There changes to the Fair Work Act have now been passed by both Houses of Parliament and will receive Royal Assent and become law sometime soon. It is a win for common sense that there is now a formal definition of a causal employee, and it is a productive step forward to have casual conversion enshrined in the law, not just in some Awards. It makes sense that disputes about casual status and conversion are to be handled by the Fair Work Commission. It is clear that there will be a dedicated Casual Fair Work Information Statement. But the question for most businesses, is what should they be doing now, so this week we will look at the practical steps and considerations for businesses today and into the future.
It is staggering to most people that until now there has not been a formal definition of a casual. It is past time that a formal definition is brought into the Act, and the uncertainty created by cases regarding status and the role of a casual rate in compensating an employee for a lack of paid leave, notice, redundancy and a lack of ongoing commitment to employment, is well addressed by this new definition. This clarity will alleviate much anxiety in particularly small retail business who have anxiously been trying to puzzle out how an employee could get paid a higher rate and then claim unpaid leave and get that in addition.
The definition itself is a simple one; A person is a causal employee if the offer is made “on the basis that the employer makes no firm advance commitment to continuing and indefinite work” AND the employee retains the right to accept or reject work, AND the employee is described as a casual AND the employee receives a casual loading or specific casual rate.
The definition goes further to clarify that even a regular pattern of hours does not itself indicate a firm advance commitment to continuing and indefinite work.
The definition also highlights that it is the agreement at the time of offer that is the assessment point if there is a dispute, and that a casual employee will stay a casual employee until they either convert to permanent (more on this below), accept other employment or the relationship ends.
Casual Definition – What should the business do now….
This definition means that businesses should be reviewing their Letter of Offer and Confirmation of Employment documents to clearly reflect the language of the definition.
“The business is delighted to offer you the position of Casual Console Operator (R4) as outlined below.
It is important to note that as a casual employee, employed and engaged as required, by the hour, there are as such no guaranteed hours and no firm advance commitment to continuing and indefinite work. As a casual employee there is no entitlement to paid annual leave, personal and carers leave, notice of termination or redundancy.
As a casual employee you will receive a casual rate [or casual loading on a base rate] in compensation for the lack of paid leave, notice, redundancy and commitment to continuing work.”
This language, while somewhat clunky, makes it very clear that the employee is a casual employee, and makes it very clear from the outset what this means in terms of entitlements and compensation.
It is also important that the business ensure, wherever possible, that the employees Casual status is referred to on the payslip.
A Confirmation of Employment process, that clarifies these elements annually in line with the national wage case is also ideal – see; https://acapmag.com.au/2019/06/hr-highlight-confirmation-of-employment-why-you-should-be-sending-one-to-all-staff-now/
Entitlements, deeming to be permanent and double dipping?
The changes to the Act also make it clear that, as long as the employee was employed as a casual (as per definition) and the employee received the appropriate casual rate (or casual loading on a base rate) in compensation for not having a ‘relevant entitlement’ (like paid leave, redundancy etc), then if there is a claims that the employee was not in fact a casual, then the amount paid for not having a relevant entitlement will be offset against any judgement for the employee to receive the entitlement. This means if an employee is paid as a causal and is later deemed to be a permanent employee with access to paid leave, the amount the employee received as a casual that compensated them for not having paid leave is taken off (or offset) from the amount that would have been owed to the employee if they would have received that entitlement as a permanent employee.
The changes to the Act will result in the following requirement for casual conversion;
An employer must make an offer of permanent employment, in writing, within 21 days of 12 month employment anniversary, to a casual employee if; the employee has been employed for 12 months, AND, the employee has been employed in a pattern for the last 6 months that could be worked as either permanent full time or permanent part time.
An offer of permanent emplyoment is not required to be given to the casual employee if; the business is a small business, OR, if there are reasonable grounds not to make the offer.
Reasonable grounds not to make an offer can include (but is not limited to); the position will not exist in 12 months, the hours worked into the future are not known or knowable, the hours worked will be significantly reduced in the future, there is a significant change to business in terms of hours or work type.
If an employer has a reasonable ground not to offer permanent employment to the casual employee they will need to outline these reasons in writing, within 21 days of the 12 month employment anniversay, to the employee. This notice must specifically outline that the employer is not making an offer under section 66B of the Fair Work Act and outline the reasons why the offer is not being made (the grounds for not making the offer).
If the business makes an offer the employee must accept or reject in writing. If an employee does not correspond in writing then they are taken to have rejected the offer. In the case of a rejected offer the employee will remain a casual employee.
The employee is able to ask the business to convert them to permanent at a later date as long as; the employee has not rejected an offer in the last 6 months, AND, the business has not issued a notice as to why an offer has not been given in the last 6 months, AND, the employee has worked a pattern of hours in the last 6 months that could, without significant adjustment be converted to part time or full time, AND, the request is not coming in the 21 day window from the 12 month employment anniversary.
If an employee makes a ‘later date’ request for conversion, the business must consider and respond and must not unreasonably refuse, but may refuse on reasonable business grounds, but only AFTER the business consults with the employee on options. Any acceptance or rejection of request must be issued in writing by the business to the employee, within 21 days of the request, outline the consultation that occurred prior to the refusal as well as outline the grounds for refusal.
An employee cannot be forced to be a permanent employee – if they want to stay casual then they can stay casual.
Casual Conversion – what should the business do now…
In the fuel retail and wholesale industry casual conversion is a well understood and long held element of employment, having been in the industry Awards for well over a decade. It is anticipated that the Awards may undergo additional changes once these changes are adopted into the Act. In the mean time businesses should;
- Set a calendar reminder for each casual employees 6/12 month anniversary (6 month in fuel retail) and review the employees work pattern for suitability to convert at that time.
- If there is suitability then the business should send a letter offering the conversion to permanent
- If there is not suitability the business should send a letter outlining that at this time it is not making an offer of conversion on the reasonable business grounds of [xyz]
- Ensure that they are signed up for Award change alerts through the Fair Work Commission website (or are subscribed to ACAPMAg) to ensure the latest Award updates, including the Casual Conversion operation, are understood.
For now it is important to note that the changes to the Act have not yet happened, so the casual conversion process in the Award is the one that takes precedence. ACAPMA will release new Casual Conversion Guides once the interplay between the Act and the Awards is clarified.
Disputes about status or conversion
The changes to the Act outline the process for dispute resolution, but only if there is not already a term in the employment instrument that applies to the employee about dispute resolution. The Act will now provide for disputes to be initially addressed at the business level, then escalated to the Fair Work Commission for arbitration if the dispute cannot be settled at the business level.
This dispute resolution change has caused much commentary in the media, but puts disputes about casual status and conversion on the same process as disputes about termination (unfair dismissal) bullying and adverse action – so it is a common sense approach.
Disputes about status or conversion – what businesses should do now…
If a business is committed to a different dispute resolution process then this should be enshrined in the employment instrument.
Casual Fair Work Information Statement
The changes to the Act will also lead to the publication of a Fair Work Information Statement specifically for casual employees.
The Casual Employee Fair Work Information Statement will include information on the National Employment Standards, the meaning of a casual, the operation of casual conversion as well as general employment and dispute resolution information for casual employees.
Casual Fair Work Information Statement – what businesses should do now…
The Fair Work Information Statement that currently has to be provided to all new employees, covers both permanent and casual staff.
The change to have a dedicated Casual Employee Fair Work Information Statement (and thus a Permanent Employee Fair Work Information Statement) opens many businesses to the risk of providing the wrong statement (which could compound, not address confusion).
It is suggested that each Letter of Offer be amended to include a link to the Fair Work Ombudsman’s website page on the Fair Work Information Statement at the very least – https://www.fairwork.gov.au/employee-entitlements/national-employment-standards/fair-work-information-statement
Once this dedicated Casual Employee Fair Work Information Statement is published ACAPMA will circulate guidance for members.
Copy of the Bill as passed by both Houses: https://parlinfo.aph.gov.au/parlInfo/download/legislation/bills/r6653_aspassed/toc_pdf/20183b01.pdf;fileType=application%2Fpdf
Here to Help
ACAPMA members are reminded that ACAPMA has a series of resources from Quick Reference Guides to template letters and investigation and reporting checklists that can assist with ensuring compliant and consistent responses in this area, and can call on the advice and support of the ACAPMA Employment Professionals via email@example.com .
HR Highlights are things to consider, implement and watch out for in your business.
They are provided as general advice and you should seek further advice on your situation by emailing firstname.lastname@example.org it’s free for members.
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Elisha Radwanowski BCom(HRM &IR)
Executive Manager Employment and Training