In Plain English – Fair Work Act Changes re Casuals

The 5 recent changes to the Fair Work Act regarding casual employment

So let’s get you clear on each of the 5 changes to the FW Act that were passed by Parliament mid-March 2021. To do this I have recorded 5 separate short videos with each video explaining one of the 5 changes in plain English. The transcript is below each video for those who prefer to read it.

In each of these 5 short videos I’m going to give you: 

  1. A brief overview of the change plus.
  2. The practical steps you need to take and when.

So here are the 5 changes:

1. New definition of casual employment – In video #1 I will take you through the new statutory definition of casual employment and what this means for your workforce and what you the employer need to do now.

2. Introduction of a Casual Employment Information Statement (the CEIS) – In video #2 I’ll explain the new requirement to issue the Casual Employment Information Statement to your existing and future casuals.

3. New casual loading offset provision to avoid double dipping – In video #3 I’ll explain the changes to “double-dipping” laws for when casuals who feel they’ve been misclassified, seek to claim payment for permanent entitlement’s, and I’ll take you through what you need to do to benefit from this protection.

HR Tactics HR Consultants Brisbane - In Plain English – Fair Work Act Changes re Casuals

4. A new requirement for some businesses to “offer” casual conversion [>=15 employees only] – In video #4 I’ll explain this new requirement to now “offer” permanent employment to casual employees after 12 months of employment IF you employ 15 or more employees. And I’ll explain and the steps you need to follow to be compliant here.

5. Small claims procedure for casual conversion disputes –  I’ll explain what this change means for your business.

So from here you can watch the next 5 videos in any order you wish (or read the transcript below each video) and if you have any questions about how the information relates to your business then just reach out to us. There are multiple ways you can get your question answered by us:

  • Send us a message through our website contact us page.
  • Send us your question through our HR Q&A section on the front page of our website.
  • Using the phone number on our website.
  • Or email me directly and that email address is on our website.

EXPLAINED: New definition of casual employment

Finally, we’ve been given a definition of a casual. The question of what makes a casual a casual has been a major cause of concern for employers, especially in recent years due to some court cases like Skene and Rossato.

So here we go – a person is now considered 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.

The way it’ll be determined whether, at the time the offer was made the employer made no firm advance commitment to providing ongoing work  with an agreed pattern, is by checking 4 things:

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

So it’s all about the nature of the “offer” that was “accepted” by the employee. The question of whether a person is a casual employee is now going to be assessed solely on the basis of the “offer” that was “accepted”, not on the basis of any subsequent conduct of either party

Ok I can hear you asking – so can I hire someone as a casual and still assign them a regular pattern of hours? the answer is yes. Because a regular pattern of hours does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work. 

And once the casual has been offered and accepted a casual position knowing that there is no firm advance commitment to ongoing work with an agreed pattern of work they will continue to be a casual employee until they either: 

  • stop being employed by the employer e.g. They resign or are terminated. 
  • they become a permanent employee which can happen by one of two ways – through: 
    • Casual conversion.
    • Are offered and accept the offer of full-time or part-time employment.

As an aside, they’ve also repealed the definition of ‘long term casual employee’ and introduced a new definition of ‘regular casual employee’. A regular casual employee is now defined in s.12 of the fair work act as a casual employee who has ‘been employed by the employer on a regular and systematic basis’. 

What has changed 

Unlike in the past, the casual employment relationship is now assessed at the point of offer and acceptance, not at all based on the nature of the employee’s ongoing work hours.  

What to do now 

Well, it’s all about your employment contracts. 

Because there has to be evidence that: 

1. an employer made an “offer” of employment stipulating that no firm advance commitment is being given to continuing and indefinite work according to an agreed pattern of work.

and  

2. that the person has “accepted” the offer knowing that there is no firm advance commitment. 

You now need to make sure your casual employment contracts or enterprise agreement clearly communicate this. 

So depending on what, if any, HR documentation you have in place that states the legal employment arrangement you have with your Casuals, you will need to take the following steps:

IS THIS YOU – don’t have employment contracts for your casuals – 1 thing to do

1. Get casual contracts drafted. 

OR IS THIS YOU – do already have employment contracts for your casuals – 2 things to do

1. Conduct a review of them and check for whether the wording in the casual employment contract. 

  • Meets the new definition.  
  • Communicates the 4 determining factors.
    • Whether the employer can elect to offer work and the worker can elect to accept or reject work. 
    • Whether the employer can elect to offer work and the worker can elect to accept or reject work. 
    • Whether the employer can elect to offer work and the worker can elect to accept or reject work. 
    • Whether the employer can elect to offer work and the worker can elect to accept or reject work. 
      • Which relevant entitlements the loading amount is compensating for.
      • The proportion of the loading amount attributable to each such entitlement.  

2. If the wording in your Casual Employment Contracts doesn’t comply then we strongly recommend that you draft an amendment or variation stating these points and have the employee sign it so that your casuals will now be legally defined and categorised as per the new definition and you have this legal document as evidence the position has been “offered” and that offer has been “accepted”. 

OR IS THIS YOU – Have an Enterprise Agreement – 2 things to do 

  1. Conduct a review of it and check for whether the wording: 
  • Meets the new definition.
  • Communicates the 4 determining factors 
    • Whether the employer can elect to offer work and the worker can elect to accept or reject work.
    • That the worker will work only as required according to the needs of the employer.
    • The employment is described as casual employment.
    • The worker will be entitled to a casual loading or a specific rate of pay under the terms stated in their contract, award or enterprise agreement.
      • Which relevant entitlements the loading amount is compensating for.
      • The proportion of the loading amount attributable to each such entitlement. 
  1. If the wording in your enterprise agreement doesn’t comply then we strongly recommend you make an application to vary your enterprise agreement using the new “Form F23C – application for the Commission to vary an enterprise agreement to resolve uncertainty or difficulty.”

EXPLAINED: The casual employment information statement (the CEIS)

The amendment act introduces a Casual Employment Information Statement (CEIS) which is to be given to all casuals. The CEIS can be downloaded from the fair work ombudsman website in word or PDF version. 

What to do now! 

All employers, small and large, regardless of the number of employees you have must now do the following 3 things.

1. Go to Fair Work Ombudsman site and download the CEIS. You can simply type CEIS in to the “search” field on the top right hand side of any of their website pages.

2. Give your existing casual employees a copy of the CEIS as soon as possible after 27 March 2021.

3. Amend your onboarding processes to now ensure that every new casual employee you hire from now on, receives a Casual Employment Information Statement (the CEIS) before, or as soon as possible after, they start their new job with you. 


EXPLAINED: New casual loading offset provision to avoid double dipping

This is the biggest relief for business owners! so, there’s a new casual loading offset provision that has been introduced to ensure wrongly classified casuals cannot double dip and be back paid entitlements as a permanent employee in addition to keeping the casual loading they’ve already been paid. We now have clarity as to what we employers must do to ensure no double dipping by casuals will be possible moving forward and no permanent entitlement claims which have already been made will stand up in court.

The way to avoid this is by having employment contracts in place with our casuals and those employment contracts stating some very particular things, which I will outline in a moment, and this will ensure that any past or future claims for permanent entitlements from that employee will now be offset against the casual loading that has been paid to that casual employee.

So this means that when an employee who has been described as casual, but through court proceedings it is determined that they are not casual, the court is now required to reduce any amounts that the employee could be entitled to by reference to casual loading amounts already paid by the employer to compensate for those entitlements. 

Let me just take a quick step back here for those of you who aren’t across the confusion that has existed in this space over the last few years – because the question of what makes a casual a casual has been a major source of uncertainty for employers in recent years due to some court cases like Skene and Rossato, there has been some instances where casuals have been able to claim they were not in fact casual because they had been performing such regular and consistent hours over time. And based on this and a number of other complexities which I won’t bore you with here, they were able to keep the casual loading they had been paid PLUS be back paid various entitlements that a permanent employee receives – essentially allowing them to “double-dip”. 

What has changed 

Now, employees whose employment contract states they are casual and states that the casual loading is a separate identifiable amount will remain so if, when they accepted the offer of employment, they were not committed to work in advance. This is now, regardless of whether the casual performs regular and consistent hours. In other words, regular and systematic casual employment will not of itself imply permanency. 

So this means we now have a way to avoid wrongly classified casuals from double dipping and being back paid permanent entitlements as well as getting to keep their casual loading they’ve been paid. 

Here’s the important part – You will only be able to avoid the double dipping situation where the employment contract states that the casual loading is a separate identifiable amount, paid in compensation for the employee not having at least one or more of the following entitlements:

  • Paid annual leave. 
  • Paid personal/carer’s leave.
  • Paid compassionate leave. 
  • Payment for absence on a public holiday. 
  • Payment in lieu of notice of termination.
  • Redundancy pay. 

I am also recommending to our clients that they also include the proportion of the loading amount attributable to each such entitlement. If you don’t know these amounts we can help you out with that. 

What to do now!  

There are 2 things you need to do to be able to access this new Casual Loading Offset Provision and avoid an incorrectly classified casual being able to claim permanent entitlements in the future: 

1. Give all casuals (existing and future) a copy of the casual employment information statement (CEIS). Just like you already give them the fair work information statement. Now you give casuals the CEIS as well. 

2. Put this new casual loading offset provision into your employment contracts or enterprise agreement asap to avoid double dipping so: 

IS THIS YOU – If you don’t have employment contracts for your casuals

1. Get casual contracts drafted that clearly state: 

  • The relevant entitlements the loading amount is compensating for.
  • The proportion of the loading amount attributable to each such entitlement. 

OR IS THIS YOU – If you do already have employment contracts for your casuals

1. Check if their employment contract states somewhere the relevant entitlements the loading amount is compensating for and the proportion of the loading amount attributable to each such entitlement.  

2. And if not – draft an amendment or variation and have the employee sign it. 

OR IS THIS YOU – If you have an Enterprise Agreement

1. You’ll need to review the wording to ascertain whether there is any ambiguity that the current wording is in conflict with the new casual conversion provisions.

2. If it is then you can make an application to vary their agreement using the new “Form F23C – application for the commission to vary an enterprise agreement to resolve uncertainty or difficulty.”

** And don’t forget as per our advice in our video on the new definition of casual employment, make sure the wording in your casual employment contracts: 

  • Meet the new definition.
  • Communicates the 4 determining factors.
    • Whether the employer can elect to offer work and the worker can elect to accept or reject work. 
    • The worker will work only as required according to the needs of the employer.
    • The employment is described as casual employment.
    • The worker will be entitled to a casual loading or a specific rate of pay under the terms stated in their contract, award or enterprise agreement.

EXPLAINED: A new requirement to “Offer” casual conversion [if have >=15 employees]

This change relates specifically to employers with 15 or more employees so if you have less than 15 employees then you just need to be ready to assess requests from your casuals.  

So this change passed by Parliament in March 2021 relates to a new entitlement being added to the National Employment Standards (NES) giving casual employees a pathway to become a permanent (full-time or part-time) employee. This is also known as ‘casual conversion’. So now the NES have 11 Standards, not 10. 

So if you do have 15 of more employees you are not deemed under the Fair Work Act to be a small business and therefore you are now required to do 2 things before September 27th 2021

1. Proactively provide a written offer to convert to full-time or part-time permanent employment, to all casual employees who: 

  • Have been employed for a period of 12 months beginning the day the employment started.
  • During at least the last six months of that period, have worked a regular pattern of hours on an ongoing basis.
  • Could continue working those hours as a permanent employee without significant changes.
  • Hold a position that is not due to cease to exist in the next 12 months.

Where:

  • The transfer to permanent would not result in: 
    • Hours of work they’re required to perform being significantly reduced.
    • A significant change in the days on which the employee’s hours of work are required to be performed.
    • A significant change in the times at which the employee’s hours of work are required to be performed which cannot be accommodated within the days/times the employee is available to work.
    • Non-compliance with a recruitment or selection process required by or under a Commonwealth, State or Territory law?

2. Respond to the employee in writing notifying the casual employee of the decision.

What has changed? Prior to this, the only pathway for a casual to convert to permanent was for them to submit a request to convert. However now, employers with 15 or more employees must proactively offer it. So if you have less than 15 employees nothing has changed –  you just continue with the casual conversion process stipulated in your Award whereby your Casuals are able to request to convert to permanent if they believe they are eligible.  

What to do – if you have 15 or more employees 

If you have 15 or more employees, you need to take the following 5 steps before September 27th 2021.

1. Ensure you have given all current casuals the CEIS and the FW Information Statement.

2. Check that you have an onboarding procedure set in place whereby: 

  • All new casuals are provided with the CEIS and the FW Information Statement and you have evidence it has been given.
  • A reminder alert is placed in the calendar for the 11th month anniversary of a new casual, so you will be reminded to assess their eligibility to convert.

3. Pick a date when you’re going to conduct your Casual Conversion Audit (eg. Sept 1st)

4. Conduct a Casual Conversion Audit of your existing casuals to assess their eligibility against the criteria above.  

FREE RESOURCE: If you’re unsure how to conduct this audit, you can use our  “Casual Conversion Audit Checklist” on the Fair Work Compliance Resources page of our website.

Here is an overview of the steps. 

STEP 1. Prepare 3 lists (eg. on paper or an Excel  spreadsheet) titled:

  • List #1. Eligible Casuals.
  • List #2. Ineligible Casuals – completed 12 months.
  • List # 3. Casuals not completed 12 months as at September 1st 2021.

STEP 2.  Look at the start dates of every casual employee and:

  • Place the names of those who have not completed 12 months employment with your business as at September 1st 2021 on to list #3 – Casuals not completed 12 months as at September 1st 2021.
  • Place a reminder in your calendar to alert you to the 12 month anniversary of each of those casuals on List #3 – Casuals not completed 12 months as at September 1st 2021 so that you will be reminded to reassess their eligibility at that time and notify them as per STEP 5 or STEP 6. You do not need to notify these casuals that they are not yet eligible and why. No communication is required at all. 

STEP 3.  Work through each remaining casual and ascertain which are “Eligible Casuals” and are to be placed on to List #1 – Eligible Casuals and which are “Ineligible Casuals” and are to be placed on to List #2 – Ineligible Casuals – completed 12 months.

“Eligible Casuals” are those who meet ALL of the following eligibility criteria: 

  • Have been employed for a period of 12 months beginning the day the employment started.
  • During at least the last six months of that period, have worked a regular pattern of hours on an ongoing basis.
  • Could continue working those hours as a permanent employee without significant changes.
  • Hold a position that is not due to cease to exist in the next 12 months.
  • Transferring them to permanent would not result in (non-exhaustive list): 
    • Hours of work they’re required to perform being significantly reduced.
    • A significant change in the times at which the employee’s hours of work are required to be performed which cannot be accommodated within the days/times the employee is available to work.
    • The employer having to make a significant adjustment to the employee’s work hours for them to be employed full-time or part-time.
    • Non-compliance with a recruitment or selection process required by or under a commonwealth, state or territory law.

STEP 4.  For those on List #1 – Eligible Casuals: 

  • Provide them a written offer to convert to full-time or part-time (permanent) employment (within 21 days) advising them:
    • They must respond to the offer in writing within 21 days after receiving the offer advising whether they accept or decline the offer.
    • That If they don’t respond within that timeframe, then you the employer can assume that they’ve declined the offer. 

STEP 5.  For those on List #2 – Ineligible Casuals – completed 12 months –

  • Consult/discuss with the employee that: 
    • Their employer has been exempted from the requirement to offer them the opportunity to convert to permanent, and on which of the criteria that exemption is based.  
    • That they will be notified in writing.
  • Provide notification in writing (within 21 days) advising them: 
    • That their employer has been exempted from the requirement to offer the opportunity to convert to permanent.
    • On which of the criteria that exemption is based.

STEP 6.  When you receive an acceptance in writing you must within 21 days:

  • Discuss the new permanent arrangements with the employee – the hours of work etc.
  • Convert them to permanent in your payroll system to commence within the next full pay period (or on another date as agreed between the employee and the employer).
  • Provide them with a Permanent Part Time/Full Time Employment Contract (or Letter of Appointment for businesses with an Enterprise Agreement).

When you receive a declined offer in writing you must within 21 days:

– Confirm in writing to them that you’ve received their decision to not convert.

When you don’t receive anything in writing you must within 21 days:

– Confirm in writing to them that as you have not received their response, you have assumed that they’ve declined the offer. 

5. Be ready to receive requests to convert from your casuals. On receiving a request you will need to work through a series of 4 steps I’m about to talk you through and you’ll need to take these steps within 21 days. These steps cover:

  • Assessing their eligibility.
  • Consultation.
  • Responding to their request.
  • Conversion if they are eligible.

FREE RESOURCE: If you are unsure how to manage requests for casual conversion you can download our step by step “Casual Conversion Request Checklist” on our Fair Work Compliance Resources Page.

But I’ll talk you through the 4 steps here:

STEP 1.  

– Use the eligibility criteria to ascertain if this casual is an “Eligible Casual” or an “Ineligible Casual”

“Eligible Casuals” are those who meet ALL of the following eligibility criteria:

  • Have been employed for a period of 12 months beginning the day the employment started.
  • During at least the last six months of that period, have worked a regular pattern of hours on an ongoing basis.
  • Could continue working those hours as a permanent employee without significant changes.
  • Hold a position that is not due to cease to exist in the next 12 months.
  • Transferring them to permanent would not result in: 
    • Hours of work they’re required to perform being significantly reduced.
    • A significant change in the days on which the employee’s hours of work are required to be performed.
    • A significant change in the times at which the employee’s hours of work are required to be performed which cannot be accommodated within the days/times the employee is available to work.
    • Non-compliance with a recruitment or selection process required by or under a commonwealth, state or territory law.

– If the casual is deemed eligible based on the above, then move on to step 2.

– If the casual is NOT deemed eligible based on the above, then move on to step 4.

STEP 2.  

For those Eligible Casuals you must do the following within 21 days:

– Ask yourself whether in the last 6 months:

  • They’ve refused an offer from you to convert to permanent employment.
  • They’ve been told by you in writing that you won’t be making an offer of casual conversion because there was a reasonable ground not to make the offer.
  • You have refused another request for casual conversion because there was a reasonable ground to refuse the request.

If the answer to ALL the above is “NO” then they are still eligible so move on to step 3. 

If the answer to ANY the above is “YES” then they are not eligible so move on to step 4.

STEP 3.

– Consult/discuss with the employee that:

  • You have assessed them as eligible and will be accepting their request to convert to permanent.
  • They will receive notification of this acceptance in writing with a Part Time/Full Time Employment Contract. 

– Convert them to permanent in your payroll system.

– Provide them with:

  • Official written acceptance of their request to convert.
  • A permanent part time/full time employment contract (or Letter of Appointment for businesses with an Enterprise Agreement).

STEP 4. For those Ineligible Casuals you must do the following within 21 days:

– Consult/discuss with the employee that: 

  • Their request to convert does not appear to meet the eligibility criteria and therefore their employer is exempted from the requirement to accept their request to convert, and on which of the criteria that exemption is based.

– Provide notification in writing advising them: 

  • That their employer has been exempted from the requirement to accept their request to convert to permanent.
  • On which of the criteria that exemption is based.

What to do – if you have less than 15 employees

Because small business employers are exempt from having to proactively “offer” the option to convert to their eligible casual employees, you are only required to advise your eligible casuals that they have the right to request to convert if they are “eligible casuals” by providing them with the CEIS.  

So if you have less than 15 employees there are 3 things you need to do as soon as possible after March 27th 2021 is:

1. Ensure you have given all casuals the CEIS and the FW information statement.

2. Check that you have an onboarding procedure set in place whereby all new casuals are provided with the CEIS and the FW Information Statement and you have evidence it has been given.

3. Be ready to receive requests to convert from your casuals. On receiving a request you will need to work through a series of steps within 21 days involving:

  • Assessing their eligibility,  
  • Consultation  
  • Responding to their request
  • Conversion if they are eligible

Again, if you are unsure how to manage requests for casual conversion you can download our step by step “Casual Conversion Request Checklist” on our Fair Work Compliance Resources Page of the HR Tactics website.

When is an employee ineligible to make a request

An employee isn’t eligible to make a request if, in the last 6 months:

  • They’ve refused an offer from you to convert to permanent employment.
  • They’ve been told by you in writing that you won’t be making an offer of casual conversion because there was a reasonable ground not to make the offer.
  • You have refused another request for casual conversion because there was a reasonable ground to refuse the request.

How often can an employee make a request for conversion?

Casual employees who believe they’re eligible to become a permanent employee can make a request for conversion every 6 months. 

Sometimes employees can still make a request even if their employer has told them in the last 6 months that they won’t be making an offer of casual conversion.  

Employees can only do this if they didn’t get an offer because they hadn’t worked a regular pattern of work in the 6 months before their earlier request, but they now have.

VERY IMPORTANT – Protections at work 

It’s really critical that you remember here that an employer can’t reduce or change an employee’s hours of work, or terminate their employment, to avoid having to offer or accept a request for casual conversion.

Why is that? Because casual employees are also protected against: 

1. Adverse action by an employer because they have a workplace right to convert to permanent employment. 

Casual employees may also be protected against: 

2. Unfair dismissal by an employer if they are regular and systematic casual employees.  

So, what does this mean? It means that if you go ahead and deliberately change an employee’s roster so they don’t meet the eligibility requirements, the casual employee may have grounds to lodge an adverse action claim or an unfair dismissal claim against you. 


EXPLAINED: Casual conversion –small claims procedure

The amendment act has introduced a new avenue to resolve some disputes about casual conversion.

What has changed 

The resolution of disputes around casual conversion used to be dealt with by the fair work commission only but now the employee has an alternative option of filing in the federal circuit court as well. 

So in practice – if the parties cannot resolve the dispute themselves, either party can refer the dispute to the fair work commission (FWC). The act then provides that the FWC must deal with the dispute (including by mediation, conciliation, making a recommendation or expressing an opinion) and, if the parties agree, by arbitration.  

So that means that the FWC can only make a binding decision about an employer’s refusal to convert an employee to permanent employment if the employer agrees to have the matter heard by the commission.    

So from there, if an issue remains unresolved and the parties do not have agreement that the FWC can arbitrate, then the employee can now file in the federal circuit court. 

What to do now 

Nothing.

HR Tactics – HR Consultants Brisbane – Outsourced HR

This information was provided with the intention of helping you find more clarity, confidence and peace of mind as you navigate your own journey as an employer. I would love to hear your thoughts on this, and if you think someone else would enjoy it please feel free to share it on.


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About The Author
Jackie Strachan

Jackie Strachan

Jackie’s passion for creating better Human Resources outcomes stems from over 20 years’ experience in the field and a drive for finding innovative solutions.
Her HR career has seen her hold both operational and strategic HR management roles across a vast array of industry sectors including retail, financial services, child protection, professional services, dental, state emergency services, Department of Justice, agency recruitment and IT.
Combining her experience in each specialised area of Human Resources (such as learning & development, recruitment, WHS and employee relations etc), Jackie leads HR Tactics with an industry-respected foundation of knowledge.