In March, the Fair Work Ombudsman (FWO) announced changes to casual employment in Australia. These change the entitlements and obligations of casual employees, as well as your responsibilities as their employer. Below, we have summarised the changes and your new obligations.
Defining the changes to casual employment for 2021
Changes to casual employment give a new meaning to the words ‘casual employee.’ This new meaning is because of a recent law passed by the government. The terms of a casual employee under the Fair Work Act include the following:
- The job seeker accepts an employer’s job offer knowing there is no guarantee for ongoing work.
- The job seeker accepts the job offer knowing it is not ongoing regular work.
- The job seeker becomes an employee when they accept the job offer of casual employment.
What casual employment rules guide an employer making an offer of casual employment? Here are five rules that apply:
- The employer chooses to offer work to a casual employee as needed.
- The employee can choose to accept or reject the offer of work.
- The work is casual or described as casual employment.
- The employee is paid a higher pay rate as a casual employee.
- The employee is owed casual loading.
Changes to casual employment rights in Australia
In some cases, casual employees have the right to become full-time or part-time employees. The 2021 changes to casual employment include updates to casual conversion.
The number of workers a business employs influences the terms for casual conversion. Employers with more than fifteen workers can make an offer to an employee of casual employment. For casual conversion to occur, the employer has employed the worker for twelve months. The employee also needs to have worked on a steady basis for the last six months. They also agree to work the same hours as a permanent worker but without changes.
With the above terms met, employers need to offer the casual employee a permanent job.
Small businesses with less than fifteen workers have different terms for casual conversion. Changes to casual employment rules do not require them to offer permanent work. However, a worker can request a casual conversion for a full-time or part-time job.
Employees need certain terms met before a request can be accepted or denied. The employee:
- Places the request after the 27th of September 2021.
- Needs to be employed for twelve months before placing a request.
- Works a set number of hours within the past six months.
- Agrees to work those hours as a permanent worker without changes.
- Has not been told by their employer that they cannot offer them a permanent role due
to ‘reasonable business grounds.’
- Has not declined an employer’s past offers of permanent work in the last six
- Has not been refused a past request for casual conversion in the last six months.
Once the employee meets these casual conversion rules, they can ask for full employment in writing. The right time also plays a part in meeting these rules. The employee makes their request no sooner than twenty-one days after their first year of service. If the small business denies the casual employee’s request, they can make another one after six months.
Once the request is placed, the small business has twenty-one days to respond. If the employer accepts the request, the employee receives new forms. However, if a small business rejects the worker’s request, the employer talks to them about the reasons why. Employers also need to tell casual employees of the denial in writing. Changes to casual employment mean the employer needs to show ‘reasonable business grounds’ for the rejection.
Deductions to casual loading amounts
Recent changes to casual employment include casual loading deductions for employers. Casual loading is when a casual employee gets extra pay plus an hourly rate. What decides the correct rate of casual loading is the contract between the casual employee and the employer. Most casual employees receive a higher pay rate because they do not get sick leave or annual leave.
Sometimes permanent staff are noted as casual employees when they should not be. Changes to casual employment allow businesses set-off terms for casual loading. This set-off method aids employers when pay errors occur.
How did this change to casual loading come about? In the case of Workpac v Skene , a worker was paid a loading for not being paid leave as a casual employee. Later, the court deemed that while he was classified as a casual employee by WorkPac, his working arrangements were those of a permanent employee.
More recently, in the Workpac v Rossato case, the Court rejected the employer’s claim that they could off-set these entitlements via a higher hourly rate, stating “where the purpose of a payment is not to provide the entitlement in the terms required but to provide a substitute, there will not be a “close correlation” between that purpose and the entitlement”.
Under the changes to casual employment rules, employers can deduct paid loading given in error to a permanent worker. In future, casual loading deductions require the following:
- The work contract describes the employee as casual.
- The casual loading is rated as an amount paid to the casual employee. It should also state the reason for not giving benefits like sick or annual leave.
Overall, employers can meet the changes to casual employment by completing the following:
- Review all fair work casual contracts and note any employees for casual conversion.
- Be sure current and new employees get the Casual Employment Information Statement.
- Review casual employee contracts so that the business gains from casual loading paid.
Fair Work Casual Employment Information Statement
Changes to casual employment in Australia include how and when to give the Casual Employment Information Statement (CEIS). Employers also give new casual employees this statement. There is an updated copy for download here.
This new version includes the legal meaning of a casual employee. It also gives recent facts about changes to casual conversion for current employees.
Employers give the Casual Employment Information Statement every year to their casual employees. Casual employees who work irregular hours over twelve months only need to receive it one time.
The CEIS now includes:
- The legal meaning of a casual employee.
- When employers can offer casual conversion, and when they cannot.
- How the Fair Work Commission handles casual conversion disputes.
- Claims of casual conversion by a casual employee employed by a small business.
Changes to casual employment for 2021 also require employers to send the latest copy of the CEIS. Always check the website for the correct copy before sending it.
Employers can present the CEIS to casual employees by emailing a link to the location of the statement located on their intranet. They can also email it to the casual employee. If the casual employee has no laptop or cell phone, the employer can give the CEIS in person or mail it.
Tambla can help you navigate changes to casual employment
Manually interpreting your workforce pay conditions is a complex and time-consuming process. Tambla is a market leader in Award and Business Rule interpretation. We provide real-time, accurately interpreted costs to help you make informed business decisions.
Learn more about our Workforce Management solution.