#309 New laws on casual employment

Employers should review casual contracts of employment

Recent amendments to the Fair Work Act 2009 (Cth) are relevant for medical practices that engage casual staff.

Casual workers receive a 25 per cent loading on top of their ordinary hourly rate. This has traditionally been intended to compensate them for not having some statutory entitlements of a full-time or part-time employee, such as paid annual and personal leave. However, the decisions of WorkPac Pty Ltd v Skene (2018) 264 FCR 536 and the subsequent decision of WorkPac Pty Ltd v Rossato [2020] FCAFC 84 determined that ongoing employees who were incorrectly classified as casual could be entitled to paid annual leave on top of any casual loading they received. Employers were concerned that employees could “double dip”.

These court decisions created uncertainty in the business community about the definition of a casual employee and caused unease about being liable for additional entitlements on top of the casual loading. The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 amended the Fair Work Act 2009 (Cth) to address the concerns of the business community.

What is new?

There is a new legislated definition of a casual employee.
Employers have an obligation to offer full-time or part-time positions to casual employees who meet certain criteria set out in the legislation.
There is a casual employee information statement that must be provided to employees.
The new legislation offers some protections to employers against “double dipping”.

What is the new definition of a casual?

In order to satisfy the new definition of a casual employee, the following criterion must be satisfied:

The offer of employment made to the employee was on the basis that there is “no firm advance commitment to continuing and indefinite work”
The person accepts that offer
The person is an employee because of the offer and the acceptance.

This position differs from the previous position adopted by the courts, where the subsequent post-contractual conduct of the parties was a factor in determining whether there was casual employment.

The new legislation provides for an exhaustive list of considerations that a court must have regard to when determining whether “no firm advance commitment to continuing and indefinite work” exists. These considerations are as follows:

Whether or not the employer can elect to offer work
Whether the person being offered work is able to elect to accept or reject the work
Whether the employee works as required according to the needs of the employer
Whether the employment is described as “casual”
Whether the person is entitled to a casual loading or a rate of pay available to casual employees.

Importantly, the new legislation states that whether an employee is a “casual” is to be determined with reference to the offer and acceptance - NOT the subsequent conduct. This is a significant departure from the previous position.

What are the new obligations on employers?

Offers to convert
An employer, who is not a small business employer, must make an offer to a casual employee to convert to part-time or full-time employment if:

the employee has been employed by the employer for a period of 12 months, and
during at least the last six months of that period, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time employee or a part-time employee.

An employer is not required to make offers for conversion if the employer is a small business that employs 15 or less staff. An employer is also not required to make an offer if it has reasonable grounds not to make an offer and the reasonable grounds are based on facts that are known, or reasonably foreseeable, at the time of deciding not to make the offer.

Some of the reasonable grounds for not making an offer can involve the following considerations:

Is the employee’s position likely to cease to exist in the next 12 months?
Is there likely to be changes to the hours of work and the days of work that the employee is required to work?
Is making the offer inconsistent with a recruitment or selection process required by or under a law of the Commonwealth or a state or territory?

If the employer decides not to make an offer, the employer must notify the employee in writing within 21 days of the employee becoming eligible to receive an offer. If an employer decides to make an offer, there are further notification requirements under the legislation. In addition, if an employer fails to make an offer, employees who meet the requisite criteria in the legislation have residual rights to seek a conversion.

With respect to each casual employee, it is recommended that employers take steps to diarise the key dates to comply with the legislative requirements or otherwise implement a process to action the requirements.

Casual Information Statement
An employer must give each casual employee the Casual Employment Information Statement before, or as soon as practicable after, the employee starts employment as a casual employee with the employer. The Casual Employment Information Statement is available here through the Fair Work Commission website.

Protections against “double dipping”

If an employer, incorrectly or mistakenly classifies a full-time or a part time employee as a casual, the new legislation offers some protections to employers against additional liability on top of the casual loading in certain circumstances. These protections may only be available in circumstances where there is an identifiable loading amount. Therefore, it is important that employers review all casual employment contracts to ensure that there is an identifiable casual loading amount.

If there is an identifiable casual loading amount, a court must reduce (but not below nil) any amount payable by the employer for the relevant entitlements by an amount equal to the loading amount. The new legislation further limits the discretion of the Court to consider factors outside of the “relevant entitlements”, including uncertainty of casual work, which was previously considered to be a reason for paying a casual loading. The relevant entitlements are exclusively defined in the new legislation to include paid annual leave, paid personal/carer’s leave, paid compassionate leave, payment for absence on a public holiday, payment in lieu of notice of termination and redundancy pay.

What is next?

Employers should review contracts of casual employment to ensure they comply with the new definition of a casual employee and take advantage of the protections offered in the new legislation. For example, does the rate of pay clearly identify the loading amount? Does the contract of employment provide no firm advance commitment to continuing and indefinite work?

Further, for large employers, compliance with the obligations to offer casual conversion to eligible employees can be complex. Therefore, it is crucial that organisations have systems and procedures in place to ensure compliance.

If you would like to know more about casual employment, contact Kennedys on (03) 9498 6619.

Nilanka Goonetillake
Senior Associate

Sarah Rickard
Associate