Unlocking the Future of Casual Employment: Navigating Recent Changes

In May’s HR Breakfast Club, Ash Borg of the Employment Law & Investigations team discussed the laws around casual conversion, and how they are changing.

Ash discussed, amongst other things:

• Trends in the casualisation of the workforce

• Legislative amendments to casual employment and casual conversion

• Implications for businesses and employees

Background

In 2023, casual employees made up a substantial 22% of the workforce. Casual employment provides flexibility for employers and some employees.

However, casual employment also has its negatives. The lockdowns during the COVID-19 pandemic highlighted the acute job insecurity faced by casual employees. Casual employees are further disadvantaged because they are not entitled to sick leave, annual leave, redundancy pay, notice of termination (in most cases) and more.

To address the trend of workforce casualisation, most Modern Awards have casual conversion clauses that allow casuals to convert to part-time or full-time roles in certain circumstances. However, until recently, there was no clear definition of ‘casual employment’ that employers could use to structure their businesses or workforces.

What is the definition of ‘casual employment’?

Following certain landmark High Court decisions on whether an employee is a ‘casual’, the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth)introduced a definition for ‘casual employment’ in the Fair Work Act 2009 (Cth) (the FW Act) for the very first time.

Section 15A of the FWA defines casual employment as one in which there is no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.

Factors that indicate ‘casual employment’ include the ability to accept or reject work, whether casual loading is paid, and whether the employment is described as casual. Currently, the focus is the on offer and acceptance of casual employment. This will change as of August 2024, as discussed below.

Casual conversion – when should you approach your casual employees.

Employers (other than small business with less than 15 employees) must offer conversion to casual employees who:

• Have been employed for a period of 12 months; and

• During at the least the last six months of that time, has worked a regular pattern of hours on an ongoing basis.

Unless:

• There are reasonable grounds not to make the offer; and

• These are based on facts known, or reasonably foreseeable, at the time of deciding not to make an offer.

The casual conversion provisions form part of the National Employment Standards, which means employers can incur civil penalties if they contravene them.

Changes to the definition of ‘casual employment’

Section 15A will be amended by the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) (the Closing Loopholes No 2 Act), so that the focus is on a wider range of circumstances in ascertaining whether the employment is truly casual.

The Closing Loopholes No 2 Act amends the definition of ‘casual employment’. This new definition will come into force on 26 August 2024. This definition focuses on the practical reality of the employment relationship, rather than just what was stipulated in the employment contract when the employee commenced work.

For example, if a hypothetical employee is provided a firm roster well in advance, cannot in fact refuse or cancel shifts, is expected to be available on an ongoing basis, and performs the same work as part-time or full-time employees, the Court will focus on factors such as these rather than limiting themselves to the terms of the contract of employment.

As we approach August, employers should start reviewing their current casual employment arrangements, including the way that casual employees are rostered, the flexibility they are given to accept or reject shifts, and more.

Changes to casual conversion

The Closing Loopholes No 2 Act changes to casual conversion (which also come into effect on 26 August 2024) will give the choice to employees to initiate a conversion by notification to their employer. This mechanism will operate alongside the existing provisions that require employers to offer casual conversion to applicable employees:

• After six months of ongoing employment; or

• 12 months in the case of small businesses

Employers will only be able to refuse requests if:

• The employee meets the definition of a ‘casual employee’;

• There are fair and reasonable operational grounds to do so; and

• It results in the employer not complying with recruitment processes required by Commonwealth, State or Territory laws.

Fair and reasonable operational grounds may include that there will be significant impacts on or changes to the operation of the business.

Further obligations upon employers will include:

• Consulting with a casual employee before deciding in respect of the request; and

• Providing casual employees with the casual employment information statement at certain intervals of employment.

Disputes about casual conversion must be dealt with at the workplace level first. If the dispute is not resolved, it can be referred to the Fair Work Commission (FWC) by either party. If the FWC arbitrates the matter, the Commission may make orders that an employee continue to be treated as a casual, or alternatively as full-time or part-time.

Further notes for employers

The Closing Loopholes No 2 Act has introduced two further changes that will also come into effect on 26 August 2024:

• Employers must not dismiss or threaten to dismiss an employee to engage that employee as a casual employee to perform the same, or substantially the same, work; and

• Employers that employ or have at any time, employed an individual to perform particular work other than as a casual employee must not make statements that:
  • Employer knows is false; and
  • Are made in order to persuade or influence the individual to enter into a contract for casual employment under which the individual will perform the same or substantially same work for the employer

Closing Remarks

If you are a HR professional in the ACT and would like to attend future HR Breakfast Club forums, visit our monthly forum page and register to attend. If you have any questions or queries about the information in this summary, please contact the BAL Lawyers Employment Law & Investigations team on 02 6274 0999.

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