracts, whether you intended to or not. Having a formally written contract with signatures on it is proof of the contract that was agreed. The documentation is not what is required to make it binding.

    Evidence obviously becomes an issue when contracts are oral. That is when disputes end up in courts, with different people claiming perfect, and differing, recollection of what was agreed.

     

    contracts and deeds are different things

    There is a difference between deeds and contracts. Contracts need consideration, which is the doing or giving of something in exchange for understanding that the other party to the contract or the other parties to the contract have obligations that they will fulfill in exchange.

    A deed is binding without consideration, and as a result, there are specific rules around the signing of a deed before it can become binding.  

     

    remedies

    Once a contract is formed, the nature of the remedy depends upon the nature of the problem in the contract and can include a variety of remedies from voiding the contract from the beginning through to payment of damages, specific performance, damages for losses occurring within the contract and so on. These all depend on the terms of the contract agreed between the parties.

    Want more information?

    We love writing contracts. Especially contracts you understand, so that your customers understand them too. Keep it simple. Let us know what contracts you would like to put in place in your business by completing our contact form or booking an appointment. 

    How Governance Can Help an Organization Add Value

    How Governance Can Help an Organization Add Value

    How Governance Can Help an Organization Add Value

    What is the purpose of corporate governance? 

    What exactly is governance and why is it important?

    Well, it’s not that complicated. It’s just the rules around doing business.

    If you’re a registered company, there are certain reporting obligations that you have in order to protect the shareholders, the investors in your business. Good governance also helps to add value to your business so that when you’re looking at getting more investors on board or actually selling your business in the future, you can demonstrate why it’s worth what you say it’s worth.

    An example here might be if you’ve got a startup and someone’s developed a piece of software. Now, that piece of software might have some value, and the person who created it might be entitled to receive some money from the business at some point in time once it’s making revenue.

    Actually documenting the rights of the company and the developer shareholder are very important because if you’ve got an investor who wants to come into the company, or you’ve got someone who wants to buy the business, they need to know that the business owns that software and on what terms it owns it, because it can make a big difference to the valuation of the business. That is one of the first points of information around governance – ensuring that all the key players in the business understand the rules for the business.

    There’s a lot of questions around what level of detail you need to have, but that’s a separate conversation. Typically, a company will have at least a constitution or replaceable rules, and a shareholder agreement governing the relationship between the shareholders. 

    How can Onyx Legal help you?

    If you would like to understand your business structure and how to bring in new people so that everyone is on the same page, contact us.