In brief - The Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill (the Bill) introduced into Parliament on 9 December 2020 proposes significant change to the concept of casual employment, introducing for the first time a statutory definition of what it means to be a casual employee and creating an entitlement to conversion from casual to permanent employment for all employees.

Casual employees - three key amendments

The Bill proposes a comprehensive response to the contentious Federal Court decisions of Workpac Pty Ltd v Skene [2018] FCAFC 131 and Workpac v Rossato [2020] FCAFC 84.
It includes three key amendments:

  1. The insertion of a statutory definition of the term 'casual employee', limiting the factors which may be taken into account when determining whether employment is casual;

  2. The insertion of statutory mechanisms for the conversion of casual employment to full-time or part-time employment; and

  3. A requirement that courts offset any identifiable casual loading amounts paid to an employee against amounts later found owing to that employee as a result of a finding that the employee was not a casual employee.

Each of these amendments is considered in more detail below.

A. Insertion of statutory definition of 'casual employee'

The proposed definition limits the matters which may be considered in the assessment of whether an employee is casual to the conduct and intention of the parties at the time the employment relationship commences, thereby addressing the key difficulties faced by Workpac in the decisions of Skene and Rossato.

The proposed definition provides that:

"A person is a casual employee of an employer if:

  1. an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and

  2. the person accepts the offer of that basis; and

  3. the person is an employee as a result of that acceptance".

A determination of whether the employer makes "no firm advance commitment to continuing and indefinite work according to an agreed pattern of work" must be based on only 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;

  • whether the employment is described as casual employment;

  • 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 Act instrument.

Most critically (in light of the Federal Court's analysis in the decisions of Skene and Rossato):

  • the proposed definition of casual employee provides that:

    • a regular pattern of hours does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work;

    • the question of whether a person is a casual employee of an employer is to be assessed on the basis of the offer of employment and the acceptance of that offer, not on the basis of any subsequent conduct of either party.

    • an employee who accepts an offer of casual employment in accordance with the above will remain a casual employee until the employee either:

  • has his or her employment converted to full-time or part-time employment under the proposed new casual conversion mechanism; or

  • accepts an alternative offer of employment (other than as a casual employee) and commences work on that basis.

Notably, the Bill also replaces the notion of a "long term casual employee" with that of "regular casual employee", and extends certain entitlements (such as parental leave and the right to request flexible work) to regular casual employees who have been employed for a period of at least 12 months. A "regular casual employee" is defined as a casual employee who has been employed by the employer on a regular and systematic basis.

B. Insertion of statutory casual conversion mechanism

The Bill proposes two mechanisms for the conversion of casual employment as follows:

  • Conversion at the initiative of the employer: under the proposed changes, unless there are reasonable grounds for not doing so, an employer must offer a casual employee conversion to permanent employment within 21 days after the first anniversary of a casual employee's employment where the casual 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, 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).

  • Conversion at the initiative of the employee: under the proposed changes, casual employees may request conversion to permanent employment at any time after the employee's first anniversary of employment, provided the following conditions are satisfied:

    • the employee has been employed by the employer for a period of 12 months beginning the day the employment started; and

    • the employee has, in the period of six months ending the day the request is made, 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 (as the case may be); and

    • during the period of six months ending the day the request is made, the employee has not refused a casual conversion offer made by the employer or received notice from the employer of a decision to not make a casual conversion offer on reasonable grounds or refused a previous request for casual conversion; and

    • the request is not made within 21 days of the first anniversary of the employee's employment.

  • Regardless of who initiates the conversion process, the casual employee's employment cannot be converted to employment on a fixed-term, fixed-task or seasonal basis.

Under the Bill, reasonable grounds for deciding not to make an offer to convert to permanent employment include the following:

  • within the following 12 months:

    • the employee's position will cease to exist;

    • the employees' hours of work will be significantly reduced; or

    • there will be significant change to the days on which, or times at which, the employee's hours of work are required to be performed, which cannot be accommodated by the employee's availability; or

  • the casual conversion offer would not comply with a State or Federal statutory recruitment or selection process.

Strict time limits apply in relation to an employer's duty to notify an employee of their casual conversion entitlements and the employer's response to a proposed casual conversion, including any proposed working arrangements in the event the conversion to permanent employment proceeds.

The Bill also proposes a prohibition on employers reducing or varying an employee's hours of work, or terminating an employee's employment, in order to avoid any right or obligation with respect to casual conversion. This is in addition to the protection offered by the existing general protection prohibition on taking adverse action against an employee because of a workplace right.

Finally, the Bill proposes that the Fair Work Commission would have the power to deal with disputes about the operation of the casual conversion provisions, unless an alternative dispute procedure is established by an applicable Fair Work Act instrument, employment contract or other agreement between the parties.

C. Orders relating to casual loading amounts

Finally, the Bill proposes that Courts be required to offset the amount of any casual loading paid to an employee against any amounts later found to be owing to the employee, thereby eliminating the so called "double-dipping" of entitlements.
Specifically, the Bill proposes that where an employee:

  • has been described as a casual employee; and

  • paid an identifiable loading to compensate for entitlements that would otherwise accrue during the employment (loading amount); and

  • is later found not to be a casual employee; and

  • makes a claim to be paid amounts for one or more of those entitlements,

the Court must reduce (but not below nil) any amount payable by the employer to the employee for the relevant entitlements by an amount equal to the loading, or by a proportion of the loading amount in the award, enterprise agreement or employment contract under which the loading amount is paid. If no such terms exist, the Court is to determine the proportion of the loading amount attributable to each of the following entitlements:

  • paid annual leave;

  • paid personal/carer's leave;

  • paid compassionate leave;

  • payment for absence on a public holiday;

  • payment in lieu of notice of termination; and

  • redundancy pay.

We will continue to provide updates on the implications of the proposed changes as the Bill passes through Parliament. If you would like specific advice on the implications of the changes for your business, please contact us.

To find out more about the changes proposed by the Bill please click here.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2021.