For the first time, a casual will be defined in federal legislation. Importantly, the definition focuses on the intention of the employer and the employee at the start of the relationship in identifying the true nature of the employment contract.
This development follows the controversial Workpac cases where employees, engaged and paid as casuals, were found not to be casuals by the federal court. This was because of the length and regularity of their employment. The court found they were permanents, and entitled to annual leave, but did not deduct the casual loading when awarding backpay. This double-dipping caused great concern among the employers of millions of casuals.
The legislation provides that if “an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person and the person accepts the offer on that basis”, then, ostensibly, that person is a casual.
Other factors include if the person is paid a loading and is free to accept or reject work, as is the employer free to offer or not offer work from time to time.
The legislation’s wording is critical and should be encapsulated in employment offers/contracts. If this is done, then the court can note it if an employee later argues they were in fact permanent.
But there’s a catch. This legislation also requires an employer to make an offer to a casual to convert to permanent under certain circumstances. This offer must be made if the casual has been employed for 12 months (counting from the first day the casual was employed) and, during at least the last six months of that period, the casual employee had a regular pattern of hours which could readily be structured as a full or part time arrangement.
There are limited circumstances where an employer can refuse a conversion request. Employees retain the right to request conversion even if the employer fails to issue an invitation after 12 months. Importantly, the Fair Work Commission can become involved in disputes under these provisions including issuing a recommendation or expressing an opinion. If the FWC found for the employee where a refusal reason was challenged, and the employer maintained opposition to conversion, it could open adverse action avenues for the employee to pursue.
Employers will be obliged to provide all casual employees a Casual Employment Information Statement which the Ombudsman will promulgate shortly. So there is definitely a new landscape, with safeguards to avoid double-dipping as happened to Workpac, but with increased emphasis on reducing casual employment where the employee wants permanency.
Overall however, and despite the missed opportunity to give enterprise bargaining a boost, these recent legislative changes to clarify casual employment are a welcome relief. The prospect of paying both a casual loading and annual leave weighed heavily on many employers and needed to be fixed.
Whether this will be the end of the problem however is not absolutely certain. Already there’s talk of a constitutional challenge to this legislation. And the High Court has yet to hear the full arguments in the Workpac cases which may alter the landscape yet again. Meanwhile, employers are entitled to act on the law and Royal Assent for this legislation is imminent. The main issue is to ensure that offers of employment for casuals are very clear and use the same language as the legislation.