Legal Insights

The casual landscape: The Government’s IR Reform Act – and what you need to know about changes to casual employment

By Vanessa Andersen, Lindy Richardson

• 28 April 2021 • 7 min read
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The highly anticipated industrial relations reform legislation finally passed both Houses of Parliament last month. It has been well-publicised that negotiations with the crossbench resulted in the Government dropping most of its reform agenda. Now that the dust has settled, we take a comprehensive look at the issues leading to reform, the aspects of the IR Reform Bill that were removed, those that remain in the new amending Act and what will be required going forward. The changes came into effect on 27 March 2021, with some requirements having immediate effect and others coming into effect after a transitional period on 27 September 2021.

In a snapshot

From 27 March 2021:

  • Definition of casual (and set-off provisions) changed.
  • Small business employers must provide the Casual Employment Information Statement (CEIS) to all new and existing casual employees as soon as practicable.
  • Eligible casual employees of small business employers can request casual conversion.
  • All other employers must provide the CEIS to all new casual employees as soon as practicable.

From 27 September 2021:

  • All other employers must provide the CEIS to all existing casual employees as soon as practicable.
  • All other employers must offer casual conversion to eligible casual employees.
  • Eligible casual employees of all other employers can request casual conversion.

‘Gutting’ of the Reform Bill

As originally put before Parliament, the Bill included proposals for wide-ranging reform across five areas:

  • casual employees
  • modern awards
  • enterprise agreements
  • greenfield agreements
  • compliance under the banner of wage theft.

Faced with substantial opposition from Labor and the Greens, the Government had to consult and negotiate extensively with crossbench senators to secure the Bill’s passage through the Senate. Ultimately, the Government was forced to cut four of the five areas.

The only reforms that did pass were those concerning casual employees. The Act as passed, seeks to address recent confusion surrounding casual employment, including providing clarity as to when a casual is a casual, preventing 'double-dipping' of casual entitlements and more.

What was the issue with casuals again?

The Full Court of the Federal Court’s decision in WorkPac v Rossato [2020] FCAFC 84, highlights the confusion and uncertainty surrounding the definition of a casual employee. For almost three and a half years, Mr Rossato was engaged in employment with a labour hire company on a casual basis and was entitled to casual loading. However, his work was ‘regular, certain, continuing, constant and predictable’ and the Court found that he was not a ‘true’ casual worker and should have been classified as a permanent employee.

Mr Rossato was entitled to retain all casual loading payments in addition to compensation for all leave entitlements that he did not receive. For further guidance on this case, please refer to our related article here.

The new landscape

Definition of casual

A person will now be a casual employee if an offer of employment is made to the person on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person, and the person accepts the offer on that basis.

Whether an employer makes 'no firm advance commitment' under this definition is to be determined only, by whether the:

  • employer can elect to offer work and whether the person can elect to accept or reject work
  • person will work only as required
  • employment is described as casual employment
  • person will be entitled to a casual loading or a specific rate of pay for casuals under the terms of the offer or a fair work instrument.

Subsequent conduct is excluded from the relevant considerations when making this assessment.

The Fair Work Act 2009 also has a new definition of ‘regular casual employee’ and the definition of ‘long term casual’ has been repealed.

Offset of casual loading amounts

If, in circumstances like those in the WorkPac v Rossato case, a Court finds that an employee has been misclassified as a casual employee and paid casual loadings when the employee was in fact permanent, the Court now must reduce the amount payable for their unpaid entitlements by the amount of loading previously paid. In order to benefit from these provisions, employers need to draft offers and contracts of employment carefully – casual loadings must be identifiable amounts clearly directed to compensating the person for not being able to enjoy entitlements normally applicable to permanent employees.

Interestingly, these provisions also have retrospective application to cover periods of employment, entitlements accrued and loadings paid prior to the commencement of the provisions.

Conversion to permanent employment - a new National Employment Standard entitlement

Under the changes, employers (that are not small businesses) will be required to offer casuals conversion to permanent employment after 12 months of employment, where in the previous six months the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time or part-time employee.

The employer must give the offer within 21 days of the 12-month anniversary, and the employee must accept or decline the offer within another 21 days.

An employer will be excused from making an offer where there are reasonable grounds not to make the offer. Reasonable grounds may include where:

  • the employee’s position will cease to exist in the following 12 months
  • the employee’s hours of work will be significantly reduced in the following 12 months
  • where there will be significant changes to the days or times of the employee’s work which cannot be accommodated by the employee.

After the initial 12-month period, if they haven’t received an offer from their employer, an eligible casual employee can request to convert to permanent employment from 21 days after their 12 month anniversary, but effectively requests can only be made every six months.

A dispute may be referred by either party to the Fair Work Commission for mediation or conciliation (and there is already a new Form F10A to deal with such a dispute), however the Commission may only arbitrate by consent of both parties. The Australian Council of Trade Unions has raised some concerns that there are no formal rights of enforcement.

Importantly, this is a new National Employment Standard entitlement meaning that any terms of an enterprise agreement (or indeed a modern award) that exclude the new provisions will have no effect (although terms that are the same, ancillary, incidental or supplement them will remain in effect). The Commission has been given powers to resolve uncertainties and difficulties relating to the interaction between an enterprise agreement and the new provisions (noting that the Commission can exercise these powers retrospectively).

Employers need to assess whether any of their existing casual employees employed before 27 March 2021 are eligible to be offered conversion to casual employment by 27 September 2021. Eligible casual employees of small businesses already employed can make a request from 27 March 2021, and from 27 September 2021 requests can be made to all other employers.

Casual Employment Information Statement

The changes also introduce a requirement for employers to give each casual employee the CEIS before, or as soon as practicable after, the employee starts employment as a casual employee with the employer. The CEIS is only required to be given once every 12 months. Small business employers need to give their existing casual employees a copy of the CEIS as soon as possible after 27 March 2021 and all other employees must give the CEIS to casual employees as soon as possible after 27 September 2021.

There will be more to come – so watch this space

The President of the Commission, Justice Ross, has recently issued a statement about the amendments. This discusses the new provisions, the Commission’s new powers as well as the review of modern awards. You can read the statement here.

Despite dropping the majority of the proposed reforms to get the amendments regarding casuals through the Senate, the Attorney-General's Department's head has told a Senate Estimates hearing that the Government remains committed to advancing those reforms.

What is more, a High Court challenge could be in the works, with the law firm behind multiple class-actions alleging misclassification of workers questioning the constitutionality of retrospectively allowing employers to offset casual loading amounts against unpaid leave entitlements of workers subsequently found to be permanent.

Want more information regarding changes to casual employment?

Contact our Employment, Safety & People team

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