Casual Employment Rules Clarified

Posted on April 20, 2021

On 22 March 2021 the Commonwealth Government passed legislation aimed to address the uncertainty around the engagement of casual employees.

Definition for casual employees

A person will be considered a casual employee if they are offered employment with “no firm advanced commitment to continuing and indefinite work according to an agreed pattern of work”.

Factors that will be considered in determining whether there has been “no firm advance commitment” are whether the:

1. Employer can elect to offer work, and whether the employee can accept or reject the work offer;
2. Employee will only work as required;
3. Employment is described as casual employment; and
4. Employee is entitled to casual loading, or specific rate of pay for casual employees under the terms of the offer or an industrial instrument.

Importantly the assessment of whether the definition is met is to be made on the basis of the offer of employment not the subsequent conduct of either party during the course of the employment.

Existing casual relationships captured

Notably the definition will apply retrospectively to offers of casual employment that were given before the commencement of the amendments.

Casual Loading Offset

Employers will now be able to use the casual loading to offset Relevant Entitlements, if it is found that the employee has been incorrectly classified as a casual employee. Relevant Entitlements include:

1. Annual leave;
2. Personal/carer’s leave;
3. Compassionate leave;
4. Payment for absence on a public holiday;
5. Payment in lieu of notice on termination; and
6. Redundancy pay.

Again, this will apply retrospectively to offers of casual employment that were given before the commencement of the amendments.

Casual Conversion to Permanent Employment

Employers, other than small businesses, must now offer casual employees conversion to part time or full time if:

1. The employee has been employed for at least 12 months;
2. In the last 6 months of employment, the employee has work a regular pattern of hours on an ongoing basis;
3. This pattern of hours could continue on a permanent part time or full time basis without significant adjustment.

The conversion offer must be made in writing to the employee with 21 days of the 12 month anniversary. Employees then have 21 days to accept or reject the offer. A failure to respond will be considered to be a rejection of the offer. Within 21 days of acceptance by an employee, the employer must give a written notice to the employee confirming the hours of work and the date of effect and hold discussions with the employee about the details of the offer.

Importantly, an employer is not required to make a casual conversion offer if there are “reasonable grounds” for not doing so.

Reasonable grounds will include that in the following 12 months:

1. The employee’s position will cease or the hours will significantly reduced; or
2. There will be a significant change in the employees work days or hours of work and the employee cannot accommodate those changes.

Employers (other than small businesses) have until 27 September 2021 to assess casual employees who meet the eligibility requirements and either provide casual conversion offers or a notice of a reasonable ground exemption.

Casual Employee Right to Request Conversion to Permanent Employment

All casual employees including those employed by small businesses, have a right to request conversion to permanent employment if they satisfy the eligibility requirements referred to above and in the past 6 months:

1. They have not refused an employer's offer for conversion;
2. They have not received a reasonable business grounds exemption notice for their employer;
3. The employer has not refused a previous conversion request and;
4. The request is not made during the 21 days after an employer offer of conversion.

An employer must respond to the request by the employee within 21 days. Again an employer may invoke a reasonable grounds exemption.

Significant Penalties for Breach

A breach of any of the provisions discussed above carries the possibility of substantial civil penalties. Notably these conversion rights will also be considered “a workplace right” for the purposes of the general protections provisions of the Fair Work Act.

Casual Employment Information Statement

Employers must provide casual employees with a casual employment information statement before or as soon as practicable after the commencement of the employment.

Action Required by Employers

1. By 27 September 2021 employers must review employment arrangement of each casual employee to ascertain whether they meet the eligibility requirements for the making of an offer of conversion of permanent employment.
2. Carefully review the employment arrangements of all casual employees when they reach their 12 month anniversary to determine whether an offer of conversion to permanent employment should be made.
3. Review all casual employment contracts. Ensure that the casual loading is specifically identified.
4. Ensure that all new casual employees are provided with the Casual Employment Information Statement.

If you need assistance with your casual employee arrangements, please contact our workplace relations team on 8236 7688.

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