A new definition of “Casual Employee” under the Fair Work Act* and more than 140 Federal Modern Awards will take effect from 26 August 2024.

To comply with this new law, the Fair Work Commission (FWC) has decided to vary all Federal Awards concerning:

1. A new definition of “Casual Employee”
2. New “Casual conversion” processes

*The Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 amends the definition of casual employee in section 15A of the Fair Work Act 2009 (the Act).

Given these changes, your business’s employment contract and letter of offer may need to be revised and updated for casual employees. The Holman Webb Lawyers Workplace Team can assist in this task.

New “Casual Employee” Definition

Question: Is the change important?
This change is important if you are an employer of casual workers or a casual employee.

This is because it will change how casual employment is determined, i.e. who and is not a casual employee. And it will not always be straightforward.

The Background

The new change is intended to reverse the legal effect of the 2021 change made in the law by the then Morrison Government.

The Morrison Government’s amendment defined a “casual employee” based on their job offer. If the employee’s contract of employment said that the employee was a Casual, that fact determined the worker’s employment status as a casual on an ongoing basis.

The purpose of the Morrison Amendment was to protect employers from claims by some long-serving casual employees who worked their hours as regular patterns of work that they were entitled to accrued leave and other benefits – even though the employee had been paid as casual.  The claims, some of which were successful in court, were based on the legal proposition that the employees were, in fact, not casuals but permanent employees.

What is the effect of the new “Casual Employee” definition?

The new definition reverses the Morrison amendment. Adelaide University senior law lecturer Gabrielle Golding has put it this way:-

"We will now see a return to the situation where an employee will not be a casual if the practical reality of their employment relationship is one of permanent employment, meaning that they instead have rights as a permanent employee."

How has the definition of “Casual Employee” changed?

While the FWAct retains the concept of a casual employee as someone who has no firm advance commitment to continuing and indefinite work, the new definition will require consideration of the practical reality of the employment relationship (i.e. what happens at work), not just relying on the terms of the employment contract set when the employee started working. 

When assessing if an employee has a firm advance commitment to continuing and indefinite work, an employer and the employee need to consider if:

• The employer can choose to offer (or not offer) work to the employee
• The employee can choose to accept or reject an offer of work
• Continuing work is reasonably likely to be available given the nature of the business
• Part-time or full-time employees are undertaking similar roles in the same workplace
• The employee has a regular pattern of work
• The employee is entitled to a casual loading or specific casual pay rate.

No single consideration is determinative of whether an employee is a casual.

Employees engaged as casual employees will remain casual until a specified event occurs, underpinned by an active employee’s choice to change their status via Casual Conversion – see below.

New “Casual Conversion” provisions

According to the Federal Government, “There will be one single, clear pathway to change from casual to permanent employment in the National Employment Standards – the employee choice pathway.”  [DEWR “Closing Loopholes” bulletin]

About Existing Casuals

The FWAct’s new provisions include “transitional” arrangements to ensure that an existing casual employee will not automatically cease to be a casual because of the new provisions.   Consistent with the FWAct, the FWC is working on the final new wording for the Modern Awards to ensure the Award changes result in existing casuals remaining casuals at the start of the new Award provisions.

How “Casual Conversion” will change

Employees who have worked for six months (12 months in a small business) are entitled to notify their employer where their circumstances have changed and believe they no longer meet the ‘casual employee’ definition.

Employers will have 21 days to respond and either:-

• Convert the employee to full-time or part-time employment; or
• Give written reasons why the notification is not accepted.
  Employers may refuse notification on specified grounds, including where the employee still meets the definition of a casual employee or where there are fair and reasonable operational grounds to do so.

The Fair Work Commission will be able to help resolve disputes, including, as a last resort, the power to decide the issue by arbitration.

Things to keep in mind

A casual employee’s employment status will not change automatically.

A status change from casual to permanent (part-time or full-time) will only happen if an employee wants to change. If employees want to remain casual, nothing can force them to become permanent.

Employees who work like permanent employees can choose to change to permanent work. If they do so, they will no longer be entitled to a casual wage loading and will instead receive paid leave entitlements and job security that permanent work provides. 

The existing casual conversion processes in the Act have been repealed, so employers will no longer be required to offer eligible employees conversion.

The Fair Work Ombudsman (FWO) Casual Employment Information Statement (CEIS) will be updated.

All employers must continue to provide the CEIS to casual employees as soon as possible after they start work. To ensure employees are reminded of their rights and ability to change to permanent work, employers will also be required to provide the Statement to casual employees:

•            After 6 and 12 months of employment, and then after every 12 months.

•            For small business employers – after 12 months of employment

If you have questions about this article, contact Holman Webb Lawyers Workplace Relations team. They can assist employers in navigating the Federal Government’s recent reforms by reviewing employment agreements and policies.