We have some exciting news! The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 is finally here! 

So, what does this mean for your business? Your casual employees may have the right to convert to part-time or full-time employees.

What are employers required to do now?

Let’s break it down. 

What Is A ‘Casual Employee’?

New amendments to the Fair Work Act 2009 (Cth) provide that an employee is a casual employee if:

  1. The employer makes no firm advance commitment to a continuing and indefinite pattern of work when offering employment and;
  2. The employee accepts the offer of employment on the basis that there is no firm advance commitment to a continuing and indefinite pattern of work.

What Is A ‘Firm Advance Commitment To A Continuing And Indefinite Pattern Of Work’? 

When determining whether you have made a firm advance commitment to a continuing and indefinite pattern of work, you should consider:

  • Whether the employee can elect to accept or reject work 
  • Whether the employment is described as causal employment 
  • Whether the employee will be entitled to casual loading or a specific rate of pay for casual employees
  • Whether the employee will work as required according to the needs the employer. 

What If There Is A Regular Pattern Of Hours Of Work?

Section 15A(3) of the Act states that a regular pattern of hours does not in and of itself indicate a firm advance commitment to continuing and indefinite work. 

For example, if you were to offer your employee a regular pattern of hours such as 3 hours a week, this alone would not be a firm advance commitment to a continuing and indefinite pattern of work. Therefore, this employee would likely be a casual employee. 

However, if you employed a person on the basis that they were to work 3 x 6 hour shifts on the same days each week for an indefinite amount of time, this would be a firm advance commitment to a continuing and indefinite pattern of work. Under the new law, this employee is likely not a casual employee under the Act. 

Out With The ‘Long Term Casual Employee’, In With the ‘Regular Casual Employee’ 

The definition of a long term casual employee has been removed from the Act

Instead, section 12 now refers to a ‘regular casual employee.’ 

An employee is a a regular casual employee if: 

  • They are a casual employee and; 
  • They work regular and systematic hours. 

For example, an employee who works 5 hour shifts on a Monday, Wednesday and Friday each week, on a regular basis, would be deemed to be working regular and systematic hours. 

So, what does this mean? 

Let’s talk about casual conversion. 

‘Casual Conversion’

Casual conversion is when a ‘casual employee’ who: 

  • Has been employed for 12 months or more and
  • Has worked regular and systematic hours for the past 6 months 

Has the right to be offered or request permanent employment

Permanent employment includes both part-time and full-time employment. 

Section 66B of the new law states that an employer must make an offer of permanent employment to a ‘casual employee’ if: 

  • The employee has been employed by the employer for a period of 12 months and
  • The employee has worked a regular pattern of hours on an ongoing basis for the past 6 months. 

How Should I Make An Offer? 

The offer must: 

  • Be in writing 
  • Be an offer for the employee to convert to either:
  1. Full-time employment if the employee currently works equivalent to full-time hours or
  2. Part-time employment if the employee currently works a consistent and regular pattern of hours that do not amount to a full-time workload
  • Be given to the employee within 21 days from when the employee reached 12 months of employment with the employer
    • For example: 
      • If the employee started work with you on the 1st of January 2020, they must be given the offer for casual conversion by the 22nd of January 2021. 

Are There Any Exceptions To Casual Conversion?

Section 66C of the Act states that an employer is not required to make an offer of casual conversion if: 

  • There are reasonable grounds not to make the offer and 
  • The reasonable grounds are based on facts that are known or reasonably foreseeable at the time of deciding not to make the offer. 

Reasonable grounds include: 

  • The employee’s position will cease to exist within 12 months of deciding not to make the offer 
    • For example: 
      • The position is being made redundant within the next 12 months
  • The hours of work that the employee performs will significantly reduce within the next 12 months
  • There will be a significant change to the days and times that the employee works
  • Making the offer would not comply with a recruitment or selection process required by law. 

If you decide that it is reasonable to not make an offer of casual conversion, you must provide written notice of this decision to your casual employee. 

In this notice you must include: 

  • Notice that you will not be making an offer of casual conversion and 
  • Detailed reasons why you will not be making that offer. 

This notice must be provided to your casual employee within 21 days from when your employee reached 12 months of employment with you.

Employees Residual Right To Request Casual Conversion 

In accordance with the new law, an employee has a remaining right to request casual conversion.

A casual employee may request that their employment be converted to permanent work (full-time or part-time) if: 

  • They have been employed for 12 months or more 
  • They have been working a regular pattern of hours on an ongoing basis for the past 6 months 
  • They have not refused a previous offer of casual conversion in the past 6 months 
  • The employer has not provided notice detailing that they will not offer casual conversion on reasonable grounds and 
  • The employer has not refused a previous request for casual conversion. 

In the instance that your employee does request casual conversion, it must be: 

  • In writing and 
  • Requesting to convert to full-time or part-time employment, depending on which type of employment coincides more appropriately with the regular pattern of hours they have worked in the past 6 months. 

Do I Have To Reply To This Request?

You sure do. 

Under section 66G, employers must provide a written response within 21 days of the employees request. 

If you choose to grant the employees request you must detail in writing: 

  • The type of employment (full-time or part-time) that the employee will be converting to 
  • The employees work hours after the conversion takes place
  • The date when the conversion will take place
    • This is generally the first day of the employee’s first full pay period after the notice has been given, unless agreed otherwise. 

You can only refuse an employees request if: 

  • You have consulted the employee 
  • There are reasonable grounds to refuse the request 
  • The reasonable grounds are based on facts that are known or reasonably foreseeable at the time of refusing the request. 

Reasonable grounds for refusing the request include: 

  • Significant adjustment to the employee’s hours of work would be required to convert the employee to a permanent employee
  • The employee’s position will cease to exist within 12 months of deciding not to make the offer 
    • For example: 
      • The position is being made redundant 
  • The hours of work that the employee performs will significantly be reduced within the next 12 months
  • There will be a significant change to the days and times the the employee works
  • Making the offer would not comply with a recruitment or selection process required by law. 

Further Points To Note

Whilst the new amendments to the Fair Work Act 2009 (Cth) certainly encourage casual conversion, it is important to note that the new law: 

  • Does not require an employee to convert to permanent employment if they do not want to
  • Does not permit an employer to require an employee to convert to permanent employment if they do not want to
  • Does not require an employer to increase the hours of work for an employee who requests conversion to permanent work. 

Further, an employer must not reduce or vary an employee’s hours simply for the purpose of avoiding the need to grant casual conversion. 

How To Define Your Employees

We get it. The new amendments to the Fair Work Act 2009 (Cth) have introduced a heap of new information that can be tricky to get your head around. 

It is important that you know which of your employees are in fact ‘casual employees’ and which employees are entitled to request or be offered casual conversion. 

Let’s simplify how you can determine this with the following tables: 

Casual Employee 
Description
  • Your employee accepted their job on the basis that there was no advance commitment to a continuing and indefinite pattern of work at the time the job was offered to them.
  • Your employee can elect to accept or reject work.
  • Your employee is described as a casual employee.
  • Your employee will be entitled to casual loading or a specific rate of pay for casual employees.
  • Your employee will work as required according to your needs as their employer.
Example
  • Your employees roster changes each week to suit your needs. 
  • Your employee can refuse or swap shifts. 
Outcome
  • Your employee is a casual employee and can remain as such. 
Regular Casual Employee 
Description
  • Your employee works regular and systematic hours. 
Example
  • Your employee works 5 hours every Monday, Wednesday and Friday on a regular basis. 
Outcome
  • Your employee is considered a regular casual employee.
  • Your employee has a right to request or be offered casual conversion if:
    • They have worked for you for 12 months or more and
    • They have worked regular and systematic hours for the past 6 months

No More Double Dipping! 

The new amendments prevent casual employees from ‘double dipping.’ 

‘Double Dipping’ is where ‘casual employees’ working regular and systematic hours are afforded both casual loading and leave entitlements. 

Preventing this from occurring is a massive win for employers! 

In accordance with the new amendments, casual employees are no longer allowed to claim both ‘casual loading’ and leave entitlements simply because they work regular and systematic hours. 

The distinction between what casual and permanent employees are entitled to is much clearer. This is particularly due to the new definition of a casual employee and the introduction of casual conversion. 

As such, casual employees are entitled to extra pay in the form of ‘casual loading’ (typically around 15-25% more than permanent employees)  to compensate for the fact that they don’t get leave and other entitlements.

Employees will only be afforded to leave entitlements upon gaining permanent employment, whether this be through casual conversion or otherwise. 

Casual Employees Information Statement 

Section 125 requires the Fairwork Ombudsman to publish an Information Statement detailing the new casual worker reforms. 

The purpose of this is to make the relevant information easily accessible to both employers and employees. 

The Information Statement includes: 

  • The meaning of a casual employee under the new law 
  • What casual conversion is and how it works
  • Reasonable grounds to not offer causal conversion 
  • Who can help if there is a dispute about the operation of the new laws.

The new law requires that all employers provide the Information Statement to all casual employees before or as soon as practicable after the casual employee begins their employment. 

As a business owner it is vital that you follow these new laws and provide all casual employees with the Information Statement as soon as practicably possible upon offering employment. 

Does All Of This Apply To Small Businesses?

If you are a small business owner, you are not required to offer casual conversion. Your employees are however entitled to request casual conversion if they satisfy the grounds to do so. 

In accordance with section 23 of the Fair Work Act 2009 (Cth), a small business owner is an employer who employs less than 15 employees at one time. 

So, if you are a small business owner, remember: 

  • You are not required to offer your casual employees casual conversion 
  • However, your employees are entitled to request casual conversion if they satisfy the grounds to do so.

So, What Do Employers Have To Do Now? 

The new law requires employers to understand the law and abide by it correctly. 

As a business owner it is vital that you understand the law and your role in implementing it into your business’s operations. 

In summary, the new amendments to the Fair Work Act 2009 (Cth) require employers to: 

  • Make no firm advance commitment to a continuing and indefinite pattern of work when offering casual employment 
  • Understand and implement causal conversion 
  • Provide new employees with the Casual Employment Information Statement 
  • Ensure that all casual employees employed before 27 March 2021 meet the new definition of a casual employee under the Act to maintain the status of a casual employee. 

Need More Help? 

With the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 coming into effect, there is a lot to take in. 

We understand that there is a lot of information you have to get your head around as a business owner. However, it is vital that you understand and abide by the law correctly to ensure the success of your business and its employees. 

Keeping up to date with your legals can be a tricky task at times. Don’t stress, we’re here to help! If you have any questions, you can reach out to our team for a free, no-obligations chat at team@sprintlaw.com.au or 1800 730 617

About Sprintlaw

Sprintlaw is a new type of law firm that operates completely online and on a fixed-fee basis. We’re on a mission to make quality legal services faster, simpler and more affordable for small business owners and entrepreneurs.

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