This article was co-authored with Allana Smith and Josh Richards.
What has happened so far?
Last month the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021, also known as the Omnibus Legislation, came into effect. This reformed the legal definition of a casual employee and introduced a statutory definition of a “casual employee” for the first time in Australia.
For a long time, the accepted thinking was that a casual employee was one who was engaged as such and paid a casual loading. However, more recently, the Courts have taken a broader approach when determining whether an employee was a casual employee, by assessing various factors of the relationship and reaching a conclusion which favoured substance over form. This often led to uncertainty as to an employee’s actual status at law at any given time and to the concept of the ‘true casual’ versus a casual employee in name only.
The Omnibus Legislation has attempted to remedy this uncertainty by including a definition of ‘casual employee’ in the Fair Work Act (FW Act). A person is a now defined as a casual employee if:
- an offer of employment 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 that offer and is employed as a result of that acceptance.
There are four relevant considerations in assessing whether the employer made no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person. They are whether the:
- employer can elect to offer work and whether the person can elect to accept or reject work;
- person will work as required according to the needs of the employer;
- employment is described as casual employment; and
- 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.
This is a significant change to the legal position, making the test one of form over substance. Now, where an employee is called a casual, and provided the elements of the definition are satisfied, it appears that they are more likely to be found to be a casual employee regardless of the way in which the conduct of the parties potentially changes over time.
This has been enshrined by the Omnibus Legislation which includes the following provisions:
“To avoid doubt, 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.”
“To avoid doubt, the question of whether a person is a casual employee of an employer is to be assessed on the basis of the offer of employment and the acceptance of that offer, not on the basis of any subsequent conduct of either party.”
New provisions directed at eliminating “double dipping” of certain paid entitlements by requiring courts to offset “casual loadings” paid to a worker who has been incorrectly classified as a casual have also been included in the FW Act.
The provisions are directed at the situation where a person has been employed and paid on the basis that they were a casual employee, but is subsequently found by a court not to be a casual employee at law and is therefore entitled to those entitlements provided to ongoing employees (as was the case in Workpac Pty Ltd v Rossato  FCAFC 84 which we discussed in our earlier blog here and which is currently subject to appeal).
The employer must have paid the person an identifiable amount (a loading amount) to compensate the person for not having one or more of the relevant entitlements.
The FW Act has also been amended to include a mechanism for casual employees to convert to full time or part time employment. They do not apply to small businesses.
In circumstances where a casual employee has been employed for at least 12 months and has worked a regular pattern of hours on an ongoing basis for at least 6 months, without significant adjustment, the employer must make an offer to convert the employee from casual employment to full time or part time employment (unless an exception applies). In the same circumstances, an employee may also make a request that they convert to full time or part time employment.
An employer is not required to make an offer (or accept the employee’s offer) if there are reasonable grounds for not doing so. The reasonable grounds must be based on facts that are known or reasonably foreseeable at the time of deciding not to make the offer (or accept the employee’s offer).
If there is a dispute about the conversion of an employee, for example, an employer has refused a request to convert to full time employment, the parties must attempt to resolve the dispute at the workplace level through discussions. Only once the parties have attempted to resolve the dispute, albeit unsuccessfully, may they bring the dispute to the Fair Work Commission.
What happens next?
As with all significant employment reforms, there are flow-on effects which take time to play out in practice. In this case, the casual employee reforms will have a significant impact on modern awards.
Since the FW Act previously had no definition of a casual employee, many modern awards included their own definition of what constituted a casual employee, some of which included default positions that employees who were neither part time nor full time were automatically casual employees. There are also modern awards that provide specific benefits for or limitations on casual employees. In light of the changes to the FW Act, these definitions, benefits or limitations may no longer be applicable.
The Fair Work Commission is conducting a review of a sample of modern awards to consider the impact of the reforms, the possible amendments of the modern awards and any other impact on industries.
The Commission will complete its review by 27 September 2021 and in the meantime will be publishing an issues paper and seeking feedback from industry and interested parties.
Any employer that has casual employees and is covered by one or modern awards should consider engaging in this review process.
Employers should act now to:
- Ensure terms of engagement for new casuals satisfy the new definition of casual employee;
- review existing terms of casual engagement to see whether they fall within the new definition (if they do, employees will be prevented from making an entitlements claim);
- consider whether existing casuals need to be offered full-time or part-time employment (this must be done by 27 September 2021); and
- provide casual employees with the new Casual Employment Information Statement.
If you would like to discuss the changes or require any advice or assistance, please do not hesitate to contact the Employment & Labour team.