In March of 2021, an Amendment to Supporting Australia’s Jobs and Economic Recovery Bill was passed in Parliament.
The new Bill seeks to resolve problems arising from the misclassification of employees as casual workers by their employers. The key issue this can cause is the misclassified employees missing out on leave entitlements they would ordinarily be entitled to if they were permanent employees.
What will change under the Bill?
The changes will impact every business in Australia that employs a casual workforce. Some of the most significant changes include:
A new statutory definition of ‘casual employee’
A ‘casual employee’ will be classified as such if their offer of employment does not promise regular work and the employee accepts the offer with that understanding.
Where the offer of employment does not make a firm advance commitment of regular work, casual employment will be determined by:
- the employee’s freedom to accept or reject work;
- whether the description of the employment in the employment contract is ‘casual employment’;
- whether the employee will receive a casual loading; and
- whether the employee will only be offered work to coincide with the needs of the employer.
The new statutory definition of a casual employee is also unambiguous in providing that a regular pattern of hours does not construe a firm advance commitment to continuing and indefinite work. i.e. if a genuine casual employee was offered regular work over a busy, three month period, this should not be seen as an offer of permanency.
An employers obligation to offer casual employees permanent employment
If an employee has been employed on an ongoing basis for 12 months, with a regular pattern of hours on an ongoing basis for the last six months of that period, and they can continue to undertake those hours on a full or part-time basis, then the employer has an obligation to offer that employer a permanent position. This obligation does not exist if there are reasonable business grounds not to offer permanency.
This obligation does not apply to small businesses (i.e. those employing less than 15 workers).
Similarly, a casual employee will be entitled to request a conversion to permanent employment after a period of 12 months of ongoing employment. However, the request must meet the following requirements:
- the employee must not have refused a conversion offer from their employer in the preceding six months; and
- the employer must not have, within the previous six months, given the employee notice that it has either refused a conversion request or decided not to make an offer of conversion on reasonable business grounds.
An employer may only refuse a conversion request if there are reasonable business grounds to refuse the request.
A requirement to provide casual employees with an information statement regarding their employment
Employers are already obligated to provide employees with a Fair Work Information Statement during onboarding. The Casual Employment Information Statement will be a similar statement that is prepared by the Fair Work Ombudsman and must be provided to casual employees before or during the onboarding process.
What do employers need to do to meet compliance?
It would be prudent of employers to review the work arrangements they currently have with casual employees to determine their eligibility for conversion to permanency. Existing template contracts should be updated to ensure they are drafted in a way that complies with the new obligations.
Additionally, employers will also need to develop and implement processes that comply with their new obligations, such as if they refuse a request for conversion. The business may need to consider developing a dispute resolution process that can be commenced prior to the matter being taken up with the Fair Work Commission.
Converted employees will be considered ‘permanent employees’ and laws, industrial instruments and employment contracts relating to permanent employees will be applicable to their employment.
Where enterprise agreements containing conversion provisions exist, employers should also seek advice about how those provisions will be interpreted under the new Bill and whether attempts need to be made to resolve any ambiguity.
Employers will be prohibited from certain actions that may be seen as trying to avoid the new obligations they face. These actions include terminating an employee or reducing or varying their hours of work.
If your business currently employs casual staff and you need assistance navigating what the new Bill means for your organisation, contact Cairns Employment Lawyers today.