Clarity on casual employees

What you need to know

The Federal Government recently amended the Fair Work Act 2009 to bring clarity to casual employment and to prevent “double-dipping”.

The details

The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2020 (the Act) has introduced a number of important changes, most of which relate to Casual Employment, including:

  • A new definition of casual employment;

  • A ‘Casual Employment Information Sheet’; and

  • A new pathway for casual employees to convert to permanent (part-time or full-time) employment.

Previously there was no statutory definition of ‘casual employment’. Whether a job was classified as ‘casual’ was typically determined by whether a person was engaged and paid as a casual employee.

 

Generally speaking, casual employment involves an employee receives a higher hourly rate instead of receiving the various benefits that accompany permanent employment, including:

  • Paid annual, personal/carer’s and compassionate leave;

  • Payment for being absent from work on a public holiday;

  • Payment in lieu of receiving a notice of termination; and

  • Redundancy pay.

“Double dipping”

There have been recent court decisions concerning employees who were engaged as casuals and who later claimed that, because of the regularity and duration of their employment, they were actually permanent full-time or part-time employees in all but name. As a result, they alleged that they were entitled to receive entitlements such as annual leave and redundancy pay.

 

In these cases, employees had argued that because their written letter of offer did not sufficiently identify that the casual loading (which was intended to compensate for the loss of permanent employment entitlements) was paid instead of these entitlements, the loading could not be set off against the new claims. As a result, the employee would stand to get both the casual loading and the permanent employment entitlements, in effect “double-dipping”.

 

The amendments address this in that, if an employee making a claim is found to be permanent and not casual, employers now have a statutory right to offset the amount of the employment entitlements owing to an employee, against a portion of the identifiable casual loading paid during the period the employee didn’t receive one or more of the relevant permanent entitlements.

 

New statutory definition of casual employee

Under the new definition of casual employment, a person will be a ‘casual employee’ if they accept an offer of employment with no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.

 

In addition to the new definition, the Act further specifies that:

  • regular hours do not indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work; and

  • if an employee is engaged as a casual, the later conduct of the employee and employer will not change the nature of the employment.

Employers should immediately ensure that their letters of offer reflect the wording of the new definition.

 

Offers and requests to convert to permanent employment

The amendments also gives casual employees a new pathway to becoming permanent employees in certain circumstances. Casual employees can make a request to their employer to become a permanent employee, where:

  • they have been employed for 12 months;

  • they have had a regular pattern of work on an ongoing basis for at least 6 months; and

  • they could continue working those same hours as a permanent employee without significant changes;

  • they have not refused a conversion offer in the last 6 months;

  • they have not been informed by their employer that they will not receive a conversion offer on reasonable grounds; and

  • have not made a request to their employer to convert to permanent employment which has been refused within the last 6 months.

Casual employment information sheet

The Act has introduced a Casual Employment Information Sheet which sets out the new definition and casual conversion process, which can now be downloaded from the Fair Work Ombudsman’s website.

 

Employers need to give their new casual employees a copy of the Information Sheet before, or soon after they start work. All employers must have provided a copy to all of their existing casual staff by now – the deadline to do so was 27 September 2021 for small business employers – so this should be done as a matter of urgency if it has not yet been done.

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