Significant amendments to the proposed Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (the Bill) were circulated and passed on 17 March 2021 at the Senate.
The amended Bill has since returned to the House of Representatives and been passed on Monday 22 March 2021. It is expected the Bill receive Royal Assent shortly. The original Bill included the criminalisation of intentional underpayments, changes to certain Modern Awards and various other proposals however, last week’s amendment saw that most of these proposals were removed with only one significant change remaining. The predominant change affects casual employment as set out in Schedule 1 of the Bill.
What is a Casual?
A Statutory definition of a casual employee has now been introduced for the first time. Section 15A of the Bill specifies that a person is deemed to be a casual employee if:
- an offer of employment made by the employer to the person is made on the basis that the employer 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 on that basis; and
- the person is an employee as a result of that acceptance.
In determining whether the employer has made a firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person regard must be had to:
- 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;
- 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.
A regular pattern of hours does not itself indicate a firm advance commitment to continuing and indefinite work and whether a person is a casual employee of an employer is to be assessed since the offer of employment and the acceptance of that offer.
Given the new definition and the emphasis on whether such a commitment exists, casual employment contracts should be given consideration when engaging employees to ensure that these conditions are met.
Additionally, when engaging a casual employee, there is now a requirement that they be provided with a Casual Employment Information Statement before they commence employment.
The National Employment Standards (NES) will now include provisions that allow for casual employees to convert their employment to either full-time or part-time. Many Awards already contain similar provisions. This new section will be inserted into the Fair Work Act 2009 (Cth) which will place obligations on all employers to make offers to casual employees to convert their employment, if eligible.
The eligibility stems from length of service and whether the casual employee has worked a regular pattern of hours of work. Specifically, the section states at 66B that an offer must be made if the employee has been employed by the employer for a period of 12 months and during at least the last 6 months of their employment, they had worked a regular pattern of hours on an ongoing basis, which without significant adjustment, the employee could work as a full-time or part-time employee depending on their individual case.
Obligations are placed on employers to undertake the following steps if an offer to convert casual employment is made. Specifically, the new provision states that employers will need to:
- Ensure that the offer is in writing;
- If the casual employee has worked the equivalent of full-time hours during the prescribed period, that the offer reflect a full-time offer. Conversely, if they had worked the equivalent of part-time hours, the offer is to reflect a part-time offer; and
- The offer be made 21 days after the employee has been employed for 12 months.
The new provision does allow for exceptions and an employer will not be required to make such an offer if there are reasonable grounds for not doing so and if the reasonable grounds are based on facts that are known or reasonably foreseeable at the time of deciding not to make an offer. Small Businesses are exempt from the obligation of making conversion offers.
What constitutes “reasonable grounds” is defined in the new provision which provides some clarity for employers. If the following apply then an offer to convert employment may not be required:
- The employee’s position will cease to exist in the period of 12 months after deciding not to make an offer.
- The hours of work which the employee is required to work will be significantly reduced in that period of 12 months.
- There will be significant change in either both the following in that period of time:
- The days in which the employee’s hours of work are required to be performed
- The times at which the employee’s hours of work are required to be performed which cannot be accommodated within the days or times the employee is available to work during that period.
- Making the offer would not comply with recruitment or selection processes required under a law of Commonwealth or a State or a Territory.
Obligations are placed on employers to advise employees in writing within the 21 day time period if they decide not to make an offer to the employee and the notice must specify why they are not making an offer and the applicable grounds.
Disputes regarding conversion can be referred to the Fair Work Commission if it cannot be resolved at the workplace level.
Casual loading and offsetting
The new casual loading provisions in the Act seeks to address the Full Federal Court decision in WorkPac v Rossato1 which allowed for some casuals to be entitled to annual leave, personal leave, notice of termination or redundancy pay in addition to the casual loading entitlements that they had received.
If a casual employee who has been incorrectly classified as a casual employee pursues a claim for unpaid entitlements, the Court will now be able to reduce the claim by an amount equal to the loading amount which was paid to the casual employee. This allows for offsetting of any entitlements owed to the employee such as leave entitlements against the casual loading amount already received. This effectively removes the effect of ‘double dipping’ as held in Rossato.
If an employer can demonstrate that the casual employee was paid an identifiable amount (such as a casual loading) then these offsetting provisions can apply.
Things to consider:
- Wording in employment contracts when engaging casual employees.
- Be mindful of casual conversion clauses in Enterprise Agreements, are they better off compared to the NES?
- Consider your rostering arrangements and whether casual employees have a distinctive rostering pattern which may or may not allow for a casual conversion.
If you would like to discuss how these developments impact your business or assistance with managing your workforce, please contact a member of our Workplace Relations team.
1.  FCAFC 84.
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