What’s changing to casual employment?

This Alert reminds our valued clients of the upcoming changes in relation to casual employment, following the passage of the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Closing Loopholes No. 2 Act).

What are the changes?

The changes, which will take effect on 26 August 2024, include:

1. A new definition of ‘casual employee’
2. A new pathway for casual conversion
3. New protections for casual workers

Definition of casual employee

The changes will insert a new definition of casual employee which is one where:

• the employment relationship is characterised by an absence of a ‘firm advance commitment to continuing and indefinite work’; and
• the employee is entitled to a casual loading or a specific rate of pay for casual employees.

Whether the employment relationship is characterised by an ‘absence of a firm advance commitment to continuing and indefinite work’ will be assessed on the basis of the ‘real substance, practical reality and true nature’ of the employment relationship; and not limited to the written terms of an employment contact. It will involve a consideration of:

• whether there is an inability of the employer to offer, or not offer, work or an inability of the employee to accept or reject work (and whether this occurs in practice);
• whether, having regard to the nature of the employer’s enterprise, it is reasonably likely that there will be future availability of continuing work in that enterprise of the kind usually performed by the employee;
• whether there are full-time employees or part-time employees performing the same kind of work in the employer’s enterprise that is usually performed by the employee;
• whether there is a regular pattern of work for the employee.

Employee-choice pathway for casual conversion

The current casual conversion arrangements will be abolished, and employers will no longer be required to make casual conversion offers to employees.

Under the new ‘employee choice’ pathway:

• Employees who have worked for at least six months (12 months if employed by a small business employer) may notify their employer in writing if they believe they no longer meet the definition of a casual employee;
• Employers must, having consulted with the employee about the notification, provide a written response to the employee within 21 days after receiving the notification, either:
  • accepting the notification – in which case the employee will be taken to be a full-time or part-time employee; or
  • refusing the request on one or more of the following grounds:
    • the employee meets the definition of a casual employee;
    • there are ‘fair and reasonable operational grounds’ for not accepting the notification;
    • accepting the notification would result in the employer not complying with a recruitment or selection process required by or under a law of the Commonwealth or a State or a Territory.

The Fair Work Commission (Commission) will be empowered to deal with disputes about the operation of the new employee choice arrangements including by compulsory arbitration.

Protections

New protections will make it unlawful for employers to:

• dismiss or threaten to dismiss an employee to engage them as casual employees; and
• knowingly make false representations in relation to casual employment.

The new provisions will be civil remedy provisions, and employers may be subject to penalties for contraventions.

What should employers do?

Before the changes take effect in August 2024, employers should, at a minimum:

• review their casual workforce and identify employees’ status by reference to the new and intended definition which places emphasis on how the relationship operates in practice;
• review template employment contracts for casual employees to remove the operation of references to current casual conversion arrangements post August 2024;
• consider whether existing casual conversion processes and procedures will comply with the new laws and amend them;
• diarise obligations to update and issue casual employment information statements at the required intervals.