New Casual Definition – Implications for Employers

The Federal Government has recently passed the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020.  One of the key elements of this Bill is the introduction of a formal definition of ‘Casual’ employment in the Fair Work Act 2009 (Cth), as well as the statutory right for long term Casuals to request conversion to permanent employment.

What is the new definition of a Casual under the FW Act?

An employee will be classified as ‘Casual’ if they are offered employment without a ‘firm advanced commitment to continuing and indefinite work’ and the employee accepts the offer on those terms.

This means that a Casual will be defined as such, based on the offer of employment ONLY and not based on the conduct of either party throughout the course of the employment relationship.

What rights do long terms Casuals now have regarding requests for permanent employment?

All Casual employees now have a right to convert to permanent employment if they have been employed for 12 months and worked a regular and systematic pattern of hours during the last 6 months.

Haven’t Casuals always had the right to covert to either Full-Time or Part-Time?

Yes and no.  Some Modern Awards already contain provisions for Casuals to request conversion to permanent employment.  The difference is employers now have an obligation under the Act to offer conversion which means the onus has now been shifted from the employee to the employer.  This legislation will be applied retrospectively, so employers will need to check the start dates of their existing Casual employees to determine who they need to make offers to.

Are there any exceptions to this rule?

Some employers may not be obligated to make an offer if they have “reasonable business grounds” to do so.  This may include instances where the conversion would require a significant adjustment to the employee’s hours or where the business can reasonably foresee that the hours required or the days and times with which the employee usually works will significantly decline or change during the 12-month period following the conversion eligibility date.

If we know that we cannot make an offer under reasonable business grounds, do we need to do anything?

Yes!  Even if you are not able to make an offer of permanent employment, you must still advise the employee in writing within 21 days of when the employee was eligible for the conversion.  Failure to do so means that the employee will have the right to make a request at a later stage.

How do we make the offer to the employee?

The offer should be made in consultation with the employee and the outcome should be confirmed in writing.  If the employee accepts an offer of permanent employment, a new permanent Employment Agreement should be issued.  Radford HR have designed an easy to use letter template to assist with this process (link below).

What if the employee declines the offer?

If the employee does not wish to convert their employment to a permanent arrangement, they forfeit the right to make a request at a later stage.  If the employee declines the offer, it should be documented in writing and kept on the employee’s personnel file.

What do we need to do next?

Practically speaking, there are a number of steps that employers will need to take to ensure compliance with these changes, including:

  1. Establishing a system by which to identify when an employee hits the 12-month mark. Most Payroll systems should have the capacity to flag this electronically.  We recommend clients talk to their Payroll provider to see what current system functionality may be available or if they plan to release system upgrades to make it easier for users to manage this process.
  2. Book a meeting to make the offer and have the discussion with the eligible Casual employee. Make sure you undertake a thorough analysis beforehand to determine whether you can offer a Part Time or Full Time arrangement and familiarise yourself with the employee’s new entitlements so you can answer any questions.
  3. Document the details of the conversation and record on the employee’s personnel file.  Here is a Free template to assist with this process.
  4. If you are unable to make an offer for permanent employment, you need to advise the employee in writing. It is recommended that you hold a face-to-face meeting with the employee to advise them of the outcome and the reasons why you are not able to make an offer at this time.
  5. Ensure your Casual Employment Agreement templates are up to date and include clauses to meet your obligations regarding Casual Employment, including the new definition, loading requirements and conversion rights. In a previous bulletin we discussed the risk of Casual employee ‘double dipping’ and the need for Employment Agreements to include a specific breakdown of Casual loading entitlements.  Click here to read more.
  6. Issue the new Casual Fair Work Information Statement to all existing Casual employees and all new Casual employees upon commencement. Employers will have until 27 September 2021 to ensure all existing Casual employees have received this statement and have been offered the option of converting to permanent employment.

If you would like customised advice for your business or updated Casual Employment Agreement Templates, please reach out today!