Last year we wrote about a recent decision handed down by the Federal Court of Australia (WorkPac Pty Ltd v Rossato [2020]) in which the Court heavily scrutinised the common law tests surrounding the definition of a “casual employee”.

Given the uncertainty that arose in that case in defining casual employment, on 27 March 2021 the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recoveries) Act 2021 (Amendment Act) was enacted to provide greater certainty and protection to both employees and employers.

The Amendment Act significantly amends the Fair Work Act 2009 (Cth) (FWA) by introducing a new definition of “casual employee”. The changes greatly impact both employers and employees alike.

What is the new definition of “casual employee”?

Under the new section 15A of the FWA, a person will be a casual employee if they:

  • are offered employment on the basis that the employer makes “no firm advance commitment to continuing and indefinite work”;
  • accept such an offer; and
  • are an employee as a result of that acceptance.

The definition focuses on the terms upon which employment is offered and accepted, rather than the conduct of the parties. This means that a determination as to whether a person is a casual employee is made at the time the offer and acceptance of employment occurs.

As such, the statutory definition of a casual employee overturns the common law principles established in WorkPac Pty Ltd v Rossato [2020] which looked at the parties conduct during employment to determine whether the employment was casual in nature.

Whether there is “no firm advance commitment to continuing and indefinite work”

To determine whether an offer was made on the basis that there is “no firm advance commitment to continuing and indefinite work” regard must be had to whether the:

  • employer can elect to offer work and whether the person can elect to accept or reject work;
  • person will work as required according to the needs of the employer;
  • employment is described as casual employment; and
  • person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.

Prohibition against “double dipping”

In addition to the new statutory definition of a casual employee, the Amendment Act also introduces a new section 545A in the FWA which provides a statutory offset rule whereby the entitlements owing to an employee who has been misclassified as a causal employee can be offset against any casual loading already paid to the employee.

New Casual Employment Information Statement

Moving forward, employers will be required to provide all new casual employees with a Casual Employment Information Statement (CEIS), in addition to the Fair Work Information Statement, prior to the commencement of the casual employee’s employment.

The Amendment Act also requires that small business employers provide their existing casual employees with a copy of the CEIS as soon as possible. All other employers have until 27 September 2021 to provide existing casual employees with the CEIS.

Casual conversion

The Amendment Act also introduces a new regime for casual conversion in the National Employment Standards. This obligation requires all employers (to the exclusion of small business employers) to offer all eligible casual employees the opportunity to convert their employment to full time or part time in circumstances where the casual employee:

  • has been employed for at least 12 months; and
  • for at least 6 months of their employment the casual employee worked a regular pattern of hours on an ongoing basis.

The Amendment Act also provides a list of reasonable grounds for an employer to not offer casual conversion, including, but not limited to:

  • the employee’s position will cease to exist within 12 months after the time the decision on conversion is made;
  • the employee’s hours of work would be significantly reduced within 12 months of the conversion occurring; and
  • there would be a significant change to either the day or time on which the employee’s work is required to be performed which cannot be accommodated within the days or times the employee is available to work during that period.

All employers (to the exclusion of small business employers) will have until 27 September 2021 to:

  • identify ad asses all existing eligible casual employees;
  • offer conversion to those eligible casual employees unless the employer has reasonable grounds for not doing so; and
  • if the employer has reasonable grounds for not offering casual conversion, provide a notice to the casual employee explaining the reasons as to why an offer of conversion was not made.

Key takeaways

The Amendment Act gives rise to substantial changes affecting all employers. Employers should:

  • ensure their casual employment contracts are drafted to reflect the new statutory definition of casual employment;
  • familiarise themselves with the CEIS and ensure that a CEIS is issued to all new casual employees, as well all existing casual employees; and
  • review existing casual employees’ patterns of work to determine whether any conversions to permanent employment are required.

If you have any questions about the Amendment Act and how it affects you as an employee or employer, please contact our Employment Law team.