Casual employment under the Closing the Loopholes legislation
Employment Law: 06 June 2024
Author: Stephen Curtain - Our People
The changes to casual employment in the Fair Work Legislation Amendment (Closing the Loopholes) Act will commence on 26 August 2024.
The changes include a new definition of casual employee, a new regime for conversion from casual to permanent employment and new penalties for non compliance.
New definition of casual
Generally casual employment will exist where:
- there is an absence of a firm advance commitment to continuing and indefinite work; and
- the employee is entitled to a casual loading or specific rate of pay for casuals (under an award or enterprise agreement).
In determining whether there is a firm advance commitment consideration must be given to:
- the “real substance, practical reality and true nature of the employment relationship”. The firm advance commitment may be in the form of a mutually agreed term in the employment contract or mutual understanding or expectation between employer and employee. Significantly, these can be determined from the conduct of the parties after entering into the contract and how the contract is performed. So, the terms of the contract are not as determinative as previously.
- the following factors:
- whether either the employer or employee is unable to elect to offer/reject work;
- whether it is reasonably likely that continuing work of the kind performed by the employee will be available in future, having regard to the nature of the business;
- whether there are full-time or part-time employees performing the same kind of work that is usually performed by the employee; and
- whether the employee engages in a regular pattern of work, even if it is not absolutely uniform and includes some fluctuations and variations over time.
Note, where casual employment becomes permanent it does not do so retrospectively.
The Act limits the ability for employers to engage casual employees on a fixed or maximum-term contract except in circumstances where the period is identified by reference to a specified season or the completion of the shift of work to which the contract relates.
Employers will be required to provide casual employees with a new Casual Employees Information Statement, which will include their rights under the Bill, when they commence employment.
In summary, under the proposed amendments the practical reality and true nature of the relationship must be considered including how the contract is performed. How the contract is written will not solely or predominantly determine the nature of the relationship and how the contract is performed will.
Casual conversion
Under the new regime, casual employees who have been employed for 6 months, or 12 months for small businesses, whose employment is ongoing and not casual, can give written notification to their employer that they would like to change their employment status from casual to permanent, full or part time. It is no longer up to the employer to do so.
Employers have 21 days in which to reject or accept a request and comply with a range of form, content and notice requirements. They can reject the employee notice if:
- the employment is still casual (see the dot points above);
- there are fair and reasonable operational grounds for rejecting e.g. if substantial changes in the way the employer’s enterprise is operated would be required; or
- if accepting the change would result in the employer not complying with a recruitment or selection process required by law.
Employers must have first consulted the employee about the notice and, if intending to accept the conversion, consulted about specified matters such as whether the employment is to be full or part time, the hours of work and the commencement date.
Referral of disputes to Fair Work Commission
If the employer rejects the employee choice notice or decides not to offer casual conversion under the existing legislation, it must now provide detailed reasons and a statement as to how the parties can attempt to resolve issue, including the right to apply to the FWC. The parties must first attempt to resolve the issue at the workplace level and if unsuccessful, either may refer the matter to the FWC which may facilitate conciliation or mediation, make a recommendation or express an opinion. If still not resolved, the FWC can resolve the matter by arbitration.
Penalties
Heavy penalties apply for contravening an FWC order; for misrepresenting employment as casual employment; for dismissing an employee to engage them as a casual; for making representations to engage someone as a casual; or for taking steps to avoid the conversion process such as changing a pattern of work or terminating the employee.
New civil remedy provisions apply to employers who change a pattern of employment or terminate an employee to avoid conversion to permanent; misrepresent employment as casual; dismiss employees to engage them as casuals. However, if the employer can show that it reasonably believed when the misrepresentation was made that the contract was for a casual position it will have a defence.
Further, an employer that employs or has at any time employed an individual to perform work other than as a casual, must not make a statement that it knows is false in order to persuade the individual to enter into a contract for casual employment, under which the individual will perform substantially the same work.
Furthermore, an employer that employs or has at any time employed an individual to perform particular work, other than as a casual, must not make a statement it knows is false in order to persuade the individual to enter into a contract for casual employment, where the work is the same or substantially the same.
Conclusion
The changes have implications for employers both in relation to the need to ensure that not only does the employment contract properly refer to the employment as casual, but also that it is conducted subsequently as a casual position having regard to the items in the dot points above.
Employers should also be mindful of casual employees’ rights to apply to convert their employment after 6 months, or 12 months for small businesses. The request can be denied if the role is still casual or the other two elements above exist, but the response with detailed reasons must be provided within 21 days and after consultation with the employee.