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New Standards on Casual Employment

by | May 12, 2021 | Uncategorized

On Friday 26 March 2021, the Fair Work Act 2009 (FW Act) was amended to change workplace rights and obligations for casual employees. The changes were made by the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Amendment Act).

These changes came into effect on Saturday 27 March 2021. However, the Government decided to make different rules for small business employers (those with less than 15 employees) and larger business employers (those with 15 or more employees) including different action dates. In the latter case, some of the changes are deferred until 27 September 2021.

Background

Over the past few years, there have been some decisions made in relation to casual employment in the Federal Court that have caused alarm among employer groups and the Federal Government. 

In these decisions, the Court ruled that the casual employees in question were not really casuals because they had regular and systematic employment and a reasonable expectation of continuing employment. That meant that these continuing employees would have entitlements to paid leave even though they had nominally received a casual loading in compensation of paid leave, notice of termination, public holidays and redundancy entitlements.

This legislation was introduced to clarify what a casual employee is and to eliminate the potential for double dipping on casual loading and paid leave entitlements.

What are the changes?

New casual employee definition

The FW Act has been amended to include a new definition of a casual employee.

Under the new definition, a person is a casual employee if they accept a job offer from an employer knowing that there is no firm advance commitment to ongoing work with an agreed pattern of work.

Once employed as a casual, an employee will continue to be a casual employee until they either:

  • Become a permanent employee through casual conversion or accepting an offer of full-time or part-time employment, or
  • Stop being employed by the employer

New Casual Employment Information Statement

From 27 March 2021, all new casual employees have to be provided with a Casual Employee Information Statement (CEIS) in addition to the Fair Work Information statement before or as soon as possible after commencing employment.

These two statements now form a National Employment Standard which is not negotiable.

For existing casual employees as at 27 March 2021:

  • Small business employers need to give their existing casual employees a copy of the CEIS as soon as possible after 27 March 2021. 
  • Other employers have to give their existing casual employees a copy of the CEIS as soon as possible after 27 September 2021.

New National Employment Standard on Casual Conversion

Various rights and obligations come into play once a casual employee:

  • Has worked for their employer for 12 months
  • Has worked a regular pattern of hours for at least the last 6 months on an ongoing basis
  • Could continue working those hours as a permanent employee without significant changes

In the case of a small business employer:

  • There is no obligation to make an offer of casual conversion at any time
  • An eligible employee (i.e. a casual employee who satisfies the above 3 conditions) can apply for casual conversion at any time from 27 March 2021 onwards

In the case of a larger business employer, for any casual who meets the above 3 conditions, the employer must either:

  • make a written offer of casual conversion before 27 September 2021 or within 21 days of the employee’s 12 month anniversary whichever is later or
  • advise the employee in writing within 21 days that they are not eligible for conversion or there are reasonable business grounds for deciding not to make the offer.

If a larger business employer elects not to offer conversion to a casual employee, the employee can request conversion in writing and the employer has to respond in writing within 21 days.

What happens if the matter is in dispute? 

If a casual employee is aggrieved by a decision by their employer not to offer casual conversion or not to agree to a request for casual conversion, the matter can be taken to the Fair Work Commission in line with the provisions in the relevant award or enterprise agreement or directly to the Federal Court.

If there is an employment agreement that contains a dispute resolution procedure, that procedure could also be used.

Interaction with awards  

Most modern awards include casual conversions which are typically one of two types:

  1. Trades, manufacturing, construction and some other awards have long had casual conversion provisions which require an employer to make a written offer of casual conversion to full-time or part-time employment to any casual employee who is engaged on a regular and systematic basis for 6 months or more.
  2. A couple of years ago, a different standard casual conversion provisions was inserted into most other modern awards. This provides the ability for a casual employee to request conversion to full-time or part-time employment after 12 months regular and systematic employment. 

A modern award can provide different but no less beneficial entitlements than those prescribed in the Fair Work Act/National Employment Standards.

For the moment, it appears that the new National Employment Standards governing the CEIS and casual conversion apply alongside the casual conversion provisions in modern awards meaning that there are two different sets of rules applying at the same time. 

For example, if I have a business in construction or manufacturing and I have a casual employee who has completed 6 months regular and systematic employment, I have an award obligation to make a written offer of casual conversion now.

Under the new legislation, if I have less than 15 employees, I don’t have to make an offer at all and if I have 15 or more employees, I don’t have to consider making an offer until the employee has completed 12 months service.

The Fair Work Commission has initiated a process to review all casual conversion clauses in modern awards with the aim of completing that before the 27 September 2021 action date for larger employers.    

Conclusions

  1. Subject to the outcomes of future court cases and precedents to be set, the legislation appears to have addressed the biggest elephant in the room – that of the potential for double dipping on casual loading and paid leave entitlements.
  2. If, like in the court decision that led to this legislation, a nominal casual employee is found not to really be a casual, they will now not be able to retrospectively claim paid leave entitlements if they have been paid a casual loading.
  3. There appears to be plenty of “wriggle room” for employers to claim reasonable business grounds for not offering or agreeing to casual conversion.
  4. The Federal Government has done a terrific job of making a complicated compliance requirement even more complex for businesses to understand and manage and the different action dates for small business employers and larger business employers don’t make any sense and actually add a further complication for any business which may float around the 15 employee mark with different obligations if they drop below 15 employees at any point in time.
  5. One thing we can expect is a rise in the incidence of General Protections complaints of adverse action for employers who interrupt regular patterns of work purely for the purpose of disrupting any potential claim for casual conversion. Interestingly, we have seen evidence of some legal firms suggesting that that is what their clients should do to avoid the exposure to requests for casual conversion.
  6. All employers should review their employment contracts to ensure that the basis of engagement as a casual is clear including that there is specific notation of the casual loading and the value/amount of that and that there is “no firm advance commitment to ongoing work with an agreed pattern of work”
  7. If your business is covered by an enterprise agreement, you should obtain advice as to how this legislation and relevant modern award provisions impact on your enterprise agreement and your business.

If you need assistance with any of this, please do not hesitate to contact us at enquiries@ridgelinehr.com.au

 

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