Changes have been made to the Fair Work Act 2009 [Cth] [FW Act] which may impact how businesses employ and manage casual employees going forward and they have until 27 September 2021 to put new processes in place.
Together with the employment law team at IR Legal Solutions, we have summarised the key bits and pieces you need to know for the short and long term if you employ casuals.
There is a lot in these changes, so if you would like further advice specific to your circumstances, [particularly if you have a large casual workforce], please contact us to discuss.
The key changes can be summarised into the following areas:
Changes to the definition of ‘casual employee’
What do businesses need to do about these changes?
The new ‘Casual Employment Information Statement’
The process you now need to follow to convert casual employees to permanent
What to do if you are a small business [less than 15 employees]
What do businesses need to do about these changes?
A new definition and test for ‘casual employees’
What has changed?
The FW Act amendments now provide for a clear definition on when a person is a casual employee – importantly, this will apply to former, current and future/prospective employees.
A person will be a casual employee if:
You offer them a job;
The offer does not include a firm advance commitment that the work will continue indefinitely with an agreed pattern of work, and
The person accepts the job knowing there is no firm advance commitment.
A ‘firm advance commitment’, for example, is when an employee has been offered a job and, at the time of the engagement, has been asked to work Monday, Wednesday and Friday from 9am to 2pm every week, is expected to show up at these times and the hours won’t change.
A ‘casual arrangement’ is when it is intended, at the time of engagement, that the person will only be offered shifts intermittently and the shifts will likely vary in hours or days, and the employee has the right to refuse any shift.
Other factors that come into play to determine if someone is a true casual employee will include:
Whether the person will work 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.
The new ‘casual employee’ test means that if an employee’s employment satisfies all of the identified factors, the employee will be a ‘casual employee’, until their employment is either:
Converted in accordance with the new casual conversion process (we will cover this off further below); or
At some later stage an offer of alternative employment is made for a permanent full-time or part-time position.
What do you need to do?
For current casual employees
Review your current casual arrangements and apply the new ‘casual employee’ test. You will need to take into consideration available documents from the offer of employment for each employee [this may include the first contract of employment and offer letter, if any, the job advertisement, any file note of the interview or offer meeting or emails exchange with regards to the offer].
Note – you need to be keeping records. A lot of businesses have policies that state you can destroy documents after 7 years. In relation to employee arrangements, keep everything, regardless of the time frame. Any documentation will be important and act as evidence if you get a claim. These will be key to establishing that you had a casual arrangement in place.
For future/prospective casual employees
Review your hours of work needs for future casual employees, to determine whether you need casual employees (with no firm advance commitment to hours and an ability to accept or reject work), or whether you need part-time or full-time employees.
Consider a review of your casual employment contracts, to ensure they adequately reflect your offer of true casual employment.
Check to see if you have a casual employment agreement that satisfies the new rules? If not, we strongly suggest reviewing these and putting a new casual employment agreement in place to better protect your business.
The casual employment information statement
Employers now need to provide each casual employee with a ‘Casual Employment Information Statement‘ [CEIS] before, or as soon as possible after they have started with you. This should be provided at the same time that you provide the Fair Work Information Statement [FWIS] that also must be given to every new employee [not just casuals].
The CEIS has information about definitions, casual conversion, small business [fewer than 15 employees] requirements and the role of the Fair Work Commission if there are disputes.
Employers can provide the statement via email, an electronic link or in paper. It is best practice to have your employees sign off that they received the FWIS, and for casuals the CEIS as well.
Small Business Employers [less than 15 employees] need to give their existing casual employees a copy of the CEIS as soon as possible.
All other Employers have to give their existing casual employees [employed before 27 March 2021] a copy of the CEIS as soon as possible after 27 September 2021. Why this date? This gives you, the employer, a chance to review your current workforce and determine if you need to make any casual conversion offers to employees.
Casual conversion – it now goes both ways!
Modern Award-covered employers should already be familiar with the concept of ‘casual conversion’. However, the amendments to the Fair Work Act have introduced important changes to this process, and also expanded the process to cover employees that are not covered by a Modern Award, or enterprise-agreement. So these new rules apply to all employers!
The new casual conversion process forms part of the National Employment Standards, and Modern Awards will soon be amended to reflect the new process as well.
Currently, under many Modern Awards, the casual conversion process commences when an employee requests ‘conversion’. Under the new process, an employer must make an offer to a casual employee if:
The employee has been employed for a period of 12 months [starting from the day their employment started]; and
During at least the last 6 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 or part-time employee.
This new ‘offer’ process will not apply to Small Business Employers. However, employees of small business employers will still have the right to request casual conversion at any time if they meet the requirements.
An employer has 21 days after the casual employee’s 12-month employment anniversary to either:
Make the conversion offer in writing, or
Provide a written notice setting out the reasons why a conversion offer is not being made [note that there are limited grounds for not making a conversion offer].
An employee is required to respond to a conversion offer by accepting or rejecting the offer – if an offer is rejected, no further offers are required to be made by an employer, but the employee does still have a right to request conversion at a later stage.
It is important to note that:
An employee can only request conversion in certain limited circumstances.
Disputes about conversion will be dealt with according to the applicable Modern Award or enterprise agreement dispute procedure.
If an employee is not covered by a Modern Award or Enterprise Agreement, then any other written agreement between the employer and employee for dealing with the dispute can be relied on. [This is why having casual employment agreements in place and other records are so important for employers].
For casual employees that do convert to permanent employment [during the conversion process, or at some later stage], the Fair Work Act amendments also provide that the period of employment as a casual employee does not count towards ‘continuous service’ for the purposes of assessing the service period relevant for:
What to do if you are a small business [less than 15 employees]
We emphasise and reiterate that the new conversion offer process will not apply to Small Business Employers.
As mentioned Small Business Employers are defined under the Fair Work Act as those that employ fewer than 15 employees. However, employees of Small Business Employers will still have the right to request casual conversion at any time if they meet the requirements.
Either way, if you are a growing small business that may one day exceed 15 employees, you need to be across these rules and be prepared.
What do businesses need to do about these changes?
For current casual employees
Employers have 6 months from 27 March 2021 [that is, until 27 September 2021] to implement the new casual conversion process with their current casual employees. That includes the decision on whether to offer ‘casual conversion’, or provide a written notice explaining why a casual conversion offer is not being made.
Ensure any remaining casual employees are provided with the new Casual Employment Information Statement after the conversion process has been completed.
If you think you will have casual employees that will not meet the casual employee test and potentially make a claim for entitlements, please contact us. The team at IR Legal Solutions and Bold Advisory can walk you through the new legislation around claims and help you with a casual employee management plan.
For future/prospective casual employees
Provide them with the Fair Work Information Statement and the new Casual Employment Information Statement before or at the start of the engagement;
Alert appropriate persons within your business to the 12-month anniversary of each casual employee’s employment;
Undertake an assessment of whether the casual conversion process eligibility applies; and
Decide whether a casual conversion offer will be made, and prepare the written conversion offer, or the written notice explaining why a casual conversion offer is not being made.
Not sure where to start?
We appreciate there is a lot to take in with these changes, so if you are unsure how to best navigate these new rules and this new casual conversion process, Bold Advusory can provide you with HR Consultancy support and IR Legal Solutions can provide you with specific legal advice to assist your business to navigate and best implement these changes to assist with Fair Work compliance and with general business advice.
Most importantly, make time to review and ensure that you have a process in place to manage your current casual employees along with a simple process to manage future casuals.
