The Fair Work Act 2009 (Cth) will undergo significant changes effective 26 August 2024, particularly regarding casual employment. It is important both employers and employees are aware of how these changes will affect their business or employment status.

While some employers have previously treated casual employment as a means of staffing their business with “hire and fire” employees that lack the employment protections and benefits of permanent employees, the upcoming amendments are designed to close the existing loopholes in the Act and include anti-avoidance provisions to prevent employers from misclassifying employees to avoid providing permanent employment benefits and ensuring that the employment status of their employees reflects the true nature of their work arrangements. It is unlawful for employers to make false representations about casual employment status or to dismiss and rehire employees as casuals to perform the same or substantially similar work.

Overall, the changes to the Fair Work Act 2009 reflect an effort to better define casual employment, enhance job security for casual workers, and promote fair treatment in the workplace.

Before exploring the upcoming legislative changes, let’s first look at the general differences between part-time and casual employment.

Casual versus part-time employment

Casual employees

Casual employees are generally hired on a work-as-needed basis with no guaranteed number of hours or set shifts. Their pattern of work can change on a weekly basis, and they are not obligated to accept shifts offered to them by their employer.  Causal workers are often found in the hospitality and accommodation, retail, and health care and social assistance industries, which account for approximately half of all casual employment in Australia.

Casual employees are not eligible for paid leave entitlements (whether sick, holiday, or other leave) and are not paid on public holidays which they don’t work. To compensate for this lack of leave entitlements, causal employees are paid a “casual loading” hourly rate that is normally 25% higher than the minimum rate required for permanent (part-time and full-time) employees.

As Casual workers also have no guarantee of ongoing or future work, and they can quit or have their employment terminated without notice or reason.

Part-time employees

Part-time employees are permanent workers who work less than 38 hours per week. They have an expectation that their work will continue indefinitely and generally work a pre-determined number of hours on the same days each week.

Part-time employees accrue paid leave entitlements as required by the National Employment Standard based on the number of hours they work per week. They are paid for any public holidays on which they are normally rostered but don’t work due to the holiday.

Part-time employees also must give, or be given, advance notice of termination of their employment (or be paid in lieu of notice) based on the length of time they have been employed with a business. Employers must provide a valid reason for the termination of a part-time employee, which is not required for casual workers.    

New Definition of Casual Employment

The changes to the Act introduce a revised definition of “casual employee”. Under the new definition, a casual employee is someone who:

• does not have a “firm advance commitment” to continuing and indefinite work, and;

• is entitled to receive a casual loading or a specific casual pay rate.

The determination of whether there is a “firm advance commitment” involves evaluating the “real substance, practical reality, and true nature” of the employment relationship. This assessment involves several factors:

• the employer’s ability to offer or not offer work, and the employee’s ability to accept or reject work;

• the likelihood of future work availability based on the nature of the business;

• whether full-time or part-time employees are performing similar work; and

• the presence of a regular pattern of work, such as regular weekly hours and shifts.

These factors must be considered holistically when assessing if a firm advance commitment to continuing and indefinite work exists. No element is decisive on its own nor must all factors be present for an employee to be considered casual.

Casual Conversion to Permanent Employment Rights

Unlike the current legislation, where employers were required to offer casual workers conversion to permanent employment when employees met the corresponding criteria, the new regulations place the onus on employees to initiate the conversion request. Based on the new definition of “casual employee”, employees must demonstrate that their employment situation justifies the transition to permanent status (part-time or full-time) and must submit a written request for conversion to their employer.

Employees may make this request after six months of employment (after 12 months for small businesses with 15 employees or less). Once an employee submits a written request for conversion, the employer has 21 days to respond. The employer must either accept the request for conversion to permanent employment status or provide a valid reason for refusal. Valid reasons for an employer refusing an employee’s request include:   

• Lack of continuing work: If there is no ongoing and regular work available that the employee can perform in a permanent capacity, the employer can refuse the conversion request. This means that the employer must demonstrate that the work pattern is unlikely to continue as it has been during the eligibility period.

• Significant changes to the employee’s role: If the employee’s role is expected to change significantly, such that the nature of the work or the hours available will no longer align with a permanent position.

• Change in business circumstances: Employers may refuse conversion if there are foreseeable changes in the business operations or structure that would impact the employee’s ability to perform their role as a permanent employee. This could include factors such as restructuring, downsizing, or shifts in business focus that reduce the need for the role.

• Inability to accommodate permanent employment: If accommodating the employee’s conversion to a permanent position would require making significant adjustments that are impractical or burdensome to the business, the employer might refuse the request.

• Operational reasons: Employers can cite operational reasons, such as financial constraints or the impact on business efficiency, as grounds for refusal, provided these reasons are substantial and demonstrable.

Employers must engage in a consultation process with the employee to discuss the conversion request and, if refusing the request, employers are required to provide the employee with a written response detailing the reasons for the refusal on reasonable grounds in consideration of the above factors. Employers are further prevented from taking retaliatory action, such as reducing hours and shifts, or terminating employment if a casual worker makes a conversion request.

Casual Employment Information Statement

The obligation to provide the Casual Employment Information Statement (CEIS), which is available for download on the Fair Work website, has been expanded. Employers must now provide the CEIS at the start of employment, again after six months (or 12 months for small businesses), again after 12 months of employment, and then every 12 months thereafter. This ensures that casual employees are well-informed about their rights and the nature of their employment.

Implications for Employers and Employees

Whether you are an employer that needs to review their employment contracts and practices to ensure compliance with the new definitions and conversion rights, or an employee who requires advice on their genuine employment status, our experienced employment law team at Stone Group Lawyers can assist with advising on the intricacies of the updated Act. Give one of our employment lawyers a call today on (07) 5635 0180.