By Catherine Ngo Senior Editor and Content Writer, My Business

Under section 15A of the FW Act, the definition of casual employment was if:

(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.

However, this is all about to change. The Fair Work Amendment (Closing Loopholes No 2) Bill was recently enacted, introducing significant modifications to the Fair Work Act 2009 (FW Act). Notably, a new definition of "casual employee" is among these modifications, which will take effect on August 26, 2024.

The revised definition of casual employment focuses on the practical aspects of the employment relationship rather than solely relying on the terms outlined in the employment contract.

In essence, the new definition encompasses situations with no firm, ongoing commitment to provide continuous work and where the employee is entitled to either a casual loading or a specific rate of casual pay as stipulated in an industrial instrument or agreement.

In determining the absence of a firm advance commitment to continuous and indefinite work, various factors must be considered, including:

1. The actual substance, practical reality, and genuine nature of the employment relationship.

2. Whether the employer cannot choose to offer work or the employee cannot accept or reject it.

3. The likelihood of future continuing work being available.

4. The presence of full-time or part-time employees doing the same work.

5. The existence of a regular work pattern for the employee.

These amendments recognise that a firm advance commitment can take various forms, including an employment contract, but, more importantly, through a mutual understanding or reasonable expectation.

 

NEW PATHWAYS FOR CASUAL WORKERS TO CONVERT TO PERMANENT EMPLOYMENT

In an effort to modernise employment practices, a new pathway for employees to transition from casual to permanent employment status has been implemented. Previously known as "casual conversion," this pathway replaces the existing right to casual conversion. To initiate the change, an employee with at least six months of employment (or 12 months in a small business) must choose to do so.

The new approach shifts the responsibility onto the employee to initiate the change rather than relying on the employer to review and offer casual conversion. Regarding requests for flexible work arrangements, casual employees can write to their employers to express their desire to change their employment status, and employers are obligated to respond within 21 days. This change aims to streamline the process and provide a more efficient and employee-centric approach to employment status transitions.

An employer may reject a notification of conversion from casual to full-time or part-time employment on any of the following grounds:

  • The employer believes that the employee has been correctly classified as a casual employee, meaning that they do not work on a systematic basis.
  • There are reasonable operational reasons for not accepting the notification, such as if significant changes would be necessary to the way work in the business is organised to allow the employee to convert.
  • A change of employment status to full-time or part-time would not comply with a recruitment or selection process required by law, such as the Public Service Act 1999, which states that casual employees cannot convert without a competitive selection process.

 

NEW ANTI-AVOIDANCE PENALTIES

Significant changes are being implemented to prevent employers from improperly engaging casual workers and evading their legal obligations. These changes include new anti-avoidance provisions that prohibit employers from:

1. Dismissing or threatening to dismiss an employee with the intention of re-engaging them as a casual worker.

2. Making false statements to persuade an individual to enter into a casual employment contract, such as claiming that the individual will be financially better off.

3. Misrepresenting employment as casual when it is not.

Breaching these provisions can result in civil penalties. Effective February 27, 2024, the maximum payable under the Fair Work Act (FW Act) has increased by 500% for both standard civil contraventions and serious contraventions. Companies can now face fines of up to $469,500 for standard civil contraventions and $4,695,000 for serious contraventions.

 

KEY TAKEAWAYS FOR HR LEADERS

HR professionals are responsible for understanding and enacting these changes by updating their casual conversion processes and procedures to ensure a smooth transition to the new regime and maintain compliance. Several factors should be taken into account:

  • While the absence of a firm advance commitment to ongoing work is a key factor in determining casual status, employers should additionally consider any conduct that suggests otherwise. For instance, sending a text promising a specific shift every week, even if the contract states otherwise, could indicate a non-casual relationship.
  • Employers must ensure that casual employees are paid the appropriate casual rate or loading, as required by the relevant industrial instrument.
  • Employers should be aware that casual employees can now request conversion to permanent status. They should consider any grounds to reject such a request and be prepared to provide a valid reason.

Catherine Ngo Senior Editor and Content Writer, My Business

Catherine is passionate about unravelling the latest news and insights to help entrepreneurs, small business owners and employers.