IR Reforms: Stripped back to amendments to casual employment

Yesterday, the amended Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (the “Bill”) passed Parliament, after the House of Representatives accepted the Senate’s amendments.

The Bill, as introduced in Parliament in December 2020, has been reduced to include only changes to casual employment.

These changes include:

  1. a definition of casual employee based on the original offer made to the employee, without taking into account “any subsequent conduct of the parties”;
  2. the obligation to offer casual conversion to a casual employee and the residual right to request casual conversion (other than small business employers);
  3. a Casual Employment Information Sheet; and
  4. the ability to make orders relating to casual loading amounts if an employee is found not to be a casual employee.

What is a casual employee?     

The changes provide a definition of a casual employee as follows:

A person is a casual employee of an employer if:

  • 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
  • the person accepts the offer on that basis; and
  • the person is an employee as a result of that acceptance.

A consideration of “no firm advance commitment” requires regard to only:

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

A regular pattern of hours does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work.

Casual conversion

The changes provide the obligation to offer casual conversion to a casual employee and the residual right of a casual employee to request casual conversion (other than small business employers).

  1. An employer must make an offer to a casual employee if:
    • the employee has been employed by the employer for a period of 12 months beginning the day the employment started (the “Period”); and
    • during at least the last 6 months of the Period, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time employee or a part-time employee (as the case may be).
  1. An employer is not required to make an offer if:
    • there are reasonable grounds not to make the 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.
  1. Reasonable grounds 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 the 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 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 the employee is available to work during that period;

    • making the offer would not comply with a recruitment or selection process required by or under a law of the Commonwealth or a State or a Territory.
  1. The offer must:
    • be in writing; and
    • state the conversion:
      • for an employee that has worked the equivalent of full-time hours during the last 6 months of the Period – to full-time employment; or
      • for an employee that has worked less than the equivalent of full-time hours during the last 6 months of the Period – to part-time employment that is consistent with the regular pattern of hours worked during the Period; and
    • be given to the employee within 21 days after the end of the Period.
  1. The employee must give a written response to the offer within 21 days after the offer is given. If the employee fails to respond, the employee will be taken to have declined the offer.
  2. An employer must give written notice to a casual employee if the employer decides not to make an offer to the employee, stating the reasons for not making the offer.
  3. If the employee accepts the offer, the employer must, within 21 days after the day the acceptance is given, give written notice to the employee of the following:
    • whether the employee is converting to full-time or part-time;
    • the employee’s hours of work after the conversion takes effect; and
    • the day the employee’s conversion takes effect.
  4. An employer must not reduce or vary an employee’s hours of work, or terminate an employee’s employment, in order to avoid any right or obligation in relation to casual conversion. The general protections provisions in the FW Act also prohibit the taking of adverse action by an employer against an employee (which includes a casual employee) because of a workplace right of the employee in relation to the casual conversion.

Employers will have a six month transition period to make offers of conversion to all existing eligible casuals, unless they have reasonable grounds not to.

Employee’s residual right to request casual conversion

If the employer does not, during the 21 days after the Period, make a casual conversion offer to the employee, the employee has the right to request a casual conversion.

The request has to comply with the requirements in (1) to (7) above, and has the following additional requirements:

  1. the employee has not, at any time during the Period, refused a casual conversion offer made to the employee;
  2. the employer has not, at any time during the Period, given the employee a notice of the employer’s decision not to make a casual conversion offer on reasonable grounds;
  3. the employer has not, at any time during the Period, given a response to the employee refusing a previous casual conversion request;
  4. the request is not made during the period of 21 days after the Period; and
  5. “reasonable grounds” on which the employer can refuse a request includes if 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 employee or part-time employee.

Fair Work Ombudsman to prepare and publish Statements

Employers will be required to provide (before, or as soon as practicable after starting employment) casual employees with a “Casual Employee Information Sheet” (prepared by the Fair Work Ombudsman). This statement will contain information about casual employment and casual conversion.

Orders relating to casual loading amounts

This protection has been included to address “double dipping” claims for backpay created by the Workpac ruling.

If:

  • a person is employed by an employer in circumstances where the employment is described as casual employment; and
  • the employer pays the person an identifiable amount (the casual loading amount) to compensate the person for not having one or more relevant entitlements (such as annual leave and personal/carer’s leave); and
  • the person was not a casual employee; and
  • the person makes a claim to be paid an amount for one or more of the relevant entitlements,

the court, when making any orders in relation to the claim, must reduce (but not below nil) any amount payable by the employer to the person for the relevant entitlements by an amount equal to the casual loading amount.

A relevant entitlement includes any of the following:

  • paid annual leave;
  • paid personal/carer’s leave;
  • paid compassionate leave;
  • payment for absence on a public holiday;
  • payment in lieu of notice of termination; and
  • redundancy pay.

If you would like to discuss this further and the implications for your business please contact our Employment + Workplace Relations Partner, Erin Lynch.

The contents of this publication do not constitute legal advice and are for general information purposes only.  You should seek legal advice regarding your particular circumstances.