Published May 2021

The long-awaited IR reforms of 2021 have now passed through parliament and are in full effect under the Fair Work Amendment Act 2021.

The reforms have passed through in a significantly reduced form to what was originally proposed by the Morrison government some 6 months ago.

KEY CHANGES FOR EMPLOYERS TO BE AWARE OF

A Clear Definition of Casual Employment

An individual will be considered a casual employee when an offer of employment “is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work…”.

The person must accept the offer on that basis and be an Employee as a result of acceptance.

The assessment of the definition takes place at the offer and acceptance of employment stage and relies on what is noted in the employment contract.

Casual Conversion After 12 months (not applicable for small businesses with fewer than 15 Employees)

The changes require Employers to make an offer of permanent employment (full time or part time, depending on the pattern of hours worked) to casual Employees, within 21 days of the Employee reaching 12 months of employment in the following circumstances:

• They have been employed for 12 months;
• They have worked a regular pattern of hours for at least the last 6 of those months on an ongoing basis; and
• They could continue working those hours as a permanent Employee without significant changes.
  
  

If there are reasonable business grounds for the Employer to not make an offer of permanent employment, the Employee must be notified in writing of the intent not to offer and the associated reasons, within the same timeframe.

Where an Employee rejects an offer of permanent employment under the casual conversion provisions or no offer is made by the Employer on reasonable business grounds, the employee generally does not have any future right to request permanent employment.

It should be noted that prior to these changes, Employees had the right to request a conversion to permanent employment. However, the obligation will now rest with the employer to make a proactive offer regardless of whether it is requested by the Employee (where it is required by the circumstances as listed above).

Casual Conversion for Small Business

The Fair Work Act 2009 defines a small business as having fewer than 15 Employees.

The casual conversion requirements noted above do not apply to small businesses. However, casual Employees of small businesses do have the right to request casual conversion upon reaching 12 months of employment if they satisfy the pattern of hours requirement.

Casual Loading Offset (no more double-dipping)

Where a court determines that a casual Employee should have been permanent, any back payments or entitlements owing to them (for annual leave, public holidays etc), will be reduced (offset) by the 25% casual loading already paid to them.

New Casual Employment Information Statement

The new info statement must be provided to all new and existing casual Employees in addition to the Fair Work Information Statement you should already be providing. This is available on the Fair Work website – here.

A complete summary of the changes can be found on the Fair Work Ombudsman website – here.

WHAT DO I NEED TO DO NOW?

Understand this important legislative change and how it impacts your business.

Provide all new and existing casual Employees with a Casual Employment Information Statement in addition to the Fair Work Info Statement (note that the Fair Work Info Statement has also been recently updated to reflect these changes).

Review and update your employment contracts to ensure they align with the changes (namely, the new definition of “casual Employee” and an appropriate setoff clause).

Review your HR processes to ensure that you are alerted each time a casual Employee approaches 12 month of employment, in order to assess whether a permanent offer of employment should be made (if not, comply with the separate notification requirements).

For small businesses, be prepared to respond to requests from Employees to convert to permanent employment.

While this legislation is a welcome change, it also contains many intricacies which may require clarification.