- Published
This is a must read for all businesses that employ casuals (or intend to).
Contents
1. Who does this apply to?
All businesses, of all sizes, in all industries, who employ (or intend to employ) casuals.
Please note that some obligations are different for small businesses (fewer than 15 employees); these are noted throughout this guide.
2. Why do I need to know about this?
The definition of a ‘casual employee’ has changed and it is important that employers are aware of this and aren’t misclassifying new employees as casual employees. The changes impose additional obligations on employers in relation to issuing the Casual Employment Information Sheet but have removed the requirements for employers to have to proactively offer casual conversion to eligible employees.
By not understanding these changes or failing to take the appropriate action, businesses may be at risk of:
- Penalties – The Closing Loopholes changes to the Fair Work Act 2009 have introduced new offences relating to the intentional misuse of casual employment (up to $495,000 for companies per offence);
- Employers could also be liable for backpay of any unpaid permanent employment entitlements if an employee has been misclassified as a casual worker;
- Employers could incorrectly reject a request from an employee to convert to permanent if they don’t understand the new definition;
- All of the above come with significant risk of reputational damage and negative flow on effects to employees and workplace culture.
3. Summary of the Changes Effective from August 2024
A)
A New Definition – Which only applies for all new casual employees who start from the 26th August 2024 onwards.
The new definition of a ‘casual employee’ is if, when they start employment:
- the employment relationship has no firm advance commitment to ongoing work, taking into account a number of factors*, and
- they’re entitled to a casual loading or specific casual pay rate under an award, registered agreement, or employment contract.
*The new definition of casual employment considers the real substance, practical reality and true nature of the employment relationship. That is, how the parties actually behave and treat each other once the employment has begun, as opposed to just relying on the terms in the employee’s contract (as was previously the case).
Also note that these changes are prospective, not retrospective. So, if an employee was engaged as a casual employee (pre 26th of August 2024) in line with the previous definition of ‘casual employment’, they will remain a casual employee unless their employment status is changed under the casual conversion pathway, by an order of the FWC, or by accepting an alternative offer of employment that isn’t casual.
B)
A Change to the Casual Conversion process now called ‘Employee Choice Pathway’.
A new pathway has been introduced for eligible employees to request to change from casual to full-time or part-time employment. Under the new arrangements, employers will no longer have an obligation to proactively offer conversion to permanent employment at 12 months of employment, as they did previously. It will now be the responsibility of the employee to request this change (if they are eligible).
C)
Casual Employment Information Statement – Additional requirement to issue to existing casual employees at regular intervals.
Employers now need to give all existing casual employees the Casual Employment Information Statement at regular intervals during their employment. This is in addition to the existing requirement to provide it to all new casual employees before, or as soon as possible after, they start their new job.
4. What is 'No Firm Advance Commitment'?
Whether there is a firm advance commitment needs to be assessed on:
- the real substance, practical reality and true nature of the employment relationship;
- if the employer can offer or not offer work to the employee (and whether this is happening);
- if the employee can accept or reject work (and whether this is happening);
- if it’s reasonably likely there will be future work available of the kind the employee usually performs in the employer’s business, based on the nature of the business;
- if there are full-time or part-time employees performing the same kind of work in the employer’s business as the work the employee usually performs;
- if the employee has a regular pattern of work even if it changes over time due to, for example, reasonable absences because of illness, injury or other leave.
The above isn’t a full list and other factors may apply.
When assessing whether there is a firm advance commitment, you can also look at:
- the contract of employment, and
- any mutual understanding or expectation between the employer and employee that isn’t part of the contract.
5. Casual Conversion - Now called the 'Employee Choice Pathway'
5.1. What is the ‘Employee Choice Pathway’?
A new pathway has been introduced for eligible employees to request to change from casual to full-time or part-time employment under the National Employment Standards. It is no longer the responsibility of the employer to offer casual conversion (as it was previously) – it is now the responsibility of the employee to make a written request to their employer.
5.2. Making a Notification
Casual employees will be able to notify their employer in writing of their intention to change to permanent employment if they:
- have been employed for at least 6 months (12 months if employed by a small business); and
- believe they no longer meet the requirements of the casual employee definition; and
- in the 6-month period before the notification date, the employee has not had a previous notification refused by the employer and/or has not been in dispute with the employer about casual conversion.
Please note if an existing casual employee wants to remain a casual employee, they are under no obligation to make a notification.
5.3. Responding to a Notification
Before responding the employer must:
- discuss the notice/request with the employee (eg. what would change, what their hours and entitlements would be and when the change would take effect); and
- respond in writing within 21 days of when the employee gave their notice.
If the employer accepts the change, the written response should confirm the following:
- the new employment status, (eg permanent part-time or full-time); and
- the new hours of work; and
- any changes to pay and entitlements; and
- when the change will take effect.
Do Employers have to accept a request/notice from an employee to change to permanent employment?
No, an Employer does not have to accept the notice if one or more of the following reasons applies:
- the employee still meets the definition of a casual employee; or
- there are fair and reasonable operational grounds for not accepting the notification, such as:
- substantial changes would be required to the way work in the employer’s business is organised
- there would be significant impacts on the operation of the employer’s business, or
- substantial changes to the employee’s employment conditions would be necessary to ensure the employer doesn’t break rules (such as in an award or agreement) that apply to the employee.
- accepting the change would mean the employer won’t comply with a recruitment or selection process required by law.
If an employer rejects an employee’s request they must ensure:
- they consult with the employee prior to responding in writing; and
- their written response provides detailed reasons why the request cannot be accepted; and
- they respond within 21 days; and
- they do not take any shortcuts to avoid having to accept written notices from employees to change to permanent employment (new avoidance penalties have been introduced to prevent this).
For example, Employers cannot change hours of work or terminate a casual employee just for the purpose of avoiding them requesting to become a permanent employee.
- Edwards HR recommends issuing a new employee agreement when an employee changes from casual to permanent.
Documenting these requests and responses can be tricky, so businesses should seek advice about their specific circumstances. The team at Edwards HR can help with all of your casual employment needs and questions.
6. When to give employees the Casual Employment Information Statement
Previously employers were only required to give new casual employees the Casual Employment Information Statement before, or as soon as possible after they have started employment.
Now employers must:
- provide to all new casual employees, and
- to casual employees at the following times during their employment:
- for small businesses (fewer than 15 employees) – after 12 months of employment;
- for other employers – after 6 and 12 months of employment, and then again after every 12 months of employment.
This statement is available on the Fair Work website – Here – and remember the info statements are regularly updated, so only print them as you need them to ensure you’re always providing the current version.
Make Things Easy! Each time a new casual employee starts, create a calendar reminder for when they are approaching their 6, 12-month anniversary & then an ongoing re-occurring reminder every 12 months, so that you can ensure you meet your obligations.
7. Penalties & Workplace Rights
New penalties have been put in place to prevent employers from trying to incorrectly engage casual employees.
This means employers must not:
- Dismiss or threaten to dismiss an employee with the plan to then re-engage them as casual; or
- Make false statements to convince an individual to enter a casual employment contract (for example, tell them they will be better off financially).
The general protections provisions of the Fair Work Act 2009 already prohibit any adverse action being taken against an employee because they have exercised a workplace right. This will now include an employee’s right to:
- issue a notification to become permanent;
- become permanent if their notification is accepted;
- take part in a dispute about changing to permanent employment.
8. Transitional Arrangements for Existing Casuals
There will be a period of transition between the current casual conversion pathways and the new employee choice pathway as set out below:
Offers by employers and requests for casual conversion
New Employee Choice Pathway
Existing Casual Employee’s (employed before the 26 August 2024)
Continue to apply for 6 months – (or for 12 months for small businesses)
Applies from:
26 February 2025 for all businesses with 15 + employees.
26 August 2025 – for small businesses.
Casuals employed on or after 26 August 2024
Doesn’t apply
Applies after 6 months (or 12 months for small businesses)
9. Action Employers Should Take Urgently
There are several actions employers should take with urgency to ensure they are meeting their obligations and mitigating associated risks.
Please note that there are many intricacies to these changes that may require guidance or clarification – you should contact the team at Edwards HR for advice specific to your circumstances.
- Familarise yourself with the new definition of a ‘Casual employee’ and refer to it:
- when employing new casual employees – will the new employee really meet the definition in practice?
- if an employee issues a notification/request to become permanent. Remember, you should not refuse a request unless you believe they still meet the definition of a casual employee or there are fair and reasonable operational grounds for not accepting the notification (as set out in section 5.3).
- Review your existing Casual employee arrangements – are you comfortable that they comply with the changes and that you are not at risk of penalties/unpaid entitlement claims.
- Update your current employment agreements to ensure they are in alignment with the changes and provide you with adequate commercial protection for your business.
For example, reference the new definition of a “Casual Employee” and include an appropriate set off clause.
- Itemise casual loading on payslips. It is still best practice to either note it as a separate line item, or include it in the base rate with a note that it is ‘inclusive of 25% casual loading’.
- Familiarise yourself with the Casual Employment Information Statement and provide a copy to all new casual employees, as soon as possible, after they start their job (along with the existing Fair Work Information Statement) and then again at 6 and 12 months of employment and then after every 12 months of employment (or just after 12 months of employment for small businesses).
- Understand the actions you need to take if an employee submits a notification under the employee choice pathway (as detailed in section 5).
- Consider a HR Health Check or tailored Compliance Audit by Edwards HR. More than 95% of businesses we speak with have at least two HR practices that are non-compliant with Australian employment legislation or a Modern Award. Let us help you understand your obligations and get you back on track. Read more here or contact us today.
10. If You Intend to Employ Casuals in Future
If you intend to employ casuals in future, these changes apply to you. Edwards HR recommends the following in your circumstances:
- Have an employment agreement professionally drafted to ensure it is compliant with the changes and provides adequate commercial protection for your business. Contact the team at Edwards HR for assistance.
- Ensure that the real substance, practical reality and true nature of the employment relationship once it starts, meet the new definition of a casual employee.
- Investigate and understand which Modern Award(s) apply to your team.
- Read and understand the penalties that are in place (Section 7) to make sure you are not at risk.
11. Consider a HR Health Check
The HR Health Check (audit) by Edwards HR is one of our most popular services.
It’s a compliance and best practice assessment of your current systems, practices and documents relating to 8 priority areas including pay/entitlements, contracts, recruitment/induction, contractors, policies, training, record keeping and injury management – and yes, it includes the casual employment obligations detailed in this Guide!
We also offered tailored audit services if there are specific areas you want to assess. For example, wages, Award and NES compliance.
For a simple, fixed fee, we’ll meet with you to conduct the assessment and provide plenty of practical guidance. Then afterwards, you’ll receive a written findings report, including our detailed recommendations.
It’s a very small price to pay when compared with the fines, disgruntled employees and reputational damage that come with getting it all wrong.
Contact our team on 07 3856 0866 to find out more and secure your spot!
12. Consider Training for Your Team
There are many obligations and laws that employers need to be aware of – it’s a headache – we know!!
Our training workshops have been developed by heavy industry professionals for heavy industry professionals (HR, payroll, supervisors, leaders, owners etc) to educate and improve skills and knowledge in the areas most businesses have trouble with.
We cover topics such as payroll foundations, salaries and flat rates, IR reforms, culture and retention, respectful workplaces, and more! Check out our Workshops calendar here, and take your skills and your business to the next level!
Edwards HR is here to assist you in complying with your obligations and creating a safe, respectful workplace. If you need help with policy updates or team training, please do not hesitate to reach out.
Stay up to date with all the upcoming changes via our Linkedin or sign up to our ‘Employer Update’ newsletter.
For more guidance about this update, or to find out how Edwards HR can support your business, contact our team today on 07 3568 0866.
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