Casual employment is a significant feature of the Australian labour market, offering flexibility for both employers and employees. However, this flexibility can sometimes come at the cost of job security and entitlements for some workers. To address the imbalance, changes have been introduced to casual employment laws aimed at providing greater clarity and fairness.
This article outlines the key changes and implications for employers and employees. The information is general only and does not constitute legal advice – if you need help navigating these or any other employment laws, we recommend consulting an experienced professional.
A New Definition of Casual Employment
Prior to 2021, there was no statutory definition of casual employment. On 27 March 2021, a statutory definition was introduced under the Fair Work Act 2009, where a person was considered to be a casual employee if an employer made an offer of employment on the basis that there was ‘no firm advance commitment to continuing and indefinite work’, and the person accepted that offer.
From 26 August 2024, the statutory definition was amended so now an employee is casual, only if the:
- employment relationship is characterised by no firm advance commitment to continuing and indefinite work; and
- employee is entitled to a casual loading or specific rate of pay for casuals under the terms of a fair work instrument or contract of employment.
The concept of ‘no firm advance commitment to continuing and indefinite work’ remains, but must be assessed in consideration of the ‘real substance, practical reality and true nature of the employment relationship’ (not necessarily the employment contract alone); and having regard to:
- whether the employer can choose to offer or not offer work and whether the employee can choose to accept or reject work (and whether this occurs in practice);
- the likelihood of the availability of continuing work of the type performed by the employee, given the nature of the enterprise;
- whether other full-time or part-time employees already perform the same type of work as the employee; and
- whether there is a regular pattern of work for the employee
Pathways to Permanent Employment
A new Employee Choice Pathway is available to most employees from 26 February 2025 (and 26 August 2025 for employees of small business employers – generally those with fewer than 15 employees). Until then, the current casual conversion laws will apply.
Employee Choice Pathway
Casual employees may request conversion to permanent employment (full-time or part-time) by giving written notice to their employer. To be eligible, employees must:
- have been employed by the employer for at least 6 months (or 12 months for a small business employer); and
- believe they no longer meet the definition of a casual employee.
Additionally, the employee must not:
- currently be involved in a dispute with their employer about changing to permanent employment under the pathway; or
- have had a previous request under the pathway refused or resolved in the past 6 months.
Employer’s Response and Obligations
The employer must genuinely consider an employee’s request under the Employee Choice Pathway and respond within 21 days.
If accepting the request, the employer must consult with the employee about their new employment status, hours of work and when the change will take place.
An employer can refuse the request if any of the following apply:
- the employee still meets the definition of a casual employee;
- the employer will fail to comply with a legal recruitment or selection process if they accept the request;
- there are fair and reasonable operational grounds, for example:
- substantial changes to the organisation of the business would be required to implement the change;
- there would be significant impacts on the operation of the employer’s business; or
- substantial changes would be necessary to ensure the employer complied with certain rules.
The Fair Work Ombudsman can help resolve disputes under casual conversion provisions and has the power to arbitrate such matters.
Casual Employment Information Statement
Employers must provide a Casual Employment Information Statement (CEIS) to all new casual employees before, or as soon as possible after, they commence employment. For small business employers, the CEIS must be reissued to casual employees after 12 months of employment and for other employers after 6 months, 12 months, and each subsequent 12 months of employment.
Workplace Rights
The general protections provisions prohibit adverse action to be taken against an employee for exercising a workplace right. Workplace rights now include an employee’s rights under the Employee Choice or Casual Conversion provisions. Engaging in anti-avoidance practices such as reducing or changing an employee’s hours or pattern of work to circumvent the employer’s obligations under these provisions may constitute unlawful adverse action.
Key Takeaways for Employers
- Compliance is key: Employers should familiarise themselves with the new definition of casual employment and the casual conversion process and review and update employment contracts and workplace policies as relevant. Processes should ensure that existing and future casual employees are provided a CEIS.
- Workforce planning: The new laws may require employers to rethink their workforce planning strategies. Consider the potential impact on labour costs, rostering practices, and the balance between casual and permanent employees.
- Meticulous record keeping: Maintaining accurate records of casual employees’ hours, work patterns, and conversion requests is essential. These records will be crucial in demonstrating compliance with the new laws and managing any potential disputes.
Employees
The requirement to consider the real substance of the employment relationship when determining whether or not an employee is casual aims to provide greater protection for workers. The right to request conversion to permanent employment provides a pathway to greater job security and access to benefits like paid leave and sick leave. This can significantly improve the well-being and financial stability of workers. Casual employees should familiarise themselves with the new laws and understand their rights and the process for requesting conversion from casual to permanent employment.
If you or someone you know wants more information or needs help or advice, please call (02) 5127 5261 or email [email protected].