Casual conversion passes through Parliament

The much-anticipated Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (Bill) has today passed Parliament. The Bill is a stripped-down and vastly reduced version of its original form which proposed reforms in five key areas which intended to overhaul the Fair Work Act 2009 (Cth) (FW Act). The only surviving element of the Bill now includes changes to casual employment arrangements.

So, what has changed?

Casual definition

The question of whether a casual is actually a casual has historically caused some confusion, and in recent years, thanks to the Skene and Rossato decisions, the question of what makes a casual a casual has been a major cause of concern for employers.

The Bill now provides a clear definition of casual employment: a casual employee will be deemed to be a casual employee if the employer offers employment to them on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work and that offer is accepted. Importantly, the hours the casual employee works after the employment has started will have no bearing on their casual status. To put it simply, the question of whether a person is a casual employee is assessed on the basis of the offer of employment and acceptance of that offer, not on the basis of any subsequent conduct of either party (including if the casual employee were to work a regular pattern of hours).

In determining whether, at the time the offer is made, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person, regard must be given only to the following considerations:

• whether the employer can elect to offer work and whether the person can elect to accept or reject work;
• whether the person will work only as required according to the needs of the employer;
• whether the employment is described as casual employment; and
• whether the person 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.

The Bill changes some of the key outcomes of the Skene and Rossato decisions, including:

• the employment relationship is assessed at the point of offer and acceptance. This differs from the position in Rossato which allowed post-contractual conduct to be taken into consideration when determining whether the employee was a casual or not; and
• the list of factors to be considered when determining what constitutes a ‘firm advance commitment’ is limited (exhaustive) to those set out in the Bill. Again this differs from the position in Rossatowhich sought to determine whether an employee was a casual based upon a non-exhaustive (unlimited) list of considerations which could differ in future/subsequent cases.

Offer of casual conversion

Employers now have an obligation to proactively offer a casual employee the opportunity to convert to full-time or part-time permanent employment, if certain criteria are met. The criteria including the following:

• the employee has been employed by the employer for a period of 12 months beginning the day the employment started; and
• during at least the last six months of that period, 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 employee or a part‑time employee (as the case may be).

Employers must ensure the offer is provided to the employee in writing and given to the employee within 21 days after they reach their 12-month anniversary.

However small businesses, (businesses that have less than 15 employees), are exempt from having to offer conversion. Casual employees of these businesses are still able to request conversion, however the administrative burden of having to actively offer conversion is removed for small businesses.

There are also certain instances in which a medium or large business is not required to offer conversion including where there are reasonable business grounds. The reasonable business grounds for deciding whether a business is exempt from making an offer include:

• the employee’s position will cease to exist in the next 12 months;
• the hours of work which the employee is required to perform will be significantly reduced;
• there will be a significant change in either both of the following:
• the days on which the employee’s hours of work are required to be performed;
• 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
• making an offer of conversion would not comply with a recruitment or selection process required by law.

Even where this is the case, an employer is still required to notify a casual employee of its decision.

Casual conversion – small claims procedure

A small claims procedure has been included in the Bill that can be used to resolve casual conversion disputes where a person has applied for an order from a magistrates court or the Federal Circuit Court in connection with a dispute relating to the following matters (and if the person wants the small claims procedure to apply):

• whether a casual employee meets the requirements of when an employer must make an offer;
• whether an employer of a casual employee has reasonable grounds not to make an offer to the employee to convert to full‑time or part‑time employment;
• whether a casual employee may make a request of an employer to convert to full‑time or part‑time employment; and
• whether an employer of a casual employee has reasonable grounds under to refuse a request from the employee.

Orders which may be made by the court in relation to such proceedings include:

• requiring an employer to consider whether it must make an offer to convert the casual employee to part‑time or full‑time employment on the basis that the employee meets the requirements under the FW Act;
• requiring an employer to consider whether it must grant a request made by the employee to convert to part‑time or full‑time employment on the basis that the employee meets the requirements under the FW Act; or
• preventing an employer from relying on a particular ground under the FW Act relating to when an employer is exempt from offering conversion to not make such an offer or relying on a ground under the FW Act relating to when an employer is allowed to refuse a request.

Casual Loading Offset Provisions (Double Dipping) Clarification

The Bill retains the provision which enables a Court to reduce a claim for leave or other entitlements made by an incorrectly classified casual employee by an amount equal to a proportion (which may be nil) of the casual loading amount the court considers appropriate, having regard only to:

• if a term of the fair work instrument or contract of employment under which the loading amount is paid specifies the relevant entitlements the loading amount is compensating for and specifies the proportion of the loading amount attributable to each such entitlement—that term (including those proportions); or
• if a term of the the fair work instrument or contract of employment under which the loading amount is paid specifies the relevant entitlements the loading amount is compensating for but does not specify the proportion of the loading amount attributable to each such entitlement — that term and what would be an appropriate proportion of the loading amount attributable to each of those entitlements in all the circumstances.

Relevantly, this will apply retrospectively which means that businesses will be able to rely on this provision for permanent entitlement claims which have already been made. That is, moving forward, all past and future claims for permanent entitlements will now be offset against the casual loading paid to casual employees.

Review of amendments

The Bill will be reviewed after 12 months of operation in order to:

• consider whether the amendments are appropriate and effective in the context of Australia’s changing employment and economic circumstances;
• identify any unintended consequences of the amendments; and
• consider whether amendments to the FW Act or any other legislation are necessary to improve the operation of the amendments in the context of changing employment and economic circumstances or rectify any unintended consequences.

How does our HR Software help you?

We have developed a suite of new documents to help businesses streamline the administrative burden the requirement of offering casual conversion creates. Our HR software provides easy access to the following templates,:

• casual conversion checklist (to help you navigate the multi-faceted process of offering conversion);
• letter explaining why a business does not need to offer casual conversion;
• letter offering full-time conversion;
• letter offering part-time conversion; and
• letter confirming permanent employment.

Since small business employers are exempt from having to offer casual conversion, we have also created a checklist to help navigate the process which is required to be followed when an employee requests conversion, including:

• casual conversion request checklist;
• letter of casual conversion acceptance; and
• letter of casual conversion refusal.

We have also updated our pre-employment checklist to include the requirement of issuing the newly introduced “Casual Employment Information Statement.”

Lastly, we have amended our casual employment contract templates to reflect the new provisions concerning the definition of casual employment as outlined in the Bill.

If you are a client and you have a question about the new legislation, please contact the HR Advice Line

About our author

Amanda Curatore is a qualified Senior Associate at Citation Legal and Citation HR. Amanda is highly experienced in providing workplace relations advice and assistance to clients in a wide range of matters including employment contracts, modern award interpretation, managing performance, bullying and harassment, terminations and managing risk.