New definition of casual employment

You would be aware of the recent changes to casual employment including the introduction of an ‘employee choice’ pathway for conversion to permanent employment.

We have prepared letters to assist our Retainer clients in responding to notifications from their employees, along with some guidance below about how these changes work.

Importantly, businesses should note that the earliest a casual employee will be able to notify of their intention to convert is 26 February 2025.  The reason for this is that existing casuals employed prior to 26 August 2024 will continue to have access to the previous casual conversion regime until they become eligible to access the new regime, which will take 6 months from its commencement on 26 August 2024.

New definition of casual employment

Effective 26 August 2024, a new definition of casual employee will be inserted into the Fair Work Act 2009. 

Under the new framework, a casual employee is one where the:

• employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work; and
• employee is entitled to a casual loading or specific casual rate of pay.

Whether there is an absence of a firm advance commitment to continuing and indefinite work involves consideration of:

• whether there is an inability of the employer to offer, or not offer, work or an inability of the employee to accept or reject work (and whether this occurs in practice);
• whether, having regard to the nature of the employer’s enterprise, it is reasonably likely that there will be future availability of continuing work in that enterprise of the kind usually performed by the employee;
• whether there are full-time employees or part-time employees performing the same kind of work in the employer’s enterprise that is usually performed by the employee; and
• whether there is a regular pattern of work for the employee.

The above are to be assessed on the basis of the “substance, practical reality and true nature of the employment relationship” which can be in a contract of employment or a “mutual understanding or expectation” between the employer and employee.

The new definition is similar to the current definition in that the current definition also centres on whether there is a firm advance commitment to continuing and indefinite work and uses similar indicia to determine this. The key difference however is that the current definition focuses on whether the employee accepted an offer on the basis that there was no firm advance commitment as opposed to assessing the relationship in its totality.  The impact of this on businesses will vary but our view at this stage is that most employees who were casuals under the old definition will continue to be casuals under the new definition.

Changes to Casual Conversion

Employers who continue to engage employees as casuals who do not meet the definition of casual employee need to be aware of the entitlements employees have to request conversion to part time or full time employment and how this is also changing.

The current requirements for casual conversion include:

• an obligation for employers to proactively assess employees for conversion to permanent employment at their 12 month employment anniversary; and
• a residual right for employees to request conversion to permanent employment

Instead, the Closing the Loopholes Act will replace this with an ‘employee choice’ pathway. 

Under the employee choice pathway:  

• employees who have worked for at least 6 months will be able to notify their employer of their intention to convert to permanent employment if they believe they no longer meet the definition of casual employee; and  
• employers will then have an obligation to consult with the employee and provide a  written response within 21 days either, •    accepting the notification (in which case the employee will be taken to be a full-time or part-time employee); or •   refusing the request because:   -  the employee meets the definition of casual employee;             -  there are fair and reasonable operational grounds for not accepting the notification; and / or -  accepting the notification would result in the employer not complying with a recruitment or selection process required by or under a law of the Commonwealth or a State or Territory.

Fair and reasonable operational grounds include where:

• substantial changes would be required to the way in which work in employer’s enterprise is organised;
• there would be significant impacts on the operation of the employer’s enterprise;
• substantial changes to the employee’s terms and conditions would be reasonably necessary to ensure the employer does not contravene a term of a fair work instrument that would apply to the employee as a full-time employee or part-time employee.

We can provide advice regarding specific circumstances and whether they are likely to meet these criteria as needed.  We have prepared for our Retainer clients a guide with some examples of what we consider would and would not be reasonable operational grounds as well as the Visual Guide which includes a flow chat for dealing with notifications.  At this stage we consider that situations where converting an employee would contravene a term of a fair work instrument will be rare, for example there may be situations where there is a particular term of an enterprise agreement that would be breached by converting the employee.

If there is a dispute about a notification of intention to convert to permanent employment which cannot be resolved through discussions at the workplace, an employee could refer the dispute to FWC.  FWC is then required to deal with the dispute by means other than arbitration (for example a conciliation conference) unless there are exceptional circumstances. 

If FWC arbitrates the dispute it will be able to make any orders it considers appropriate including that the employee:

• continue as a casual employee; or
• be converted to full time or part time employment.

Casual Employment Information Statement

Employers need to make sure that they comply with the requirement to provide casual employees with the casual employment information statement:

• when they commence as a casual employee (or as soon as practicable after);
• 6 months from their start date (or as soon as practicable after); and
• every 12 months from their start date (or as soon as practicable after).

 The means by which the casual employment information statement can be provided include:

• in person;
• by mail (to their residential address or nominated postal address);
• by email (to their work email or other nominated email address) including by sending a link to either the FWO’s page or the employer’s intranet page which contains the casual employment information statement; or
• by fax.

Given the regulations specify that the list isn’t intended to prevent an employer from using another means to provide the casual employment information statement, we consider the means by which it can be provided will be interpreted broadly.

We recommend that employers access the statement from the Fair Work website each time they need to provide it because the statements are updated fairly regularly and the obligation is to provide the current version.

Edge Legal

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