Casual Employment

These changes start on 26 August 2024. Preparation is key!

Contained within the Fair Work Legislation Amendment (Closing the Loopholes) Bill 2023 (‘the Bill’) is the replacement of the existing definition of casual employee with a ‘fair and objective definition’ and introduction of a new employee choice pathway for eligible casual employees to change to permanent employment, if they wish to do so. As such:

• The Fair Work Act’s definition of ‘casual employee’ will be replaced with a new one.
• The proposed changes will require parties to consider the ‘real substance’ and ‘practical reality’ and ‘true nature’ of the employment relationship (and not just the terms of their employment contract).

• • The Bill repeals and replaces the existing definition of casual employee with a test that considers the totality of the employment relationship, essentially codifying the common law approach to defining casual employment before the High Court’s decision in WorkPac Pty Ltd v Rossato [2021] HCA 23 (Rossato).
• The Bill provides that a firm advance commitment may be in the form of:
  • A mutually agreed term in a contract of employment or
  • A mutual understanding or expectation between an employer and employee and
• • Those can be inferred from the conduct of the employer and employee after entering into the employment and how the employment contract is performed.
• The new definition says that an employee is a casual only if:
  • There isn’t a firm advance commitment to continuing and indefinite work, factoring in the employment relationship’s real substance, practical reality and true nature.
  • The employee is entitled to a casual loading or a specific pay rate for casuals.
• A new pathway will replace the existing rules for eligible employees to change to permanent employment if they want to.

• • The Bill creates an employee choice framework which will allow casual employees to issue written notifications to their employers if they want to change their employment status to full-time or part-time employment. Critically, the changes to the definition of a casual employee and the proposed employee choice regime mean:
• A choice to seek a change from casual employment or not rests with the employee: no employee is forced to alter their employment status (that is, they can elect to remain a casual employee) and
• Casual employment cannot ‘transform’ into a full-time or part-time employment at some point during the employment relationship: such a change only happens if a specified event
• There will be new rules against:
  • Dismissing or threatening to dismiss workers to engage them as a casual.
  • Making certain misrepresentations in relation to casual employment.

The Casual Employment Information Statement must be given to all casual employees every 12 months to remind casuals of their rights.

Section 15A and Division 4A of Part 2-2

Under Division 4A of Part 2-2, a casual employee who has worked for an employer for at least 12 months and has, during at least the last 6 months of that time, worked a regular pattern of hours on an ongoing basis may be entitled to be offered, or request, conversion to full-time employment or part-time employment.

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.
• 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.

A person who commences employment as a result of acceptance of an offer of employment in accordance with subsection (1) remains a casual employee of the employer until:

• The employee’s employment is converted to full-time or part-time employment under Division 4A of Part 2-2; or
• The employee accepts an alternative offer of employment (other than as a casual employee) by the employer and commences work on that basis.

What are casuals entitled to?

Casual employees are entitled to:

• Two days unpaid carer’s leave and two days unpaid compassionate leave per occasion.
• Unpaid community service leave.
• A long term casual employee[1]is entitled to a maximum of 10 days unpaid domestic and family violence leave per year. A short-term casual employee is entitled to a maximum of two days unpaid domestic and family violence leave per year.

Also, after 12 months of continuous employment, and if it’s likely the casual employee will continue, they can:

• Request flexible work arrangements.
• Take parental leave without pay.

As an employer you must understand casual penalty rates. Penalty rates are higher pay rates that employees need to be paid for working particular hours or days. Employees may be entitled to a penalty rate when working:

• Weekends
• Public holidays
• Overtime
• Late nights shifts or
• Early morning shifts.

[1] *a long-term casual employee is a casual employee engaged by a particular employer, on a regular and systematic basis, for 1 or more periods of employment during the 1 year immediately before the employee seeks to access this entitlement.

What, as an employer, do you need to do?

With the new definition of “casual employee” being included and characterised by the presence or absence of a firm advance commitment to continuing and indefinite work, as an employer, you need to look at the relationship. This can be assessed against various factors that indicate the real substance, practical reality and true nature of the employment relationship.

In determining that characteristic, the legislation states the following matters should be considered:

• The real substance, practical reality and true nature of the employment.
• Mutual understanding between the parties, whether included in a contract or not.
• The inability of the employer not to offer work.
• The inability of an employee to accept or reject work.
• The reasonable likelihood of the business’s future availability of work.
• Whether there are full-time or part-time employees performing the same work.
• Whether there is a regular pattern of work for the employee.

A casual employee will have the discretion to convert to permanent employment after 6 months of employment (12 months for small businesses) if the employee believes that their employment status no longer meets the definition of casual employment.

As an employer, you will have various grounds to refuse an employee’s request, including if the employer believes the employee is still correctly classified as a casual employee.

Seek now to look at your casuals and how you utilise this relationship in the workplace. Look at the characteristics, and for each, identify the response. At Fresh HR Insights, we recommend that you keep documented records of this process and have developed a sheet for your use, which you can request to have sent to you HERE

Any dispute between an employee and yourself as the employer regarding a request for conversion to permanent employment must first be attempted to be resolved at the workplace level. This is where Fresh HR Insights can support you. If the dispute is unresolved, it will be dealt with by the Fair Work Commission.