February 14, 2019   |   Compliance

Understanding the New Rules Around Casual Employment

Two new rules impacting employees classified as “casual” have come into effect in recent months.

In this article, we discuss the two new rules; the new casual conversion clause and the Fair Work Amendment (Casual Loading Offset) Regulations 2018. Both of these rules came into effect late last year. We also discuss the impact this has on you as an employer.

The New Casual Conversion Clause

On 1st October 2018, Fair Work added a casual conversion clause to 84 modern awards. This new model term allows regular casual employees the right to request their employment to be converted from casual to full-time or part-time.

A regular casual employee is defined by Fair Work as ‘…a casual employee who has in the preceding period of 12 months worked a pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to perform as a full-time employee or part-time employee under the provisions of this award.’

An employer can agree or refuse a casual conversion request, however, if refused there must be reasonable grounds to do so. There must also have been consultation with the relevant employee before a refusal is made.

Reasonable grounds for a refusal include;

  • It would require significant adjustment to the employee’s hours of work;
  • It is known or reasonably foreseeable that the employee’s role will cease to exist within the next 12 months;
  • It is known or reasonably foreseeable that the employee’s hours of work to be performed will be significantly reduced in the next 12 months; or
  • It is known or reasonably foreseeable that there will be a significant change in the days and/or times at which the employee’s hours of work are required to be performed in the next 12 months which cannot be accommodated within the days and/or hours during which the employee is available to work.

What do you need to do as an employer?

1. Consult the awards

As the model term does differ in a small number of awards and isn’t included in some others, make sure to check the individual awards covered by your employees.

2. Provide a copy of the clause to your employees

By 1 January 2019, all employers were required to supply a copy of the relevant model term to their casual employees hired before 1 October 2018.

For all casual employees hired after 1 October 2018, you must provide them with a copy of the casual conversion model term within 12 months of them commencing employment. We suggest including it in their employment contract or as part of their onboarding pack.

For more information on the casual conversion clause, you can read Fair Work’s decision here.

Casual Loading Offset Rules

There has been a significant spotlight in the media this past couple of months on the misclassification of “casual” employees. With multiple class actions in play causing a lot of uncertainty for employers with casual workers, the Federal Government introduced the Fair Work Amendment (Casual Loading Offset) Regulations 2018 (“Casual Loading Offset”). This new legislation came into effect on 18 December 2018.

What is the Casual Loading Offset?

The new Casual Loading Offset legislation states that if an employer has incorrectly classified an employee as “casual” instead of full time or part time, then any casual loading already paid to the employee can be offset when calculating the accruals owing to the employee, in line with the National Employment Standards (“NES”).

When is an employee permanent?

If an employee is working regular and systematic hours and this pattern of work is expected to continue, then an employee may be deemed as permanent.

When does the offset apply?

An employer can make a claim to offset casual loading amounts made to an employee to offset entitlements if the following criteria are met;

  • The employee is employed on a casual basis;
  • The casual loading amount paid to the employee is clearly identifiable as a separate payment, i.e. the loading is paid as a separate pay item;
  • For at least some of the employment period, the “casual” employee was, in fact, a full-time or part-time employee for the purposes of the NES; and
  • The employee makes a claim to be paid an amount in lieu of one or more of the relevant NES entitlements.

As an employer, the second point above is the most important to remember. The casual loading amount paid to the employee must be clearly identifiable as a separate pay item.

Want to know more about the Casual Loading Offset rules? View the amendment on the Federal Register of Legislation here.