Casual employment has been at the forefront of employment and labour issues for some time. There have been various court decisions in recent years which have caused concern for employers. There is now some uncertainty about the legal status of a casual employee and what financial impact a finding that a casual employee is actually a permanent employee will have on businesses – such as whether the organisation needs to pay out the employee for accrued annual leave.

The omnibus Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (IR Bill) includes proposed changes to casual employment to address some of the issues in this space.

The proposed changes to the Fair Work Act 2009 with respect to casual employment include:

  • inserting a definition of “casual employee” which provides that an employee will be a casual employee where the offer of employment does not provide a firm advance commitment of continuing and indefinite work, according to an agreed pattern of work, and the employee accepts the offer on that basis. The legislation sets out an exhaustive list of considerations to determine whether at the time the offer was made it will be considered that there is no firm advance commitment. The considerations include: whether the employment is described as casual at the time employment commences, whether the employee can refuse shifts and whether the employee will be paid a casual loading. Relevantly, an assessment of whether an employee is casual is made on the basis of the employment offer, and not on the basis of any subsequent conduct of the parties;
  • inserting an entitlement for employees to convert from casual employment to full time or part time employment after 12 months, if certain conditions are met. The proposed provisions provide for a residual right to casual conversion in certain circumstances if an employee does not accept an initial offer to convert to permanent employment. This entitlement will bridge the gap allowing casual employees, who currently have no means to convert their employment to permanent employment, to do so (such as employees not covered by a modern award or who are covered by a modern award without a casual conversion provision);
  • requiring employers to provide a Casual Employment Information Statement published by the Fair Work Ombudsman to new casual employees; and
  • provisions to allow a court to off-set the casual loading amount received by an employee during the period of casual employment against an amount claimed for National Employment Standards’ (NES) entitlements, such as annual leave, where the employee is later found to be a permanent rather than casual employee.

After the introduction of the IR Bill, the Senate referred the provisions of the Bill to the Senate Education and Employment Legislation Committee (Committee) to consider and produce a report by 12 March 2021. The members of the Committee are from the Liberal Party, the Australian Labor Party (ALP), the Nationals, Independent Senators, Pauline Hanson One Nation, Australian Greens and the Jacqui Lambie Network.

In general, the Committee recommended that the IR Bill be passed. In relation to casual employment, the Committee noted that a number of organisations that made submissions regarding the IR Bill were concerned about the administrative burden of the casual conversion provisions for business. However, the Committee felt that the right balance had been struck to provide an opportunity for casual employees to move to part time or full time employment.

Naturally, the ALP members dissented to some aspects of the IR Bill.  Their concerns are broadly that:

  • the proposed definition of casual employment will mean that any job can be classified as casual employment so that employers can avoid NES entitlements;
  • the casual conversion provisions do not provide sufficient means of converting casuals to permanent employment because employers can deny conversion on the basis of ‘reasonable grounds’; and
  • offsetting the casual loading will deprive workers who have been wrongly classified as casual of their paid NES entitlements.

The Government has indicated that it intends to continue the passage of the IR Bill when Parliament resumes in the second week of March 2021. Despite the Committee’s general finding that it supports the passing of the IR Bill in its current form, we expect further debate particularly as the ALP Committee representatives and the ACTU are still agitating their concerns.

We will keep clients updated about whether the proposed changes described above will come into law, and if so, how this will affect employers.

The IR Bill provides for a number of other proposed changes, some of which we discussed in our previous blogs (Proposed changes to agreements in new IR Bill and Additional agreed hours and flexible working directions proposed for 12 modern awards).