Do you employee casual workers?

Existing casual employees

Existing casuals (when the new casual definition starts on 26 August 2024) will remain casual unless they transition to permanent employment either by converting or accepting an alternative employment offer and starting work on that basis.  

Nuts & bolts of the new definition

When determining if an employee meets the ‘casual definition,’ it is no longer enough to just look at the written terms of their contract. We must now consider both the contract and the ‘real substance’ and nature of the employment relationship, including how the employer and employee interact after the employment has commenced.

In assessing the ‘real substance, practical reality and true nature’ of the employment relationship, there are a range of factors that a Court or Tribunal will take into account in deciding whether an employee has been correctly engaged as a casual, including (but not limited to) whether:

• the employer can elect to offer (or not offer) work;
• the employee can elect to accept or reject work;
• the employee has a regular pattern of work;
• the employee will work on an as-needed basis;
• the work to be performed by the employee is different to the work of permanent employees in the workplace; and
• there is a guarantee or not of future or continuing work being available to the employee.

There are no rules as to the weighting given to each of the factors in the decision-making process, with no one factor necessarily decisive.

The risks of getting it wrong

Employers found to have misclassified employees may be liable to backpay the employee’s entitlements (e.g., annual leave, personal leave) from the start of the employee’s employment.

In addition, there are a range of new offences for employers who intentionally misuse casual employment including dismissing an employee to re-engage them as casual employee or knowingly making false statements to persuade or influence a person to be engaged as a casual employee. Penalties for such offences are up to $93,900 for individuals and $469,500 for companies per offence.

CHANGES TO CASUAL CONVERSION – EMPLOYEE CHOICE

The current process (until 26 August 2024)

Under the Act, employers (except small businesses) are required to offer a casual employee permanent employment if the casual employee:

• has been employed for at least 12 months; and
• During the last 6 months of that period, the casual employee worked a regular pattern of hours on an ongoing basis, which they could continue to work as a full-time or part-time employee without significant changes.

A written offer must be made within 21 days after the employee’s 12-month anniversary. The employee must respond in writing within 21 days, either accepting or declining the offer.

If the employer decides not to make an offer, they must notify the employee in writing within 21 days after the employee’s 12-month anniversary, stating that no offer will be made and explaining why.

Small businesses are not required to offer permanent employment to their casual employees.

If a casual employee believes they meet the criteria, they can request to convert their casual employment to permanent employment. The employer must respond in writing within 21 days, either accepting or declining the request. If the employer declines, they must provide reasons.

An employer can only refuse to offer permanent employment if the employee has not worked a regular pattern of hours on an ongoing basis for the last 6 months, which they could continue to work without significant changes as a full-time or part-time employee, or if there are reasonable grounds.

What will change after 26 August? 

From 26 August 2024, casual employees will have the right to request to convert their casual employment to a permanent one after 6 months instead of 12 months. For small business employers, from 26 February 2025, casual employees will have the right to request to convert their casual employment to permanent after 12 months.

Casual employees can only make a written request (notification) if they:

• have been employed for at least 6 months (or 12 months if working for a small business employer); and
• believe they no longer meet the requirement of the new casual employee definition.

Employees cannot provide this notification to change to permanent employment if:

• they are currently engaged in an ongoing dispute with their employer about conversion; or
• in the last 6 months, their employer has refused a previous request; or
• the employee has resolved a dispute with their employee about casual conversion.

Once a request is made, employers must give an employee a written response within 21 days. Before responding, the employer must consult with the employee.

If the employer accepts the change, they must provide a response including information on when the change will take effect e.g., part-time or full-time and the new hours of work.

If the employer refuses, they must provide a written response outlining reasons for the refusal. The employer can refuse the request on the following grounds:

• under the new casual employment definition, the employee’s current relationship still falls under this new definition; and
• there are fair and reasonable operational grounds including:

1. substantial changes would be required to the business;
2. significant impact on the business;

• substantial changes to the employee’s employment conditions would be reasonably necessary to ensure the employer does not breach any rules e.g., in an award or agreement applicable to an employee;

1. accepting the conversion to permanent employment would mean that the employer would not be complying with a recruitment or selection process required by or under law (Commonwealth or a State or a Territory).

It is important to note that employers will not be required to back-pay employees for any entitlements gained by moving to permanent employment.

Employers should also be aware employees can raise a dispute in the Fair Work Commission if an employer fails to respond to a request to convert or where they wish to challenge an employer decision to decline a request to convert to permanency.

Changes to sharing the Casual Employment Information Statement

The Casual Employment Information Statement (CEIS) provides information about casual employment conditions under the Fair Work Act.

From 26 August 2024, employers will now have to provide the CEIS on commencement to all new casuals and at various other points during a casual employee’s employment to remind casual employees of their rights and ability to convert to permanent work. This requirement depends on whether the business fits the Small Business Code or not.

This table summarises the new timings employers must provide the CEIS to casual employees:

All employers should ensure they download the most up to date and current version of the CEIS from the Fair Work Ombudsman’s website before giving the CEIS to casuals and should keep a record of how and when the statement is provided

Key takeaways

• Be clear with your employees about whether they are casual or permanent. The employment status should be clearly stated in the employment agreement and any communication with the employee.
• The employee choice framework means employees decide if they want to be permanent or casual based on their work pattern. Employers should not misclassify employees and should consider post-casual employment conduct to see if it could now be permanent. Employers must respond to any such requests from employees.
• Employers must fulfil their current obligations to offer conversion to casual employment up to and including August 25, 2024. The new changes take effect on August 26, 2024. For small business employers, these changes take effect on February 26, 2025.
• Employers should ensure the Casual Employment Information Statement is provided.
• Download and review our Casual Employment Updates Checklist to ensure your business complies with the changes effective August 26, 2024 (February 26, 2025, for businesses under the Small Business Code).

Should you need any expert advice on the new changes to casual employment provisions, feel free to contact Akyra. Book an obligation-free consultation today.

FREE DOWNLOAD: Casual Employment Updates Checklist

Source: This blog was originally published by Australian Business Lawyers & Advisors.