The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 passed both Houses of Parliament on 22 March 2021. Parliament made a number of amendments to the Bill before it was passed, making changes to the schedule concerning casual employment and removing all other schedules.
Defining Casual Employment
As a result of the Bill, under the FW Act, if a person is:
- offered employment without a “firm advanced commitment to continuing and indefinite work”; and
- the person accepts that offer,
then the person is a casual employee regardless of any changes in the employment relationship. That is, the assessment of whether a person is a casual occurs on the basis of the offer of employment, not on the basis of any subsequent conduct of the parties.
When determining whether a firm advanced commitment to continuing and indefinite work exists, the Bill requires a Court to have regard to only the following considerations:
- whether the employer can elect to offer work and whether the person can elect to accept or reject work;
- whether the person will work as required according to the needs of the employer;
- whether the employment is described as casual employment; and
- whether the 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.
Right to Conversion
The Bill provides that after 12 months of employment, casual employees who have worked a regular pattern of hours in the last 6 months, except for those employed by a small business, will either receive an offer of full-time or part-time employment or a notice with reasons why they have not received an offer.
However, employers are not obliged to make an offer if there are “reasonable business grounds” to not make the offer. Such grounds must be known or reasonably foreseeable at the time of declining to make the offer.
The key difference to current legislation is that the employer must be proactive in offering the casual conversion (not waiting for the employee to request) or giving notice of a decision not to offer conversion within 21 days of when the right to be offered conversation arose. Under current Modern Award terms, the employees are only entitled to ‘request’ and while the employer has some obligation to advise the employee of this right, the onus rests with the employee to request.
Small Business Employers
Employees who work for a small business employer will be able to request conversion after 12 months of employment, if they satisfy the same pattern of hours requirement. This means that the obligation to offer or notify of the intent not to offer does not exist for small business employers.
Reasonable Business Grounds
Employers will only be able to refuse a request or not offer conversion to eligible employees if they have reasonable grounds based on facts that are known or reasonably foreseeable.
The Bill defines reasonable business grounds to include:
- where the conversion would require a significant adjustment to the employee’s hours of work in order for the employee to be employed permanently;
- where the employee’s position will cease to exist in the 12 months after the conversion right arises;
- where the hours of work which the employee is required to perform will be significantly reduced in the 12 months after the conversion right arises; and
- if there will be a significant change in either the days or times on which the employee’s hours of work are required to be performed in the 12 months after the conversion right arises.
Conversion Right not never ending
The Bill makes clear that, where an employee refuses an offer to convert, they no longer hold a right to request conversion at a later date.
Equally, where an employer has determined that there a reasonable business grounds to not make an offer of casual conversion and notifies the employee in accordance with the provisions of the Bill, then the employees also cease to hold a right to request conversion at a later date.
We believe this is an element that will be tested as employees continue to work as a casual for 2, 3, 4 years etc. But it is a welcome clarification for employers that the process is not required every 6 or 12 months if the employee refuses an offer to convert. Our clients tell us that often the employee wants to remain casual whether for the flexibility or the higher pay rate – and now they no longer need to worry about that continuing if they have made a genuine offer to convert.
Statutory Offset Rule
The Bill also provides a statutory offset rule that requires a court to reduce amounts for any entitlements found owing to the employee, by an amount equal to any identifiable casual loading already paid to the employee. This will ensure that where an employee is found by a court not to be a casual employee under the statutory definition, employers will not have to pay the same entitlements twice.
This is a relief for employers compared to previous case law which introduced the potential to double-dip. It does underline the importance of ensuring that your practices around casual employment are clear on the component of their pay which is casual loading.
Impact for Business
This is a very important piece of legislation which must not be ignored by employers. It will be essential for you to ensure compliance when it comes to the employment of casuals in your business.
Employers should be looking to:
- introduce new casual contracts that align with the recent amendments; and
- introduce processes for dealing with casual conversion that ensure the employer’s operational requirements are considered whilst simultaneously ensuring compliance with the Fair Work Act.
- check casual practices such as payslips to ensure that casual loading is clearly distinguished
For some businesses, it might also be time to reassess your workplace structure to determine whether you need to make changes in order to be compliant.
There are quite a lot of intricacies with this legislation which may require clarification.
Please do not hesitate to contact our team for an assessment of your business practices or if you have any questions regarding these changes. We are here to help!