Proposed changes to casual employment provisions

Female worker standing in retail shop that sells women's clothing.

Proposed amendments to the Fair Work Act 2009 (Cth) (FW Act) signal important changes to labour provisions governing casual employment.

The new provisions are consistent with the Albanese Government's desire to place additional restrictions around casual labour, which it has repeatedly criticised as exacerbating problems associated with insecure work.

Explore the key changes proposed by the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (the Bill) and the implications for employers and casual employees.

New definition of "casual employee"

The Bill proposes to replace the current definition of "casual employee" in section 15A of the Fair Work Act 2009 (Cth) with a new definition said to be designed to assess the "real substance", "practical reality" and "true nature" of the employment relationship.

Under the new definition, an employee will only be a casual employee where:

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

Firm advance commitment to continuing and indefinite work

Assessing whether employment is characterised by an absence of a "firm advance commitment to continuing and indefinite work" is to be determined with reference to various considerations intended to focus on the "real substance" of the employment relationship. This differs from the current definition in section 15A of the FW Act, which, following the High Court decision in WorkPac v Rossato, gives primacy to the terms upon which employment was offered and accepted.

Under the proposed new definition, the factors to be considered when deciding whether there is a firm advance commitment to continuing an indefinite work include:

  • the "real substance, practical reality and true nature of the employment relationship";
  • whether a firm advance commitment exits, which may be found in a contract of employment, or in the form of a mutual understanding or expectation (regardless of the terms of a contract);
  • an inability of the employer to elect to offer work or of the employee to accept or reject work (and whether this practically occurs);
  • whether there are permanent employees performing the same kind of work at the workplace; and
  • whether there is a regular pattern of work for the employee.

Importantly, even where a contract of employment provides that there is no firm advance commitment to continuing and indefinite work, this commitment may be inferred from the conduct of the employer and employee after they enter into the contract.

An employee will not be a casual employee if their contract of employment states that the employment will end at the end of an identifiable period and that period is not identified by reference to a specified period/task.

Right to initiate casual conversion

The Bill also proposes to introduce a new pathway to enable casual employees to convert their employment to permanent employment.

Currently, casual employees have the right to be made an offer to convert to permanent full-time or part time employment where they are assessed by their employer as meeting eligibility requirements. Some lesser residual rights to request conversion also exist.

Under the proposed changes, casual employees will themselves be able to initiate a change to their employment status by providing their employer with a written notification seeking conversion of their employment (conversion notification) if the employee:

  1. believes they no longer meet the definition of a "casual employee";
  2. is not in dispute with their employer about their status as a casual employee;
  3. has been employed for at least 12 months for small business employers or 6 months for other employers; and
  4. has not (in the last 6 months) received notice from their employer about their casual employment status, rejected a casual conversion offer or been given a response from their employer under the current casual conversion provisions.

Employer response

Under the proposed changes, where an employer receives a conversion notification from an employee, they must first consult with the employee and subsequently provide the employee with a written response within 21 days.

The employer will only be able to reject the conversion notification where:

  • the employment relationship still meets the definition of a "casual employee";
  • accepting the casual notification would be impractical due to substantial changes being required in order to comply with an industrial instrument; or
  • accepting the casual notification would result in the employer not complying with a recruitment or selection process required under law.

An employer would also need to include detailed reasons of their rejection of a conversion notification, and a statement about an employee's rights to attempt to:

  • resolve the dispute under current dispute resolution provisions; or
  • (if the dispute is not resolved) to apply to the Fair Work Commission (FWC) to resolve the dispute.

It is proposed that the FWC will be provided with the power to arbitrate a dispute associated with a conversion notification and to make any order it considers appropriate.

Civil penalty provisions for misrepresentation of casual employment

The final key proposed change in the Bill associated with casual employees is the introduction of provisions (similar to the existing sham contracting provisions) to prohibit employers from:

  • misrepresenting permanent employment as casual employment;
  • dismissing a permanent employee to re-engage them as a casual employee; and
  • misrepresenting employment as casual employment to a potential employee to persuade or influence them to enter into a contract for casual employment.

The changes are proposed as civil remedy provisions, with penalties of up to 300 penalty units per breach for body corporates.

For more information about the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 and how the changes might apply to your organisation, please contact Lander & Rogers' workplace relations and safety legal experts.

Image by Korie Cull on Unsplash.

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