Your guide to casual employment law changes

Significant changes to casual employment are on the horizon, including updates to the definition of a casual employee, pathways to full-time and part-time employment, and alterations to the casual conversion process.

Starting on 26 August 2024, the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 will introduce a more nuanced approach to determining if a worker is genuinely a casual employee.

Here, we break down these changes into easy-to-understand language, explain what they mean for businesses, and share best-practice tips for ensuring compliance.

So, what’s changing for casual employment?

1. The new definition of casual employment

The definition of a casual employee is being revised to focus on the actual nature of the employment relationship. An employee will be classified as casual:

• if the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work; and
• the employee would be entitled to a casual loading or a specific rate of pay for casual employees under the terms of a fair work instrument if the employee were a casual employee, or the employee is entitled to such a loading or rate of pay under the contract of employment.

When considering whether the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work, the following is to be assessed:

• the real substance, practical reality, and true nature of the employment relationship;
• the ability for the employee to accept or reject work;
• whether having regard to the nature of the employer’s enterprise, it’s reasonably likely that there will be future availability of continuing work;
• whether there are permanent employees performing the same kind of work that is usually performed by the employee; and
• whether there is a regular pattern of work for the employee.*

*Note: a pattern of work will be considered regular even if it’s not absolutely uniform and includes some fluctuation or variation overtime (including for reasonable absences such as for illness, injury, or recreation).

2. Pathway to permanent employment

The pathway for casual employees to convert to full-time or part-time status is being streamlined. Under the new laws, casual employees can request conversion to permanent employment after six months of consistent work (12 months for small businesses with fewer than 15 employees). This is referred to as the ‘employee choice pathway’. The employer must respond in writing within 21 days and can only refuse the request based on the role still meeting the casual definition or there are fair and reasonable operational reasons for not accepting the notification. Fair and reasonable operational grounds for not accepting the notification can include the following:

• substantial changes would be required to how work in the employer’s enterprise is organised;
• there would be significant impacts on the operations of the employer’s enterprise; or
• substantial changes to the employee’s terms and conditions would be reasonably necessary to ensure that the employer doesn’t contravene a term of a fair work instrument that would apply to the employee as a full-time or part-time employee (as the case may be).

Before an employer provides an employee with a written response to their request, they must meet with the employee to consult with them about their request and if they’re accepting their request discuss the following:

• whether the employee is changing to full-time or part-time employment;
• the employee’s hours of work after the change takes effect; and
• the day the employee’s change takes effect.

3. Additional obligations

Employers are required to provide casual employees with the Casual Employment Information Statement and the Fair Work Information Statement at the start of their employment.

Additionally, an employer is required to provide a casual employee with the Casual Employment Information Statement in the following instances:

• after the employee has been employed for six months; and
• after the employee has been employed for 12 months; and
• the end of any subsequent period of 12 months for which the employee is employed.

Small business employers, will only be required to provide a casual employee with the Casual Employment Information Statement at the start of their employment and then after 12 months of employment.

Implications

This revised definition is designed to prevent the misuse of casual employment contracts, where workers might be treated as casuals despite having regular and predictable work patterns. By focusing on the actual nature of the working relationship, the new definition aims to provide greater job security for workers and ensure they receive the appropriate entitlements and protections. Employers must carefully evaluate their arrangements with casual workers to avoid misclassification and potential legal consequences.

How will these new laws impact businesses?

The new casual employment laws will take effect from 26 August 2024, significantly impacting businesses, regardless of size. Status change from casual to permanent (part-time or full-time) will only happen where an employee wants to change. If an employee wants to remain casual, nothing will force them to become permanent.

Employees who are effectively working like permanent employees will have a clear and simple way to choose to change to permanent work. Employees that make this choice, will no longer be entitled to a casual loading and will instead receive paid leave entitlements and job security that permanent work provides.

1. Redefinition of casual employment

Businesses must reassess their current workforce to determine which employees meet the new definition of casual employment. The focus on the real substance, practical reality, and true nature of the employment relationship means businesses must consider the actual working arrangements rather than just the contractual terms​. This shift may require businesses to review and revise their contracts, policies, and payroll systems.

2. Risk mitigation and legal compliance

Mitigating risks and ensuring legal compliance in the casual conversion process requires a thorough understanding of employment laws and proactive management strategies.

More changes are coming: what’s on the horizon?

The passing of both Closing Loopholes Bills has continued to deliver on the Federal Government’s promise to overhaul Australia’s industrial relations framework. As 2024 continues, we will shortly see the remaining changes from the second Closing Loopholes Bill come into effect, including:

1. Commencement of regulated labour-hire arrangement orders;
2. Changes to regulated workers’ protections and entitlements; and
3. Model terms for enterprise agreements, including flexibility, consultations, and dispute terms.

Once these upcoming changes have been enacted, we will provide a further in-depth analysis of what they entail and their implications.

How can Citation HR help?

It’s easy to see how continuously changing legislation can quickly become overwhelming for even the most experienced HR professionals, and with no grey area when it comes to compliance, that’s where having experts in your corner can make all the difference. Citation HR’s industry-leading HR Software is backed by award-winning employment law experts giving your business complete peace of mind.

Whether you have an established HR function or no HR team, Citation HR’s effective HR support can help your business stay on the right side of the law. With access to unlimited, untimed, and expert advice, staffed by highly qualified professionals to answer your questions 24/7, 365 days a year, you’ll be glad you have Citation HR by your side.

If any of the information in this article has raised questions about the right to disconnect or other upcoming legislative changes, please reach out to our workplace relations experts via our 24/7 HR Advice Line.

About our author

Shabina Sahu Khan is a Workplace Relations Consultant at Citation HR and assists various clients via the HR Advice Line. After obtaining her law degree she specialised in Family and Commercial law but found satisfaction in Employment Law and HR. She provides services to our New Zealand-based clients and comes with over 14 years of experience in providing Employment Law and HR advice. She is most satisfied when clients are satisfied and has no hesitation in going that extra mile for a client in need.