Proposed Changes to Casual Employment: What you need to know

In December last year, the Government introduced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (“the Bill”).

The Bill proposes to make significant changes to the Fair Work Act 2009 (Cth) (“FWA”) regarding casual employment in response to the Federal Court decisions of Workpac Pty Ltd v Skene [2018] FCAFC 131 and Workpac Pty Ltd v Rossato [2020] FCAFC 84.

The proposed amendments include:

1. a statutory definition of casual employment;
2. statutory rights for casual employees to convert to permanent employment; and
3. a requirement that courts set-off casual loading paid to employees against claims for leave entitlements.

Definition of Casual Employment

Under these proposed amendments, a person will be defined under the FWA as a casual employee if they are offered, and subsequently accept, an offer of employment where there is no “firm advance commitment” to continuing and indefinite work according to an agreed pattern of work.

This notion of “firm advance commitment” will also be defined and will take into account the following exhaustive factors:

• whether the employer can elect to offer work;
• whether the employee can elect to accept or reject hours of work offered to them;
• whether the employee will work only as required;
• whether the employment is described as causal employment;
• whether the employee will be entitled to casual loading, or a specific casual rate of pay.

These definitions as proposed will apply to casual employees immediately from the commencement of their employment, rather than in respect to the actual employment relationship.

Conversion to Permanent Employment

The proposed legislation will provide regular casual employees avenues to convert to full-time or part-time employment.

Under these amendments, an employer would be obligated to offer permanent conversion to the employee if the employee has been employed with the employer for a minimum of 12 months and has worked a regular pattern of ongoing hours for the previous 6 months. This obligation does extend to where it would be unreasonable to do so, including where permanency would cause significant adjustment to the employee’s hours of work or where their employment will be ending within the next 12 months.

The employee would also be able to request conversion provided the same abovementioned conditions are satisfied. Further, if the employer refuses conversion on reasonable grounds, or the employee rejects an offer of conversion, the employee will maintain a right to make this request every 6 months provided they continue to be eligible to do so.

Casual Loading Offset

The proposed legislation will also provide for employers to be entitled to offset any identifiable casual loading already paid to employees against any claims an employee may have for permanent entitlements such as paid leave.

This amendment applies to both past and future employees who are later held to not be a casual employee after having been described as such.

Subsequent Steps

This Bill is currently still passing through Parliament with these proposed provisions having been referred to the Education and Employment Legislation Committee for inquiry and report by March this year. As you can see, if these amendments are passed, they will create substantial changes to an employer’s administration of their casual workforce.

As of now, the decision in Workpac Pty Ltd v Rossato is current law. Notably however, the High Court has granted special leave for Workpac Pty Ltd to appeal this Full Federal Court decision. This means that it is essential you continue to appropriately manage your casual employees and ensure your casual employment contracts are compliant with the current law.

Please do not hesitate to contact our specialist Workplace Relations team if you wish for us to review your casual employment agreements to ensure they are up-to-date, or simply wish to discuss how to appropriately manage your employees.