In the most recent tranche of complex changes, the Government's closing loopholes legislation amends the Fair Work Act 2009 (Cth) (the Act) making important changes to casual employment.
The changes amend the definition of a casual employee, introduces an additional requirement in relation to the Casual Employment Information Statement (CEIS) and introduces an employee choice framework.
Casual employee definition
Current definition
Currently, section 15A(1) of the Act defines a casual employee as a person who is offered and accepts employment on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
Section 15A(2) of the Act goes on to list considerations to be considered in determining whether at the time the offer is made, the employer makes no firm advance commitment to continuing and indefinite work. These are:
- 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.
The current definition of casual employment was brought about due to the High Court decision in Workpac Ltd v Rossato & Ors [2021] HCA 23. The Federal Court and High Court decisions on the matter have all pointed to there being determinative weight on what is stated in the employment contract – if your employment contract referred to you as a casual employee, then you are likely to be a casual.
The changes to the casual employment definition moves away from this.
What is the change?
From 26 August 2024, the below 'casual employee' definition will be introduced.
An employee is only a casual where:
- there is no firm advance commitment to continuing and indefinite work, considering a number of factors, including the real substance, practical reality, and true nature of the employment relationship, and
- they are entitled to receive casual loading or a specific casual pay rate.
The changes mean that there is no single determinative factor e.g., what the employment contract says, and the focus is on the nature of the employment arrangement i.e., post contractual conduct.
Casual conversion – 'employee choice'
Current process
Under the Act, employers (except small businesses) are required to offer a casual employee permanent employment if the casual employee:
- has been employed for at least 12 months; and
- during the last 6 months of that period, the casual employee worked a regular pattern of hours on an ongoing basis which, without significant changes, the employee could continue to work as a full - time employee or a part - time employee.
The written offer must be made within 21 days after the employee's 12-month anniversary. The employee needs to respond to the employer in writing within 21 days accepting or declining the offer.
If the employer decides not to make an offer, they are required to write to the employee 21 days after the employee's 12-month anniversary stating they are not making an offer and the reason why.
Small businesses do not have to offer permanent employment to its casual employees.
If a casual employee believes they meet the above, they can make a request to convert their casual employment to permanent employment. The employer will need to provide a written response within 21 days either accepting or declining the request. If the employer declines the request, they must provide reasons.
An employer can only refuse to offer permanent employer if the employee has not worked a regular pattern of hours on an ongoing basis for the last 6 months which they could continue to work without significant changes as a full-time or part-time employee, or on reasonable grounds.
The changes - 'employee choice'
From 26 August 2024, casual employees will have the right to request to convert their casual employment to a permanent one after 6 months instead of 12 months. For small business employers, from 26 February 2025, casual employees will have the right to request to convert their casual employment to a permanent one after 12 months.
Casual employees can only make a written request (notification) if they:
- have been employed for at least 6 months (or 12 months if working for a small business employer); and
- believe they no longer meet the requirement of the new casual employee definition.
Employees cannot provide this notification to change to permanent employment if:
- they are currently engaged in an ongoing dispute with their employer about conversion; or
- in the last 6 months, their employer has refused a previous request; or
- the employee has resolved a dispute with their employee about casual conversion.
Once a request is made, employers must give an employee a written response within 21 days. Before responding, the employer must consult with the employee.
If the employer accepts the change, the employer must provide a response including information on when the change will take effect e.g., part-time or full-time and the new hours of work.
If the employer refuses, they must provide a written response outlining reasons for the refusal. The employer can refuse the request on the following grounds:
- under the new casual employment definition, the employee's current relationship still falls under this new definition; and
- there are fair and reasonable operational grounds including:
-
- substantial changes would be required to the business;
- significant impact on the business;
- substantial changes to the employee's employment conditions would be reasonably necessary to ensure the employer does not breach any rules e.g., in an award or agreement applicable to an employee;
- accepting the conversion to permanent employment would mean that the employer would not be complying with a recruitment or selection process required by or under law (Commonwealth or a State or a Territory).
It is important to note that employers will not be required to back-pay employees for any entitlements gained by moving to permanent employment.
Casual Employment Information Statement (CEIS)
From 26 August 2024, the CEIS will need to be provided to:
- new casual employees before, or as soon as possible after, they start their casual employment;
- all casual employees employed by non-small businesses as soon as possible after,
- 6 months of employment;
- 12 months of employment; and
- every subsequent 12 months of employment.
- all casual employees of small businesses as soon as possible after 12 months of employment.
What this means for employers
It is crucial now more than ever, that there is clear communication to casual employees of their employment status. This should also be both clearly reflected in not only the employment contract, but in any correspondence with the employee and by way of conduct.
With the new casual conversion right, whilst the employee choice framework sees a shift in the onus from employers to employees, employers should be careful not to categorise its employees incorrectly and pay attention to post casual employment conduct in considering whether the casual employment could now potentially be a permanent one. Employers still have obligations in responding to an employee's request.
Employers are required to fulfil their current obligations (to offer conversion to casual employment) up to and including 25 August 2024, until the new changes come into effect 26 August 2024. For small business employers, the casual conversion changes take effect from 26 February 2025.
Employers should ensure that included in the process of onboarding a new casual employee, that the Casual Employment Information Statement is provided.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.