Casual Conundrum: Navigating the impact of Closing Loopholes No. 2 on Casual Employment 

March 20, 2024

In a ‘back to the future’ manoeuvre the Closing the Loopholes No. 2 amendments to the Fair Work Act 2009 has redefined casual employment as more than the presence or absence of a firm advance commitment to continuing and indefinite work. Casual status must be assessed against various factors indicating the real substancepractical reality and true nature of the employment relationship. 

This change to the law takes us back to the way casual was defined before the High Court of Australia simplified the meaning in 2021. Employers face the challenge of recalibrating the workplace to align with the change that occur 26 August 2024.

Defining a casual employee 

An employee will be a casual employee where:

  • the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work; and
  • the employee is entitled under a fair work instrument or contract of employment to a casual loading or specific rate of pay for casuals.

What is a ‘firm advance commitment’?

What may be considered a ‘firm advance commitment’, is to be assessed :

(1) on the basis of the substantial and true nature of the employment relationship;

(2) on the basis of the contract of employment and practical reality of the workplace (this includes where there is a mutual understanding through conduct);

(3) having regard to, but not limited to, the following considerations which may indicate the presence, rather than absence of such a commitment:

(a) The ability of an employer to choose to offer work or an inability for an employee to choose to accept or reject work (and whether this occurs in practice);

(b) If it is reasonably likely there will be future availability for the continuation of work which is usually performed by the employee;

(c) whether there are other full-time or part-time employees performing the same kind of work in the enterprise which is generally performed by the employee; and

(d) whether there is a regular pattern of work

Note: this does not require that the pattern be uniform. Fluctuation can be included where this is in relation to reasonable absence such as illness, injury or recreation. A regular pattern of work does not of itself indicate a firm advance commitment to continuing and indefinite work. An employee who has a regular pattern of work may still be a casual employee if there is no firm advance commitment to continuing and indefinite work.

Exceptions to academic university staff

Where the employee is a member of the academic/teaching staff of a higher education institution employed under a fixed-term contract and is employed under either the Higher Education Industry-Academic Staff-Award 2020 or Higher Education Industry-General Staff-Award 2020, and is not a state public sector employee, the employee is not considered a casual. 

Casual conversion 

Pathways for casual conversion have now also been amended. Commencing 26 August 2024 there will be one pathway for casual employees to convert to permanent employment. This is the “employee choice” pathway, as it is initiated by the employee.

Casual employees may provide an employer with written notice where they are seeking to change their employment status to full-time or part-time employment after 6 months’ employment, or 12 months for small businesses, if the employee no longer believes they meet the requirements of a casual employee.

Employers must respond to the written notification from the casual employee within 21 days. 

An employer must consult with the employee before responding, but may refuse to accept the employee notification, where:

  • the employer believes the employee still meets the definition of a casual employee. 
  • there are reasonable operational grounds for refusal of the notification; or 
  • it is the case that accepting the notification will cause the employer to not comply with the relevant recruitment processes required by Commonwealth, State, or Territory laws.

Note: The employee choice pathway does not override any casual conversion procedure in a Modern Award or Enterprise Agreement.

What does this mean for employers?

The changes in relation to the definition of casual employment commence 26th August 2024, and will likely cause uncertainty for employees and employers alike.

Next steps:

(1) Evaluate all factors in determining if there is a ‘firm advance commitment’ to continuing and indefinite work. If on assessment there is an absence of a firm advance commitment then casual is a valid form of employment.

(2) Monitor the use of casuals tracking the practical reality and true nature of the employment relationship over the course of the employment, considering all relevant factors. If the true nature changes then consider full-time or part-time employment.

(3) Make sure that the relevant personnel (e.g., HR and Payroll) are sufficiently informed regarding changes to the casual conversion process.

(4) Provide a Casual Employment Information Statement when engaging casual employees.

(5) Must not reduce/vary an employee’s hours of work, change their pattern of work, or terminate their employment in attempt to avoid any right or obligation provided by the Act.

Further information

Contact us if you wish to discuss the implications for your business.

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