The Fair Work Act has been amended recently to clarify the meaning of casual employment.
What is casual employment?
Under the new changes, a person is a casual employee if they accept a job offer from an employer knowing there is no firm advance commitment to ongoing work with an agreed pattern of work.
In working out whether there is a firm advanced commitment to ongoing work, only the following factors can be considered:
Whether an employer can choose to offer work and whether the employee can accept or reject the offer to work
Whether the employee works only as required
Whether the employee’s employment is described as casual employment
Whether the employee is paid a casual loading
Casual loading offset
The Fair Work Act now allows a court to offset an identifiable casual loading paid to an employee, where the employee is classified as a casual by an employer but is in fact a permanent employee under the law.
This means that if an employee makes a claim against their employer for paid leave entitlements, a court can reduce the amount claimed by the employee in respect of these entitlements if the employee was paid an identifiable casual loading.
Employers should be aware that even if they are able to offset the casual loading amount, it may not offset all paid entitlements owed to an employee.
The Fair Work Act has introduced casual conversion provisions which require many employers to offer casual employees the option to convert to permanent employment if:
They have been employed for longer than 12 months; and
In the last 6 months, the employee has worked regular and systematic hours without significant change.
Employers covered by the new casual conversion provisions do not have to make an offer if there are “reasonable grounds” for doing so, for example, where the employee’s position will not exist in 12 months’ time. Employers must advise their employees if they do not intend to make a conversion offer and provide reasons why.
An employer’s offer or decision not to make an offer must be made to employees in writing and must be made within 21 days of the 12 month period referred to above.
The Fair Work Act casual conversion provisions differ to the provisions contained in many modern awards as they place a positive obligation on employers to make a written offer of conversion or justify why an offer of conversion is not being made to employees.
What does this mean for me?
Employers should review their employment arrangements to determine if their employees are truly casual or should be engaged in an alternative way. It may be necessary for an employer to review their casual employee arrangements, including updating existing employment agreements and reviewing the remuneration paid to casual employees. Doing so may avoid the risk of a costly dispute down the track.
Employees should review their working arrangements to determine whether they have been appropriately engaged and remunerated by their employer.
If you require advice about your obligations as an employer or are seeking clarification about your entitlements as an employee, please do not hesitate to contact a member of our employment law team for advice.