Previous bulletins have canvassed the implications of the new amendments to the Fair Work Act 2009 (Cth) (FW Act) regarding casual employment. The question for employers is to determine what needs to be done in the short-term to implement these changes.
How to prepare for the changes
The new casual conversion scheme provided in the FW Act National Employment Standards (NES) does not apply until 27 September 2021. This gives you the opportunity to assess all existing casual employees (whether they fall within the new FW Act casual definition or not) against the conversion criteria and either:
- offer conversion to all eligible casual employees (unless the employer has reasonable grounds not to); or
- provide a notice to any employee who is not offered conversion that includes the reasons the employer has not provided the offer.
It’s important to appreciate that the NES casual conversion scheme differs from most existing casual conversion obligations in awards and enterprise bargaining agreements. The new scheme obliges you to make casual conversion offers to eligible employees (in the absence of reasonable grounds not to do so), rather than simply respond to requests from casuals to convert. The residual right to request will become available to your existing casual employees who are eligible after 27 September 2021.
To be eligible for NES casual conversion rights, a casual employee needs at least 12 months of employment with you, with 6 of those months being a regular pattern of hours on an ongoing basis, meaning the employee could, without significant adjustment, continue to work as a permanent employee. For the purposes of determining eligibility, you count periods of employment starting before, on or after 27 March 2021.
The new statutory definition of casual employee applies on and after 27 March 2021 to offers of employment given before, on or after 27 March 2021. Therefore, if your existing casuals have accepted an offer of casual employment on the basis that you make no firm advance commitment to continuing and indefinite work according to an agreed pattern of work, then that casual will be caught by the definition. You determine this by looking at the terms of the initial offer and acceptance of employment, whether they be formally or informally given, in writing or verbally.
What to do if an employee declines to convert
What do you do with an existing casual that declines to convert but is assessed to be outside the FW Act definition of casual employment?
You have two options:
- Do nothing and rely on the new FW Act provision for you to set-off casual loading paid against claims by casuals for paid leave, notice and redundancy pay entitlements that accrue, and loading amounts paid. This applies to entitlements that accrue, and loading paid before and after 27 March 2021. You can also rely on the set-off provision for claims made by former employees.
- Indicate that you will only make future offers of casual employment on the basis that you make no firm advance commitment to continuing and indefinite work according to an agreed pattern of work. Ideally, this will be achieved by making a new written offer to the employee, and only offer employment if they accept the new offer (which can be done in writing or by turning up to work without objection). This only works if you accept that each offer and acceptance of a casual engagement constitutes a separate and discrete employment relationship (given the question of whether an employee falls within the casual definition is assessed at the time of offer and acceptance of employment, and subsequent conduct is irrelevant). You also need to avoid a situation where you are in effect dismissing the employee because they decline to accept the varied basis upon which the employment is being offered. This may expose you to general protections or unfair dismissal claims.
What else will you need to do?
Existing casual employees, regardless of whether they are caught by the new FW Act definition, must receive a Casual Employment Information Statement as soon as practicable after 27 September 2021.
In the meantime, you need to monitor the Fair Work Commission (FWC) review of all modern awards, and take into account any variations of award terms made by the FWC to make them consistent with the new statutory definition of casual employee and the casual conversion NES.
You should also review any enterprise agreements covering your employees and determine whether they make provisions inconsistent with the new statutory definition of casual employee or the casual conversion NES. The FWC has been given power to vary these enterprise bargaining agreement provisions, on application, to resolve any uncertainties or difficulties relating to how the agreement interacts with the new statutory provisions, or to make the agreement operate effectively with those provisions. These amendments can only operate prospectively.