Casual employment: changes impacting businesses
The following should not be considered legal advice and is for general use only.
Another change that was made under the Federal Government’s Closing Loopholes No.2 reforms was the definition of casual employment and their pathway to permanent employment. All businesses must be aware of the main changes that may impact your business:
- A new definition of casual employment at section 15A of the Fair Work Act 2009 (Cth) (FW Act);
- A new pathway to change from casual employment to permanent employment called the ‘employee choice pathway’; and
- Introduction of civil penalties for engaging in ‘sham’ casual engagements.
New definition
The FW Act retains the concept under the old definition that a casual employee is someone who has no firm advance commitment to continuing and indefinite work. However, the distinguishing feature of the new definition is that the ‘practical reality of the employment relationship’, will also be relevant, not just what was in the employment contract when the employee started working.
Some of the questions that employers will need to consider when determining whether an employee has a firm advance commitment to continuing and indefinite work include:
- Can the employer choose to offer (or not offer) work to the employee, and can the employee choose whether to accept it?
- Is continuing work reasonably likely to be available?
- Are there other part-time or full-time employees undertaking similar roles in the same workplace?
- Does the employee have a regular pattern of work?
Whether or not an employee is considered to meet the definition of a casual employee will depend on these factors.
Employees classified as casual who were with their employer before 26 August 2024 will stay casual under the new definition unless they move to permanent employment.
For casuals employed from 26 August 2024, the new casual employee definition will apply.
Changes to casual conversion, now the ‘employee choice pathway’
The provisions relating to the employee choice pathway for casual conversion do not commence until 26 February 2025, for the majority of employees, and until 26 August 2025 for employees of small business employers.
The ‘employee choice pathway’ gives casual employees a choice about whether they convert to permanent employment or remain as casuals. It will replace the current process where employers were required to offer casual conversion to eligible employees after a specified period of time.
The key steps under the new pathway are as follows:
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Step 1: Initial Employee Notification |
A casual employee can request to become a permanent employee by providing written notice if they’ve worked for at least 6 months (or 12 months in a small business) and believe they no longer meet the definition of a casual employee. |
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Step 2: Employer Response |
An employer must respond to the employee within 21 days.
The employer can refuse to make an employee permanent if: – The employee still meets the definition of casual; – There are reasonable operational grounds; or – if converting would breach a recruitment or selection process required by law. |
If there is a dispute between the parties about the decision, the FW Act requires the parties to attempt to resolve the dispute at the workplace level. If it is unable to be resolved internally, then either party can apply to the Fair Work Commission for assistance.
Importantly, nothing in the new process requires employees to change to full-time or part-time employment, or permits an employer to require an employee to convert from casual to permanent employment. Similarly, the amendments will not require an employer to increase the hours of work offered to an employee who makes a notification under the new division.
Sham arrangements
There are also new legal protections aimed at preventing exploitative practices of “sham arrangements” in casual employment.
It will now be illegal for employers to use casual employment arrangements in the following scenarios:
- Assigning casual workers to roles typically filled by full-time or part-time employees.
- Terminating or threatening to terminate employees to reclassify them as casual workers while continuing to assign them the same tasks as their previous permanent roles.
The changes will impose substantial civil penalties for violations. Individuals found in breach could face fines of up to $93,900, while businesses could be penalised up to $469,000.
These penalties are designed to prevent employers from using casual contracts as a loophole to avoid providing standard employment entitlements.
How DKL can help
It is important to make sure that your business is up to date with these changes and you have an awareness and understanding of your obligations as employers when it comes to engaging casual employees. If you have any questions on how these reforms may impact the casual engagements within your business, Danny King Legal is here to help.
Please visit our website or contact us for more information.
The above should not be considered legal advice and is for general use only.