Casual Employee definition and casual conversion process

The Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 introduced changes to the definition of casual employment and also a new process for casual conversion.

What’s changed? 

Definition of casual employee

The new laws introduce a new (perhaps simpler) definition of casual employment, namely:

1. the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work; and
2. the employee is entitled under a fair work instrument or contract of employment to a casual loading or specific rate of pay for casuals.

The assessment of whether there is a ‘firm advance commitment’ includes consideration of the real substance, practical reality and true nature of the employment relationship. Keep in mind that a ‘commitment’ can be in the form of a contract, or a mutual understanding or expectation (it can be inferred or presumed from conduct).

Factors which indicate the presence of a firm advance commitment include:

1. inability of the employer to elect to offer, or not offer, work or inability of the employee to elect to accept or reject work;
2. the reasonable likelihood of future availability of continuing work, given the nature of the business;
3. whether there are full or part time employees performing the same kind of work; and
4. whether the employee has a regular pattern of work (even if it fluctuates or contains variation over time, e.g. for illness, injury or recreation).

Casual conversion

Scrapping the requirement for employers to make offers for casual conversion, the new laws introduce an employee—led process where casual employees initiate the casual conversion process. Specifically, casual employees can give an employer written notification if they would like to change their employment status to full-time or part-time employment after 6 months’ employment (or 12 months for small businesses) if they believe they no longer meet the requirements of the new definition of casual employee.

Employers will be required to respond in writing within 21 days after the notification is received and the response must include:

1. a statement that the employer:
a. accepts the notification; or
b. does not accept the notification on one or more grounds (outlined below); and

2. if the employer accepts the notification:
a. whether the employee is changing to full time employment or part time employment;
b. the employee’s hours of work after the change takes effect;
c. the day the employee’s change to full time employment or part time employment takes effect;

3. if the employer does not accept the notification—reasons for the employer’s decision (though these are not required to be detailed).

The Act provides that the employer may not accept the employee notification, if:

1. the employee meets the definition of a casual employee;
2. there are fair and reasonable operational ground for not accepting the notification; or
3. accepting the notification would result in the employer not complying with recruitment or selection processes required by Commonwealth, State or Territory laws.

Fair and reasonable operational grounds then may include where:

1. substantial changes would be required to the way in which work in the employer’s enterprise is organised;
2. there would be significant impacts on the operation of the employer’s enterprise;
3. 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 (as the case may be).

The new laws also require that, before giving a response, the employer must consult with the employee about the notification and must, if the employer is accepting the notification, discuss the employee’s hours of work, whether they will be full-time or part-time, and when the conversion will take effect.

Disputes about casual conversion must be discussed and attempted to be resolved at a workplace level in the first instance. If discussions at the workplace level do not resolve the dispute, either the employee or employer may apply for the FWC to deal with the dispute. In the first instance theFWC must deal with the dispute by means other than arbitration (i.e. hold a conciliation conference first), unless there are exceptional circumstances. If the matter proceeds to arbitration, the FWC will have the power to order:

1. that the employee continue to be treated as a casual employee; or
2. that the employee be treated as a full-time employee or part-time employee.

Employers are also prohibited under the new laws from engaging in conduct to specifically avoid the casual conversion provisions including by reducing or varying an employee’s hours of work, changing an employee’s pattern of work or terminating the employee.

Practical Tips

The changes will commence on the 26^th of August 2024.

Ultimately, with the removal of the casual conversion provisions and the introduction of the employee-led conversion process, there are less stringent requirements on employers to review their workforce and proactively offer permanent employment. Instead, employers will only need to take action when an employee chooses to notify them under the new laws.

1. Update existing policies and procedures regarding casual conversion to ensure they reflect the new laws.

1. 1. For casual employees employed before the new laws come into effect, the existing provisions regarding employer offers and employee requests for casual conversion will remain in force until six months after the new laws come into effect, at which point the existing provisions will be removed and the employees will need to use the new conversion process.

1. For the changes to the definition of casual employment, employers will need to review their current casual workforce to assess the likelihood they would be considered permanent employees under the new definition and proactively assess the employment relationships of their casual employees to avoid improperly classifying them as casuals.
2. Implement the changes to the Casual Employment Information Statement (CEIS). This has always been required to be provided on commencement.

1. 1. The Act now includes an additional requirement for non-small business employer to provide the CEIS when the employee has been employed by the employer for a period of 6 months; and then again 12 months after commencement; and again every 12 months for which the employee is employed by the employer.
   2. Small business employers will only need to provide the CEIS on commencement and then again 12 months after commencement.

We highly recommend employers download new copies of the CEIS from the Fair Work Ombudsman’s website each time they need to be issued in order to avoid giving employee’s an outdated and incorrect copy of the information statement.

For more information or if you would like assistance with navigating these new changes, get in touch with us to see how we can assist.  We have a ‘Managing Casual Employees Information Sheet’ available – to access this, please send us an email and we will share it with you.