Recent changes to the Fair Work Act for casual employment and an employer’s obligations.

The Fair Work Act (FW Act) has been amended to provide clarity and certainty for casual employment with a pathway to permanent employment.

What is the definition of casual employment?

The definition consists of 3 points -

  • an offer of employment that makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person’, and

  • the person accepts the offer of employment on that basis; and

  • the person is an employee as a result of accepting the offer of employment.

What is a casual employee?

How to determine whether or not a firm advance commitment to continuing and indefinite work has been made to an employee?

  • Can the employer elect to offer work?

  • Can the employee elect to accept or reject the offer of work?

  • Will the employee work as required to meet the needs of the business?

  • Is the employment described as ‘casual’ employment; and

  • Is the employee entitled to casual loading or a specific rate of pay for casual employees under an industrial instrument (modern award or collective agreement)?

What are the changes?

Casual conversion

  • An employer must offer permanent employment to a ‘casual’ when the ‘casual’ has been employed for a period of 12-months; and

  • the casual employee has worked a regular pattern of hours on an ongoing basis for 6-months before their 12-month anniversary

  • Small business is exempt (15 employees or less) However, casual employees retain their right to request their employment convert to permanent under modern awards.

Casual Employment Information Statement - employers are required to provide this Statement prepared by the Fair Work Ombudsman to their casual employees.

Disputes that may arise in relation to casual conversion are best resolved between the employer and the employee. If a dispute is unable to be resolved then either party may refer their dispute to the Fair Work Commission.

Protection for employers - clearly identifiable payment of ‘casual loading’

Casual loading is paid to casual employees instead of ‘permanent entitlements’ for full-time and part-time employees (e.g. paid annual leave, personal/carer’s leave and compassionate leave).

Under the FW Act, if an employee is described as a ‘casual’ and later makes a claim for ‘permanent entitlements’, the court must reduce any amount ordered to be paid to the employee by the amount of ‘casual loading’ already paid to the employee by its employer. This provides protection for employers. It ensures employers do not have to pay for entitlements twice (casual loading and permanent entitlements).

However, this only applies if the employer has paid the employee casual loading that is clearly identifiable on the employee’s employment contract and/or pay advice.

Now is the time to update your employment contracts and payroll system:

  • Clearly define the terms and conditions of ‘casual employment’ in your employment contracts; and

  • Clearly and separately identify the amount of casual loading paid in your employment contracts and payroll system (pay advice).

What employers need to know and do to meet their employer obligations under the FW Act.

Small business
(15 or less employees)
What’s your head count?
All other business
(more than 15 employees)

1.  Provide all your existing casual employees with a copy of the Casual Employment Information Statement now (if you haven’t already)

1.  Provide all existing casual employees with a copy of the Casual Employment Information Statement by 27 September 2021.

2.  For new casual employees, provide the Casual Employment Information Statement on or before their start date with their written employment contract.

2.  For new casual employees provide the Casual Employment Information Statement on or before their start date with their written employment contract.

3.  A small business is exempt from making an offer of permanent employment to casual employees after the completion of 12-months employment.

However, if you elect to offer a casual to convert to permanent employment, the offer must be in writing.

Put a process in place to ‘track’ the
12-months anniversary date of your casuals.

3.  For your existing casuals as at 27 March 2021, you need to assess whether you will make an offer of permanent employment before 27 September 2021.

You have 21 days to assess the casual employee and make a decision as to whether you will make an offer to convert to permanent employment.

The casual employee must accept or reject the offer within 21 days.

For any existing casuals (as at 27 March 2021 who have been employed for less than 12-months) you must also advise in writing that you have assessed their employment and note that as they have been employed for less than 12-months they do not meet the requirements under the FW Act to be offered to convert to permanent employment.

Put a process in place to ‘track’ the
12-months anniversary date of your casuals.

4.  Casual employees retain their right to request to convert to permanent employment if they meet the requirements under modern awards.

To meet your employer obligations you must provide your casual employees with a copy of the award provision (clause) of their right to request casual conversion.

You must not refuse a request unless you have consulted with the casual employee and there are reasonable grounds to refuse the request.

4.  Casual employees retain their right to request to convert to permanent employment when the employer has met its obligations stated in point 3 above.

To meet your employer obligations you must provide your casual employees with a copy of the award provision (clause) of their right to request casual conversion.

You must not refuse a request unless you have consulted with the casual employee and there are reasonable grounds to refuse the request.

5.  Review your casual employees and update their employment contracts.

Provide your casual employees with a copy of the award provision (clause) of their right to request casual conversion under the relevant modern award (if you haven’t done so already).

                   

5.  Review your casual employees and update their employment contracts.

Prepare and have written letters and notices ready to go.

  • A letter of offer to convert to permanent employment; and
  • A letter providing notice to a casual employee that you will not be making an offer and state why (What are the ‘reasonable grounds’?)
  • Provide your casual employees with a copy of the award provision (clause) of their right to request casual conversion under the relevant modern award (if you haven’t done so already)

6.  Separate casual loading from a casual employee’s hourly rate of pay so that it clearly identifiable on the employee’s written employment contract and pay advice.

6.  Separate casual loading from a casual employee’s hourly rate of pay so that it clearly identifiable on the employee’s written employment contract and pay advice.

7.  Keep a record of when (the specific date) the Casual Employment Information Statement was provided to your casual(s) on the employee’s file along with all other written notices or offers relating to casual conversion.

7.  Keep a record of when (the specific date) the Casual Employment Information Statement was provided to your casual(s) on the employee’s file along with all other written notices or offers relating to casual conversion.

 

It is important for employers to update their casual employment contracts to ensure they are protected by the recent changes in the FW Act.

We are here to help

Ulton’s HR Consulting Services can provide you with what you need to meet your employer obligations and ensure you are protected under the FW Act.

By way of example:

  • employment contracts that clearly set out ‘casual employment’ and other necessary terms and conditions of employment to mitigate your business risk
  • provide advice and support to help you manage your casual employees and the administrative burden (e.g. template letters and notices)
  • provide advice on your employer obligations under FW Act, the national employment standards, modern awards and work, health and safety
  • provide advice that assists you with resolving any HR issues.

If you have any questions or need assistance with human resources management, industrial relations or workplace health and safety in your business, please contact Ulton's HR Consultant, Christine Guy on (07) 4154 0413 or fill in the contact form.

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