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In 2021, the Fair Work Act 2009 was amended to insert a definition of ‘casual employment’ along with minimum rights for employees to request conversion from casual to permanent employment in some circumstances.
Among the many changes being introduced by the Albanese Government, there will be further changes for employers in relation to casual employment in 2024.
On 26 August 2024, a new definition of casual employment and new pathway to permanent employment takes effect.
This change addresses one of the key concerns about the current definition, where the new definition will now consider the true practical reality of the employment relationship as opposed to merely the terms in the employment contract (which is effectively how it works right now).
New ‘Casual Employee’ Definition
From 26 August 2024, the new definition of ‘casual employee will consider the practical reality of the employment relationship, as opposed to merely the terms in the employment contract.
Under the new definition, an employee will be casual if:
- there isn’t a firm advance commitment to continuing and indefinite work, taking into account a number of factors, including the real substance, practical reality and true nature of the employment relationship; and
- they’re entitled to receive a casual loading or specific casual pay rate.
Some of the relevant factors for consideration under the new definition include:
- the likelihood of future availability of continuing work, give the nature of the business;
- whether there are full or part time employees performing the same kind of work;
- whether there is a regular pattern of work;
- whether the employee can accept and reject work;
- the employer can offer or not offer work.
The assessment will consider the real substance and true employment relationship, and not a single factor in isolation such as the contract of employment signed at the time of the offer.
For example, an employee might specify he can only accept casual shifts on Thursday, Friday and Saturday nights, and in fact is only offered shifts at these times. However, if the employer makes it clear in the contract that there is no firm advance commitment to continuing and indefinite work in the business, then the employee is likely to be correctly classified as a casual within the meaning of the Fair Work Act.
Note that casuals employed before 26 August 2024 remains casual under the new definition, until they change to permanent.
Changes to Casual Conversion
Casual conversion is the process of converting an individuals’ casual employment to permanent employment. Permanent employment may be full-time or part-time, depending on the number of hours worked by the employee.
Currently offers should be made and/or accepted in most circumstances if:
- The employee has been employed for 12 months; and
- The employee has worked a regular pattern of hours on an ongoing basis for at least the last 6 months; and
- No significant changes need to be made if the employee is to continue working their hours as a full-time or part-time employee.
Casual conversion is the process of converting an individuals’ casual employment to permanent employment. Permanent employment may be full-time or part-time, depending on the number of hours worked by the employee.
Currently offers should be made and/or accepted in most circumstances if:
- The employee has been employed for 12 months; and
- The employee has worked a regular pattern of hours on an ongoing basis for at least the last 6 months; and
- No significant changes need to be made if the employee is to continue working their hours as a full-time or part-time employee.
These rules are being replaced by a new pathway to permanent employment.
The new pathway from 26 August 2024 means the requirement for employers to proactively offer permanent employment ceases.
It involves an eligible employee being able to notify their employer of their intention to change to permanent employment if the employee:
- has been employed for at least 6 months (or 12 months if working for a small business employer);
- believes they no longer meet the requirements of the new casual employee definition.
Employees can’t notify their employer of their intention to change to permanent employment if they:
- are currently engaged in an ongoing dispute with their employer about casual conversion, or
- in the last 6 months:
- their employer refused a previous notification
- they’ve resolved a dispute with their employer about casual conversion.
Before responding to the request, the employer must consult with the employee (verbally) and respond in writing within 21 days.
There are still grounds acceptable for refusal by the employer, provided that the correct process has been followed, including if:
- the employee still meets the definition of a casual
- there are fair and reasonable operational grounds for not accepting the notification, including:
- substantial changes would be required to the way in which 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 reasonably necessary to ensure the employer doesn’t break any rules (such as in an awardor agreement) that would apply to the employee.
- accepting the change means the employer isn’t complying with a recruitment or selection process required by law.
From August, The Fair Work Commission (FWC) will have the power to determine, by mandatory arbitration, whether an employer had reasonable grounds to refuse to make an offer or decline a request for casual conversion.
Casual Employment Info Statement
Employers will still need to provide the Casual Employment Information Statement to casual employees at the start of their employment – but also at 6 and 12 months and the anniversary of the employee’s start date thereafter. Small business employers only need to give the statement at the end of the first 12 months.
These changes are significant for employers and there are things employers should be actioning to ensure compliance.
If you would like advice about how these changes will affect your business or would like to understand how we can support your compliance and risk mitigation efforts, Edwards HR are more than happy to help – please contact our team on 07 3568 0866.
For more information about the changes, you can view updates on the Fair Work Ombudsman website.
Stay up to date with all the upcoming changes via our Linkedin or sign up to our ‘Employer Update’ newsletter.
For more information about the changes, you can view updates on the Fair Work Ombudsman website here.
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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