Changes to the Fair Work Act 2009 Clarify Confusion Surrounding Casuals

On 22 March 2021, the long-anticipated Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (Bill) passed through federal parliament, albeit in a significantly refined form. While the final draft of the Bill omitted a number of schedules and frameworks which had been included in initial drafts, it still introduced significant changes to the workplace rights and obligations of casual employees.

The changes are reflected in the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Amendment Act), which was assented to on 26 March 2021 and came into effect on 27 March 2021.

Initially introduced to address the ‘economic crisis’ and improve Australia’s industrial relations system following the COVID-19 pandemic, the Amendment Act addresses the uncertainty which had previously existed with respect to casual employees. One key change is the insertion of a definition of ‘casual employee’ which, prior to the Amendment Act, had been subject to significant judicial consideration.

The Amendment Act introduces a new s 15A to the Fair Work Act 2009 (Cth), which provides that a person is a casual employee of an employer if a person is offered employment without ‘firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person’ and the person accepts the offer on that basis.

When determining whether there is ‘no firm advance commitment’, regard must be had to whether the:

  1. employer can elect to offer work and whether the person can elect to accept or reject work;
  2. person will work as required according to the needs of the employer;
  3. employment is described as casual employment; and
  4. 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.

Significantly, the inclusion of a statutory definition in the Amendment Act directly addresses the uncertainty which arose from the recent cases of WorkPac Pty Ltd v Skene[1] and WorkPac Pty Ltd v Rossato[2]. In these cases, systemic issues were highlighted by the ability for casual employees to essentially ‘double dip’ by receiving the 25 per cent casual loading and then subsequently seeking backpay of the benefits of permanent employment such as annual leave, personal leave and redundancy pay.

The explanatory memorandum of the Bill seems to respond directly to those concerns, noting the intention of the Amendment Act is to ‘prevent unfair outcomes in situations where employers have to pay an employee twice for the same entitlement’ and ‘give employers confidence to create jobs by using casual employment as a flexible employment option and encourage rehiring of many casuals who lost their jobs due to COVID-19’.

The Amendment Act also introduces a statutory offset rule, whereby if an employee has been misclassified as a casual, any entitlements owing to that employee will be offset by any casual loading already paid to the employee.

Some of the key practical changes which employers should be aware of are outlined below.

Casual Employment Information Statement

Employers will now be required to give new casual employees a Casual Employment Information Statement (CEIS) prior to commencing their role. Although small business employers are required to give their existing casual employees a copy of the CEIS as soon as possible, other employers have until 27 September 2021 to provide existing casual employees with the CEIS as part of the transitional period.

Conversion from casual to full-time or part-time employment

The Amendment Act has also introduced a new entitlement under the National Employment Standards requiring casual employees to be converted to either full-time or part-time employment after 12 months. Notably, this obligation does not extend to small business employers.

Unless there are reasonable grounds not to do so, employers must offer casual employees a conversion to part-time or full-time employment if that employee has been employed for at least 12 months, and for the last six months of that period, the employee worked a regular pattern of hours on an ongoing basis.

The Amendment Act includes a non-exhaustive list of factors which could constitute reasonable grounds for not converting a casual employee’s employment, such as if:

  • the employee’s position will cease to exist within 12 months after the time the decision on conversion is being made;
  • the employee’s hours of work would be significantly reduced after 12 months of the conversion occurring; and
  • there would be a significant change to either the day or time on which the employee’s work is required to be performed which cannot be accommodated within the days or times the employee is available to work during that period.

What employers should do now

In circumstances where only approximately four months remain of the transitional period for employers to assess their current practices, employers should start taking the following steps sooner rather than later in order to ensure compliance:

  • Employers should familiarise themselves with the CEIS and ensure that a CEIS is issued to all new casual employees, as well as to existing casual employees.
  • Employers should review the pay slips issued to casual employees in order to ensure that casual loadings are separately identified in the pay slip.
  • Employers should also review their casual employees’ patterns of work to determine whether any conversions to permanent employment will need to be made.

[1] (2018) 264 FCR 536.

[2] (2020) 378 ALR 585.

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