2020 saw many challenges and opportunities for Australian businesses thanks to the effects of COVID-19. One of the more significant in our opinion was the promised amendments to the Fair Work Act 2009 (the ‘FW Act’).
The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 finally passed both Houses of Parliament on 22 March 2021 – but not before Parliament made several amendments that significantly stripped it to back (for a full list of what was being tabled, read our article BIG ‘IR’ change in 2021. Here’s what you need to know.)
The changes came into effect on Saturday 27 March 2021 (as the Governor General grants assent and regulators update their links and information – and the Fair Work Act itself).
[the following is adapted from the Fair Work Ombudsman website and the Parliament of Australian Bills Digest No. 53, 2020–21]
The Key points to note
The key takeaways are:
- A new definition of Casual employment
- Casual Employment Information Statements to be issued
- A clearer Casual Loading offset entitlement
- Extension of Casual Conversion provisions
Definition of a casual employee
Under the new definition, a person is a casual employee if:
- there is an offer of employment made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work
- the person accepts the offer on that basis and
- the person is an employee as a result of that acceptance.
The definition effectively prioritises the form of the employment relationship (how it was offered and accepted) over its substance (the pattern of actual work).
This is generally a good thing in our opinion.
In deciding whether ‘no firm advance commitment to ongoing work with an agreed pattern of work’ exists, only the following criteria will generally be considered [emphasis added]:
- whether the employer can elect to offer work and whether the person can elect to accept or reject work,
- whether the person will work only as required,
- 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.
But what does this *actually* mean?
Basically, there is now a very strong emphasis on ensuring a genuine offer and acceptance of casual employment is made right at the start – as deciding if employment is casual will not necessarily be based on any subsequent conduct of the parties (as was the case in Workpac v Rossato [1] and Workpac v Skene [2]).
The amendment also indicates that a regular pattern of hours does not automatically dictate a firm advance commitment to continuing indefinite work.
Existing casual employees
Casuals who were employed immediately before 27 March 2021 and whose initial employment offer meets the new definition continue to be casual employees under the FW Act.
Casual Employment Information Statement
Every new casual employee must receive a Casual Employment Information Statement (the CEIS) before, or as soon as possible after, they start their new job.
Small business employers need to give their existing casual employees a copy of the CEIS as soon as possible after 27 March 2021. Other employers have to give their existing casual employees a copy of the CEIS as soon as possible after 27 September 2021.
Download the Casual Employment Information Statement (PDF 178.1KB) (DOCX 50.1KB).
Casual Loading Offset
The amendment allows employers to offset against any claimed backpay against the casual loading amount already paid to a casual where:
- an employer has incorrectly described an employee as casual,
- the employee has had an identifiable casual loading amount provided to them; and
- the employee subsequently claims for backpay of an entitlement normally associated with permanent employment.
The key words here are identifiable casual loading (e.g. the amount paid to the employee to compensate for not having one or more entitlements during the employment period: e.g. leave, public holidays, notice and redundancy).
Casual Conversion
The Amendment adds a revised entitlement under the National Employment Standards (NES) giving casual employees a pathway to become a full-time or part-time (permanent) employee. This is also known as ‘casual conversion’.
The process differs from the current model casual conversion clause in two key ways [emphasis added]:
- Firstly, the process centres on the employer making the offer for conversion, as opposed to an employee making a request.
- Secondly, the proposed amendment shortens the period of service required to show a regular pattern of work (now 6 months over the last 12 months service).
If you are a small business (fewer than 15 employees), you do not have to offer casual conversion, BUT… your employees can still make a request if they meet eligibility requirements.
An employer (other than a small business employer) MUST offer their casual employee conversion to full-time or part-time (permanent) when the employee:
- has worked for their employer for 12 months
- has worked a regular pattern of hours for at least the last 6 of those months on an ongoing basis
- could continue working those hours as a permanent employee without significant changes.
Some exceptions apply, including if an employer has ‘reasonable grounds’ not to make an offer to a casual employee for casual conversion.
Reasonable Grounds to not offer
This includes where it is known or foreseeable:
- the employee’s position will cease to exist within 12 months
- the hours of work which the employee is required to perform will be significantly reduced in that period
- there will be a significant change in the days or times of work (or both) which cannot be accommodated within the days or times the employee is available to work or
- making the offer would not comply with a recruitment or selection process required by or under a law of the Commonwealth or a state or a territory.
What to do next?
As a business owner, there are several simple steps you can immediately take. These include:
- Contracts – align language with the definition of casual employment and clarify the amount of casual loading being paid.
- Tracking hours – use payroll records effectively – including stating the amount of casual loading as a separate line item on payslips.
- Awareness -read the CEIS so you understand the obligations you have (and to see what your employees are being told by the Fair Work Ombudsman).
- Processes – plan for casual conversion by incorporating CEIS into your onboarding steps and be ready to respond to requests (mapping a clear process and template letter is a good start).
Thanks for reading and if you have any questions as a result of reading this article, please hit the CONTACT button below and one of the team will be in touch with you soon.
[1] WorkPac Pty Ltd v Rossato [2020] FCAFC 84
[2] WorkPac Pty Ltd v Skene [2018] FCAFC 131