Changes to the Definition of Casuals

What the New IR Reform Bill Means for Businesses

Defining casual employment has always been something surrounded by 'grey'. This we have seen lead to challenges within court around the true nature of a casual employee under workplace relations legislation.

Over the last twenty years, casual employment has become a prominent feature of the Australian labour market. Pre Covid-19, more than one in four people work under this form of employment.

This act defines casuals as a person who accepts an offer of employment with no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.

In 2021, the concept of casual employment is starkly different from its origins – that of ad hoc work, no promises or expectation that it would continue, with a modest premium on the hourly rate. We now see casual employees engaged consistently over many years by the same employer.

Recently the Federal Government finally passed their workplace relations reform bill through parliament, although with significant changes to how they originally intended.

The bill – known as the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 – originally intended to cover further reform, however in the end only changes to casual employment were passed.

What's Changed

The Act defines a casual employee as an employee who accepts an offer of employment in circumstances where the employer made “no firm advance commitment to continuing and indefinite work according to an agreed pattern of work”.

Factors determining whether there is ‘no firm advance commitment’ include whether the:

  • employer can offer or not offer shifts and the employee can accept or reject the shifts

  • employee will work as required according to the needs of the employer

  • employment is described as casual

  • employee is entitled to a casual loading or casual rate of pay

Something of significant note is that the new definition has retrospective effect – it applies to offers of employment given before the amendment became law unless there is a pre-existing determination by a Court that an employee was not a casual, or an employee exercised a “casual conversion” right under an award or agreement before the amendments take effect.

Casual conversion to permanent employment

The Act gives various rights to casuals including that an employer (other than a small business employer with fewer than 15 employees) must offer a casual employee conversion to permanent status if the employee has been employed for a period of 12 months, and during at least the previous 6 months, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, could continue to work as a full-time or part-time employee. An employer need not make an offer if there are reasonable grounds to decline, such as:

  • where the employee’s position will cease to exist within 12 months; or

  • there will be a significant change in the days on which, or times at which, the employee’s hours of work are to be performed which cannot be accommodated by the employee’s availability.

Offset of casual loading

The biggest win for employers out of this legislation is that it prevents casual employees from double dipping.

Double dipping refers to casual employees – having historically been paid casual loading – found by a court to have been, in fact, permanent employees, thereby entitling them to the entitlements that permanent employees enjoy (as an example, annual leave).

The outcome for the employee is that they ‘double dipped’ –receiving back payment for entitlements they were owed for being considered a permanent employee on top of keeping their casual loading.

Now, employees whose employment contract states they are casual will remain so if they were not committed to work in advance when they accepted their offer of employment. Regular and systematic casual employment will not of itself imply permanency.

A casual remains a casual until their employment is converted to permanent employment (which may be via casual conversion), or the employee accepts an alternative offer for permanent employment.

What now - Actions

  • Please make sure all your employees, even casuals have an employment contract in place

  • Review work patterns of casuals as well as review length of service for casual employees

  • The Amendment has introduced a Casual Employment Information Statement (CEIS) which employers must give to new casual employees when they start work

  • 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

Link to Casual Employment Information Statement (CEIS)

How DreamStoneHR can help

Please get in touch if you would like to know more about these changes and how they impact your business.

We are on hand to support all your people needs, as well as the introduction of the above recommended actions.

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