Under new legislation, employers will need to review their existing and future casual employment contracts, and implement a compliant casual conversion process.
The Fair Work Amendment Bill 2020, which passed Parliament on 22 March 2021, implemented a new casual employment framework that legislated the following amendments:
Definition of casual employee
A casual employee must now be considered a casual if the employment offer has no firm advance commitment to continuing and indefinite work, which is assessed on the basis of the offer and acceptance of employment, rather than any subsequent conduct of the parties.
This follows on from recent decisions such as WorkPac Pty Ltd v Rossato  FCAFC 84 which created a definition of casual employment which was based upon an assessment of the totality of the relationship between the employee and employer, creating issues of “double dipping” where casual employees receiving the 25% casual loading were also making claims for non-casual entitlements such as annual leave and sick leave.
This new legislative definition of a casual employee has made the decision by the Federal Court in the WorkPac Pty Ltd v Rossato case effectively redundant.
Casual conversion obligations
Currently, obligations relating to casual conversion are set out in various modern awards. A new amendment contained in the Fair Work Amendment Bill 2020 has made it a universal requirement for all casual employees.
Employers must offer casual conversion (to a full-time or part-time role) if the casual employee has been engaged for a period of 12 months and during the last 6 months of that period, the employee has worked a regular pattern of hours on an on-going basis which the employee could continue to work as full-time or part-time. An employee may also request casual conversion on similar terms.
Removal of ‘double dipping’ benefit
To ensure employees do not benefit from “double dipping”, if the Court finds a casual employee (employed as casual and receiving 25% casual loading) is not actually a casual employee, the Court must reduce any amount payable to the employee for the relevant entitlements (sick leave, annual leave etc.) by an amount equal to the loading amount.
Casual Employment Information Statement
An employer must give casual employees a new Casual Employment Information Statement prepared by the Fair Work Ombudsman.
What does this mean for employers?
Now that tribunals and courts will look at the offer of employment to determine whether an employee is casual, the employment contract will need to give numerous indications as to whether the employer makes no firm advance commitment to continuing and indefinite employment (i.e. the new statutory definition of casual employment).
It is vital that casual employment contracts are reviewed to ensure they satisfy the new statutory definition of a casual employee. This includes ensuring that existing casual contracts are amended or replaced as the changes to the Fair Work Act will apply retrospectively.
Hence, employers should ensure that casual contracts sufficiently describe where employment is casual, by:
- providing a clause outlining that the employer can elect to offer work and whether the person can elect to accept or reject that work by, for example, accepting or rejecting shifts within a certain timeframe;
- specifically detailing the additional casual loading.
Casual conversion offers only need to be given after 12 months of employment. But if an employer forgets, after 12 months of a person’s casual employment, to make an offer of conversion, they will essentially breach a National Employment Standard which could lead to penalties.