There have been big changes to the Fair Work Act 2009 (Cth) recently relating to casual employment which every employer and employee should be across. These changes are a result of the recent passing of the Federal Government’s Fair Work Amendment Bill, which came into effect on 27 March 2021. We’ve summarised the key changes below but before we take you through them, let’s do a Simon Sinek and take a look at the ‘why?’.
Background on the Fair Work Amendment Bill
In December last year, the Attorney-General and Minister for Industrial Relations, Christian Porter, introduced the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2021 (Fair Work Amendment Bill) to parliament with the intention of making changes to the Fair Work Act 2009 (Cth) and other legislation related to employment. Despite a rocky reception from Labour and the Greens, a watered down Bill was passed on 22 March 2021.
Since coming into effect, the Fair Work Amendment Bill has marked substantial reforms to the casual employment landscape.
The Bill reflects changes in:
- The statutory definition of a “casual employee”
- The pathway for casual employees to convert into permanent employees; and
- A requirement for the Court to offset a casual loading against any shortfall of relevant entitlements claimed by an employee, that was employed as a casual but ought to have been treated as a permanent employee.
In light of these statutory changes, our employment law specialists in the BlueRock Law division took a deep-dive into what these changes mean for both casual employees and their employers. Throughout this article, Senior Associate of BlueRock Law, Lisa-Marie Parks, answers your most frequently asked questions relating to the Industrial Relations Reforms for Casual Employment and unpacks everything you can expect from this new legislation.
Defining a Casual Employee
Who is now considered a ‘casual employee’?
If a person:
- Is offered employment without a firm advance commitment to continuing and indefinite work according to an agreed pattern of work; and
- Accepts that offer
That person is a casual employee, regardless of any subsequent conduct of either the employer or the employee.
How do you determine whether there is “no firm advance commitment to continuing and indefinite work according to an agreed pattern of work”?
The only considerations relevant to determining whether, at the time of the offer of employment, the employer made no firm advance commitment to the employee for continuing and indefinite work according to agreed patterns, 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 employer is described as casual employment; and
- 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.
Casual Conversion: From Casual Employment to Permanent Employment (Employer Offers)
The following section does not apply to a Small Business Employer (that is, employers with a head count of less than 15 employees).
When must an employer make an offer to convert a casual employee to a permanent employee?
Subject to the exceptions set out below, an employer must make an offer to a casual employee to convert to a permanent employee (“Offer”) if:
- The employee has been employed for a period of at least 12 months; and
- The employee worked a regular pattern of hours on an ongoing basis, without significant change, for a period of at least the last 6 months.
The Offer must be made:
- Within 21 days after the 12-month anniversary of employment; or
- Before 27 September 2021 (whichever is later)
How must an employer make the Offer?
The Offer must be in writing and:
- If the employee has worked the equivalent of full-time hours during the last 6 months, the offer must be for full-time employment; or
- If the employee has worked less than the equivalent of full-time hours during the last 6 months, the offer must be for part-time employment consistent with the regular pattern of hours work.
When must an employee respond to the Offer?
In writing within 21 days after the Offer is given to the employee.
How must the employee respond to the Offer?
The employee must accept or decline the Offer.
If the employee does not give a written response within the time period stated above, the employee is taken to have declined the Offer.
What must the employer do if the employee accepts the Offer?
Within 21 days of acceptance of the Offer, the employer must discuss the following with the employee:
- Whether the employee is converting to full-time or part-time employment;
- The employee’s hours of work after the conversion takes effect; and
- The day the employee’s conversion to full-time or part-time employment will take effect.
After discussing these matters with the employee and still within 21 days of acceptance of the Offer, the employer must give written notice to the employee of all the matters set out above.
Unless agreed between the employer and employee, conversion must take effect on the first day of the employee’s first full pay period after the notice of acceptance is given.
What are the exceptions to the requirement of an employer to make an Offer?
An employer is not required to make an offer to convert an employee from casual employment to permanent employment if:
- As set out above, the employer is a Small Business Employer; or
- There are reasonable grounds not to make an offer; and
- The reasonable grounds are based on facts that are known, or reasonably foreseeable, at the time of deciding not to make the offer?
What are reasonable grounds for an employer deciding not to make an Offer?
A non-exhaustive list of the reasonable grounds for an employer in deciding not to make an Offer include:
- The employee’s position will cease to exist in the period of 12 months after the time of deciding not to make an offer;
- The hours of work which the employee is required to perform will be significantly reduced in that period;
- There will be a significant change in either or both of the following in that period:
- The times at which the employee’s hours of work are required to be performed,
- The days on which the employee’s hours of work are required to be performed;
which cannot be accommodated within the days or times that the employee is available to work during that period.
How must the employer inform the employee that they will not be making an Offer?
An employer must give the employee notice in writing that provides:
- That the employer is not making an offer to convert the employee’s employment from casual to permanent; and
- The details of the reasons for not making the offer. This can include:
- The reasonable business grounds that the employer relies upon not to make the offer; or
- That the employee is ineligible for conversion as they have not worked a regular pattern of hours on an ongoing basis, without significant change, for a period of at least the last 6 months.
When must the employee be informed that the employer will not be making an Offer?
An employer must inform the employee that they will not be making an Offer:
- Within 21 days after the 12-month anniversary of employment; or
- Before 27 September 2021 (whichever is later)
Casual Conversion: From Casual Employment to Permanent Employment (Employee Requests)
When can an employee make a request to convert their casual employment to permanent employment?
A casual employee can make a request of an employer to be converted to permanent employment (“Request”) if:
- The employee has been employed for a period of at least 12 months;
- The employee worked a regular pattern of hours on an ongoing basis, without significant change, for a period of at least the last 6 months; and
- All of the following apply:
- The employee has not refused a previous Offer in the last 6 months;
- The employer has not advised the employee that they will not be making an Offer on reasonable business grounds in the last 6 months;
- The employer has not refused a previous Request in the last 6 months; and
- If the employer is not a Small Business Employer, the Request is not made within 21 days of the 6 month period of the employee working a regular pattern of hours on an ongoing basis, without significant change.
For the avoidance of doubt, an employee of a Small Business Employer has a right to make a Request.
A Request can be made within 21 days after the 12-month anniversary of employment. This means a casual employee who has been employed for at least 12 months and otherwise meets the above criteria can make a Request now.
How must the Request be made?
The Request must be in writing and:
- If the employee has worked the equivalent of full-time hours during the last 6 months, the Request is to be converted into full-time employment; or
- If the employee has worked less than the equivalent of full-time hours during the last 6 months, the Request is to be converted into part-time employment consistent with the regular pattern of hours work.
What must the employer do on receiving a Request?
The employer must grant or refuse the Request in writing within 21 days of receipt.
An employer must not refuse a Request unless:
- The employer has consulted the employee;
- There are reasonable grounds to refuse the request; and
- The reasonable grounds are based on facts that are known, or reasonably foreseeable, at the time of refusing the Request.
What are reasonable grounds for an employer deciding to refuse a Request?
A non-exhaustive list of the reasonable grounds for an employer in deciding to refuse a Request include:
- It would require a significant adjustment to the employee’s hours of work in order for the employee to be employed as a full-time or part-time employee;
- The employee’s position will cease to exist in the period of 12 months after giving the Request;
- The hours of work which the employee is required to perform will be significantly reduced in the period of 12 months after the Request;
- There will be a significant change in either or both of the following in the period of 12 months after giving the Request:
- The days on which the employee’s hours of work are required to be performed;
- The times at which the employee’s hours of work are required to be performed,which cannot be accommodated within the days or times that the employee is available to work during that period.
What must the employer do if they accept the employee’s Request?
Within 21 days of the Request, the employer must meet with the employee to discuss:
- Whether the employee is converting to full-time or part-time employment;
- The employee’s hours of work after the conversion takes effect; and
- The day the employee’s conversion to full-time or part-time employment will take effect.
After discussing these matters with the employee and still within 21 days of the Request the employer must give written notice to the employee of all the matters set out above.
Unless agreed between the employer and employee, conversion must take effect on the first day of the employee’s first full pay period after the notice of acceptance is given.
Disputes about Casual Conversion
What happens if there is a dispute about an Offer or a Request?
At first instance, the employer and employee must attempt to resolve the matter at the workplace level.
If this is unsuccessful, the matter can be referred to the Fair Work Commission.
Casual Employment Information Statement
Where can the Casual Employment Information Statement be located?
The Casual Employment Information Statement is available online via the Fair Work Ombudsman website .
When must you give an employee a Casual Employment Information Statement?
- New Casual Employees: Before, or as soon as practicable after, the employee starts employment as a casual employee.
- Existing Casual Employees (other than employees of a Small Business Employer): As soon as practicable after 27 September 2021.
- Existing Casual Employees (of Small Business Employer’s): As soon as practicable.
Offset of Casual Loading
When must a Court offset an employee’s casual loading to a relevant entitlement?
If:
- A person is employed as a casual employee;
- The employer pays the person an identifiable casual loading amount paid to compensate them for not having one or more Relevant Entitlements;
- During the employment, the person ought to have been a permanent employee; and
- The person makes a claim to be paid one or more of the Relevant Entitlements,
The Court must reduce any amount payable by the employer to an employee for Relevant Entitlements by an amount equal to the loading amount.
Relevant Entitlements are an entitlement under the National Employment Statements, a fair work instrument or a contract of employment to an employee for:
- Paid annual leave;
- Paid personal/carer’s leave;
- Paid compassionate leave;
- Payment for the absence of a public holiday;
- Payment in lieu of notice of termination; and
- Redundancy pay.
What can you do as an employer to implement the IR Reform Bill changes?
In light of these changes, and to reduce risk and avoid non-compliance, our employment lawyers recommend that employers:
- Review current arrangements to determine:
- Whether any casual employees are eligible or will become eligible for an Offer;
- When an Offer or a notice that no Offer will be made must be given to each casual employee;
- Whether employment agreements and pay slips clearly identify the casual leave loading;
- Whether you need to amend your employment agreements; and
- When you need to issue casual employees with a Casual Employment Information Statement
- Implement new on-boarding processes for casual employees, including making employment expectations clear and providing the Casual Employment Information Statement.
As we know, there’s a lot to get your head around when it comes to the Fair Work Amendments if you’re not an employment law expert! For further assistance and clarification regarding the IR reforms for casual employment, book a free consultation with our Melbourne-based BlueRock Law team .
