Important legislation changes to employment of casuals
While employing casuals is vital for many businesses, with changes in legislation from 26 August it will get more onerous and more risky for employers to engage casuals, particularly those working regular shifts for longer periods of time.
It is essential that employers are aware of these changes before the legislation takes effect.
Overview
Many employees may no longer meet the new definition of ‘casual.’
Employers are no longer required to offer casual conversion, however employees can request it.
New civil remedy provisions (modelled on current sham contracting provisions) will be in place should employers misrepresent work as casual work, when the role should be offered under a permanent employment arrangement.
Issuing Casual Employment Information Statements (CEIS) will be more complex for employers. Not doing so, could enable employees to claim additional benefits on the basis that they were undertaking work that should have been classified as permanent.
The definition of a ‘casual’ will be more broadly defined
Under the Fair Work Act definition, an employee will only be considered a casual if:
there isn’t a firm advance commitment to continuing and indefinite work (taking into account a number of factors such as those outlined below)
the employee is entitled to receive a casual loading or specific casual pay rate.
Whether there is a firm advance commitment to continuing and indefinite work needs to be assessed on the ‘real substance’, ‘practical reality’ and ‘true nature’ of the employment relationship and several other factors such as whether:
The employer can demonstrate the practice of offering, and not offering work to the employee
The employee is able to accept or reject work
It's reasonably likely there will be future work available to the employer’s business, based on the nature of the business
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
The employee has a regular pattern of work.
The above isn't a full list and other factors may apply.
For example, even if a casual has a regular work pattern for a period of time, but work hours may not be able to be guaranteed in the future, offering a role as casual could be appropriate.
On the other hand, if a person’s employment is going to be ongoing, regular and expected to continue in the future, they may not be considered to be a casual at all so offering them work as a casual could potentially breach employment laws.
The same applies to a person who is offered permanent work but prefers to work as a casual. Offering that role as casual to accommodate an employee’s personal preferences could breach employment laws.
Employees can now initiate the casual conversion conversation
Under the new legislation, employers are no longer obliged to offer casuals conversion to permanent employment as they did in the past.
Instead, the onus has shifted to employees to notify employers that they no longer meet the definition of a casual and therefore should be permanent employees. Employees can request this discussion after 6 months employment (or 12 months for employers defined as a small business). Further applications can be made at 6 monthly intervals.
An employer must respond to an employees casual conversion request within 21 days.
The employer can refuse the change if any of the following apply:
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 Award or Enterprise 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.
Employees who start as casuals
Employees who start as a casual, will stay casual until their employment status changes either through:
A conversion process
Fair Work Commission order, or
Accepting an alternative employment offer and starting work on that basis.
Casual Employment Information Statement (CEIS)
After 26 August, employers will need to provide casuals with a copy of the CEIS at the commencement of their employment, as well as at the 6 and 12 month mark of ongoing employment, then annually thereafter.
Small businesses (that is with less than 15 employees), only need to provide this statement as soon as possible after the first 12 months of ongoing employment.
What should employers do now?
Ensure new roles are correctly classified and casual roles are not offered to employees unless they meet the new definition.
Assess the nature of employment for each of your existing casual staff. If their role no longer meets the new definition, we recommend employers consider initiating a casual conversion offer in writing to your employee on this basis. Ask for their response in writing and document all communications relating to this conversation.
Update your casual employment contracts and internal policies to reflect the new laws.
Contact HRplus for updated casual employment contracts and templates to use when communicating a conversion decision to employees.
Subscribe to updates through the Fair Work Ombudsman website as Fair Work are currently considering including additional terms regarding casual employment in awards.
Put a notification alert in your payroll system to provide the CEIS at the required milestones listed above. The updated CEIS will be available via the Fair Work Ombudsman website.