IR Bill Gutted through the Senate and New Casual Laws
The long-awaited changes to the Fair Work Act have been gutted in its passage through the Senate.
Whilst the Government had the backing of One Nation for the Bill, and in the absence of support from Labor and the Greens, the Bill’s passage was stifled by the Centre Alliance in the Senate. The only part of the proposed changes that survived was
the section relating to the definition of casual workers which has been passed today, following last year’s WorkPac vs Rossato and the previous WorkPac v Skene rulings which opened businesses up to the prospect of owing millions in backpay.
The legislation change will create a legal definition of a casual worker for the first time, quashing so-called “double dipping” claims for backpay created by the WorkPac rulings. It will also give casual workers the right to request a conversion to a permanent employment (part-time of full-time) after a certain amount of time.
However other critical parts of the proposed legislation, including creating greater flexibility for part-time employees and relaxing the rules around enterprise agreements, were dropped after failing to win support from the crossbench.
The new casual provisions arising from this new legislation are detailed below.
New Casual Laws
As indicated above, the new laws surrounding casual employment are as follows and will come into force after receiving Royal Assent and will form part of the National Employment Standards (NES). The changes to casual employment are significant and will affect every employer in Australia that has casual employees.
Here is an outline of the new laws that will apply to casuals:
- New Statutory Definition Of “Casual Employee”.
There is now statutory definition of a casual employee which focuses on the terms on which employment is offered and accepted and not the subsequent conduct of the parties. This change is significant because it overturns the WorkPac Pty Ltd v Rossato case under which courts are currently required to assess how parties have actually conducted themselves during employment in order to determine whether it is of a casual nature.
An employee will be classified as a casual if an offer of employment makes no firm advance commitment of regular work and the employee accepts the offer on that basis. In determining whether the offer of employment makes no firm advance commitment of regular work regard will only be had to the following considerations:
• whether the employee can elect to accept or reject work;
• whether the employee will work as required according to the needs of the employer;
• whether the employment is described as casual employment; and
• whether the employee will receive a casual loading.
The definition also makes it clear that a regular pattern of hours does not in itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern.
2. Offering Casual Employees Conversion to Permanency After 12 Months of Employment.
The employer now has an obligation to offer conversion employment if an employee has been employed for at least 12 months, there has been a regular pattern of hours on an ongoing basis during at least the last 6 months of that period and the employee could continue to work those hours as a full-time or part time employee. However, there will be no obligation to convert an employee to permanency if there are reasonable business grounds not to do so. This obligation does not apply to small business employers who have less than 15 employees at the relevant time.
3. Conversion Right Can be Lost Temporarily
The Bill makes clear that, where an employee refuses an offer to convert, they will lose the right to convert for another 6 months. Further, where an employer has determined that there a reasonable business grounds to not make an offer of casual conversion and notifies the employee in accordance with the provisions of the Bill, then the employees also cease to hold a right to request conversion for the next 6 months.
4. Double Dipping Prohibited
The Bill includes provisions which will allow courts to set off any casual loading paid to an employee who has been misclassified as a casual against any future claims for leave and other entitlements. However, setting off will only be permitted where:
• the engagement of the employee is specifically described as being for casual employment; and
• the employer has expressly stated that the casual loading is being paid to compensate the employee for not having one or more of those entitlements.
Importantly, the setting off provisions can be applied retrospectively. In other words, the Bill will allow courts to set off any casual loading paid to an employee before the Bill comes into operation against historical claims for leave and other entitlements, provided that the criteria above are met. This applies even if the employee’s employment is terminated before the Bill commences or the employee is no longer employed by the employer.
5. Requirement To Provide Casual Employees with a Casual Employment Information Statement
Employers will be required to provide a Casual Employment Information Statement. This obligation is similar to the existing requirement for employers to provide a Fair Work Information Statement to employees when commencing employment. The Statement will be prepared by the Fair Work Ombudsman (and available on their website) and will need to be given to new casual employees before or as soon as practicable after the commencement of their employment.
6. What Should Employers Do Next?
Employers should be looking at the following:
• Introduce new casual contracts and/or Letters of Appointment that are consistent with the recent amendments;
• Introduce processes for dealing with casual conversion that ensure your operational requirements are considered but also ensuring compliance with the FW Act;
• Ensure all casuals are provided with the Casual Employment Information Statement;
• It is noted that these new provisions will form part of the NES, therefore these provisions will override any current Award and Enterprise Agreement (EA) provisions, particularly in regard to casual conversion. Therefore, if any clients have an EA, they will need to comply with these new provisions regardless of the provisions of the EA. It is understood that the Fair Work Commission will alter Awards to be consistent with these provisions.
Note: There will be a prohibition against reducing or varying an employee’s hours of work, or terminating their employment, so as to avoid the above rights and obligations.
Should you require any further information, or require assistance in the drafting of casuals contracts or Letters of Appointment, please do not hesitate to call us at Effective Workplace Solutions.
Please contact us for more advice.
By Greg Arnold
Director and Principal Consultant