Amendments to Fair Work Act provide clarity on Casual Employment

The meaning of Casual employment has been the subject of much debate over many years. Two recent decisions in the Federal Court, both involving the employer Workpac, challenged the accepted concept of casual employment. In both of the Workpac cases the Federal Court awarded leave entitlements to employees who had been engaged as casual employees. The latter of these two decisions is currently before the High Court on Appeal.

We have written on this topic a number of times and each time we have suggested to our clients that they not take any action to change their existing casual arrangements and alternatively wait until there is more certainty. In hindsight this has been the right advice and clients are now reaping the benefits of taking a cautious approach.

On Monday 22 March 2021, the Federal Government passed legislation which for the first time provides a statutory definition for Casual Employment.

The Statutory definition of a casual employee for the future will be:

A person is a casual employee if:

An offer of employment made by the employer to the person is made on the basis that the employer makes no firm 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; and
The person is an employee as a result of that acceptance.

Importantly, in determining whether an offer meets the requirements, regard must only be had to the following:

Whether the employer can elect to offer work and whether the person can elect to accept or reject work;
Whether the person will work only as required;
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 (Award or Enterprise Agreement).

Once a person is made an offer of casual employment and they accept that offer of casual employment, they remain as a casual employee unless they convert to permanent employment or accept an alternative offer of employment. Therefore, if a casual employee’s engagement over time changes such that they actually work a more regular pattern of work, this does not change their status as a casual employee.

Conversion of Casual Employment to Permanent Employment

The legislative amendments passed on 22 March 2021 also provide for situations when an employer must offer a casual employee an opportunity to convert to permanent employment. In summary where a casual employee has been engaged for at least 12 months and where in at least the previous 6 months the casual employee has worked a regular pattern of hours on an ongoing basis, an employer may be required to make a conversion offer to the casual employee to covert to full time or part time hours. However, the individual circumstances applying to each situation will be relevant to determining if an offer needs to be made, for example where a casual employee is filling in for an employee on leave or where the role is genuinely a project role, or known business changes will occur in the next 12 months impacting on the need for the work being undertaken by the casual employee, employers will not be required to make an offer.

The legislative amendments also seek to ensure that any Court decisions which apply to casual employment including prior to the legislative change do not result in “double dipping”, that is employees who have been paid a casual loading but are found to also have an entitlement to paid leave. This is directly relevant of course to the Workpac matter currently before the High Court. It is therefore not surprising that the law firm conducting the case have indicated an intention to challenge the constitutional validity of these particular statutory provisions as they relate to claims prior to the legislative changes taking effect. We will monitor such actions, if taken, and keep clients informed.

What does this mean for the future?

These legislative changes mean that employers who engage casual employees are now better placed to ensure certainty in their arrangements without the risk of a crippling claim. However, to guarantee this certainty employers must ensure that their offers of employment and contracts of employment comply with the statutory definition. If you would like assistance in reviewing how you engage your casual employees please contact our HR and IR Consulting division via the form below or on 1300 200 725.

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Author: Cheryl-Anne Laird

Published: 24/3/2021

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