Clarity about casuals – at least for now…

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After significant public discussion and parliamentary debate, the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (Bill) was passed by Parliament on 22 March 2021.

When originally introduced to the House of Representatives in December 2020, the Bill promised sweeping reforms to the Fair Work Act 2009 (Cth) (Act) across a number of areas, including casual employment, the enterprise agreement making and approval process, Greenfields agreements, and the Act’s compliance and enforcement framework. However, after Senate negotiations, only the substantive issue of casuals survived.

 

Key changes

The key changes are:

1. Definition of casual employment

‘Casual employment’ is currently not defined by the Act. This left the Federal Court, in Skene and Rossato, to develop the definition. The outcomes of this are discussed in our recent article ‘Casual approach causes major headache: WorkPac v Rossato‘ . The Federal Court’s broad and fluid definition took a number of employers by surprise, as did the Court’s refusal to offset the traditional 25% casual loading, with the Australian Government estimating $18 to 39 billion in potential back pay liability.

The Bill fixes this by inserting a definition of ‘casual employment’ into the Act, which will provide that a person is a casual employee if:

There is an exhaustive list of considerations for determining the presence or absence of a ‘firm advance commitment to continuing and indefinite work according to an agreed pattern of work’. Critically, unlike the common law definition, the Bill specifically excludes the subsequent conduct of the parties from being a factor in determining whether an employee is a casual.

A new Casual Employment Information Statement will also be prepared, and must be given to new casual employees.

2. Casual conversion

There is currently no universal right to casual conversion contained in the Act, though some modern awards do contain this right. The Bill will see the inclusion of a new provision into the National Employment Standard (NES) relating to offers and requests for casual conversion. In summary, once enacted, some employers will be required to offer casual employees conversion to ongoing full-time or part-time employment if:

(a) the employee has been working for a period of 12 months; and

(b) during at least the last six months of that 12 month period, the employee has worked a regular pattern of hours on an ongoing basis which the employee could continue to work as a permanent employee.

Where an employee is eligible to receive an offer of casual conversion, the employer is required to make the offer in writing within 21 days of the employee having being employed for 12 months.

However, an employer will not be required to make an offer for casual conversion based on ‘reasonable grounds’. The Bill provides a list of what would be considered ‘reasonable grounds’ including, for example, that the employee’s position will cease within a period of the next 12 months, or that the hours of work which the employee is required to work will be significantly reduced during that period. Some transitional arrangements exist.

3. Offsetting

The Bill reverses the ‘no offsetting’ approach adopted in Rossato, and will allow a Court to offset casual loading amounts paid to an employee, if an employer misclassifies a casual employee.

Whats next?

Rossato is still currently before the High Court, with the bulk of submissions already filed. Whilst the Bill may limit the effect of any judgment by the High Court, there is still significant matters of interpretation contained within the legislative definition of casual. It is likely that new litigation regarding the interpretation of a ‘casual’ will still arise, with courts being left to interpret, at least to some extent, who is a casual. Further, if a ‘casual’ employee was given a firm advance commitment, this new definition may not change any existing liability (save for the court’s ability to offset the loading). Finally, a class action law firm has flagged a potential constitutional challenge to the Bill.

Whilst the Bill’s aim is absolute certainty, achieving certainty in the world of industrial relations is often elusive.

Special thanks goes to Emily Capener, Lawyer for contributing to this article.

 

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