New laws for employing casuals

With new rules for employing casual workers commencing in August, our article outlines how businesses can prepare.

The Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2024 (CL No.2 Act) made significant changes to the Fair Work Act 2009 (FW Act), including a new definition of "casual employee” which will come into effect on 26 August 2024.

The new meaning

Under the new definition which will take effect on 26 August 2024, an employee is a casual employee if:

• there is no firm advance commitment to continuing and indefinite work, taking into account a number of factors, including the real substance, practical reality and true nature of the employment relationship; and
• they are entitled to receive a casual loading or specific casual pay rate.

This means that an employee who starts as a casual will remain so until their employment status changes either through a conversion process, a Fair Work Commission order, or by accepting an alternative employment offer.

For example, if an employee is offered shifts on an irregular basis without a guaranteed number of hours or ongoing work, and they get paid a casual loading, they would be considered a casual employee under the new definition.

What are the key factors to consider?

In determining whether a worker is a casual employee, the following factors are considered:

• whether the employer can offer or not offer work to the employee.
• whether the employee can accept or reject work.
• whether it is reasonably likely that there will be future work available, based on the nature of the business.
• whether there are full-time or part-time employees performing the same kind of work in the business.
• whether the employee has a regular pattern of work.

New pathways for casuals to convert to permanent employment

There will be a new pathway for employees to convert to permanent employment status, which will replace the existing right to casual conversion.

If an employee has been employed for six months (or 12 months in a small business), they can choose to change their employment status to permanent, if they believe that they no longer meet the definition of ‘casual employee’. The employee must initiate the change. There is no longer an obligation for the employer to review and offer casual conversion.

Casual employees can write to their employer to notify them that they would like to change their employment status, and employers are required to respond within 21 days either accepting the change or refusing the change.

Before responding, the employer must consult with the employee which includes discussing what impact the change will have on the employee and what other changes will occur if the employer accepts the notification.

If the employer accepts the notification, they will need to respond stating:

• what the new employment status will be (for example, part-time or full-time).
• the employee’s new hours of work.
• when the change will take effect.

If the employer rejects the notification, they must include the reasons for the refusal.

The employer can refuse the employee’s notification if any of the following apply:

• the employee still meets the definition of a casual employee.
• there are fair and reasonable operational grounds for not accepting the notification, such as if substantial changes would be required to the way that work in the business is organised to allow the employee to convert.
• there would be significant negative impacts on the operation of the business.
• accepting the change means the employer is not complying with a recruitment or selection process required by law.

When does the new definition take effect?

The new definition will commence on 26 August 2024. Employees who were employed as casuals before 26 August 2024 will stay as casuals unless they transition to permanent employment.

Casual Employment Information Statement

The Casual Employment Information Statement is a document that provides information about employment conditions that an employer must provide to all new casual employees.

Employers must provide it to new casual employees before or as soon as possible after they start working.

For casual employees working in small businesses, the employer must provide it again after 12 months of service.

For casual employees working in larger businesses, the employer must provide it to the casual again after 6 months of service, at 12 months of service and then every year.

What should employers do now to prepare?

Employers should be aware of the new rules for employing casual employees and how they can change to permanent employment.

Even without any firm, advance commitment to continuing or ongoing work, if an employer acts in a way that suggests otherwise (like promising specific shifts every week), it might mean that the employee is not really a casual.

Employers should ensure that casuals are paid a casual rate or casual loading that they are entitled to under a relevant modern award.

Casuals can now initiate the process to convert to permanent employment, so employers should consider what grounds (if any) they have to refuse a request.

More information

The Fair Work Ombudsman have information available at: https://www.fairwork.gov.au/about-us/workplace-laws/legislation-changes/closing-loopholes/casual-employment-changes