Casual Employment – A Practical Guide for Employers

The rules for employing causal workers changed on 26th August 2024.We’ve put together this Practical Guide for Employers to help you navigate these changes and understand how casual employment now works under the Fair Work Act 2009.

This is a must read for all businesses that employ casuals (or intend to).

1. Who does this apply to?

All businesses, of all sizes, in all industries, who employ (or intend to employ) casuals.

Please note that some obligations are different for small businesses (fewer than 15 employees); these are noted throughout this guide.

2. Why do I need to know about this?

The definition of a ‘casual employee’ has changed and it is important that employers are aware of this and aren’t misclassifying new employees as casual employees. The changes impose additional obligations on employers in relation to issuing the Casual Employment Information Sheet but have removed the requirements for employers to have to proactively offer casual conversion to eligible employees.

By not understanding these changes or failing to take the appropriate action, businesses may be at risk of:

• Penalties – The Closing Loopholes changes to the Fair Work Act 2009 have introduced new offences relating to the intentional misuse of casual employment (up to $495,000 for companies per offence);
• Employers could also be liable for backpay of any unpaid permanent employment entitlements if an employee has been misclassified as a casual worker;
• Employers could incorrectly reject a request from an employee to convert to permanent if they don’t understand the new definition;
• All of the above come with significant risk of reputational damage and negative flow on effects to employees and workplace culture.

3. Summary of the Changes Effective from August 2024

a) A New Definition – Which only applies for all new casual employees who start from the 26th August 2024 onwards.

The new definition of a ‘casual employee’ is if, when they start employment:

• the employment relationship has no firm advance commitment to ongoing work, taking into account a number of factors*, and
• they’re entitled to a casual loading or specific casual pay rate under an award, registered agreement, or employment contract.

*The new definition of casual employment considers the real substance, practical reality and true nature of the employment relationship. That is, how the parties actually behave and treat each other once the employment has begun, as opposed to just relying on the terms in the employee’s contract?(as was previously the case).

Also note that these changes are prospective, not retrospective. So, if an employee was engaged as a casual employee (pre 26th of August 2024) in line with the previous definition of ‘casual employment’, they will remain a casual employee unless their employment status is changed under the casual conversion pathway, by an order of the FWC, or by accepting an alternative offer of employment that isn’t casual.

b) A Change to the Casual Conversion process now called ‘Employee Choice Pathway’.

A new pathway has been introduced for eligible employees to request to change from casual to full-time or part-time employment. Under the new arrangements, employers will no longer have an obligation to proactively offer conversion to permanent employment at 12 months of employment, as they did previously. It will now be the responsibility of the employee to request this change (if they are eligible).

c) Casual Employment Information Statement – Additional requirement to issue to existing casual employees at regular intervals.

Employers now need to give all existing casual employees the Casual Employment Information Statement at regular intervals during their employment. This is in addition to the existing requirement to provide it to all new casual employees before, or as soon as possible after, they start their new job.

4. What is 'No Firm Advance Commitment'?

Whether there is a firm advance commitment needs to be assessed on:

• the real substance, practical reality and true nature of the employment relationship;

• if the employer can offer or not offer work to the employee (and whether this is happening);
• if the employee can accept or reject work (and whether this is happening);
• if it’s reasonably likely there will be future work available of the kind the employee usually performs in the employer’s business, based on the nature of the business;
• if there are full-time or part-time employees performing the same kind of work in the employer’s business as the work the employee usually performs;
• if the employee has a regular pattern of work even if it changes over time due to, for example, reasonable absences because of illness, injury or other leave.

The above isn’t a full list and other factors may apply.

When assessing whether there is a firm advance commitment, you can also look at:

• the contract of employment, and
• any mutual understanding or expectation between the employer and employee that isn’t part of the contract.

5. Casual Conversion - Now called the 'Employee Choice Pathway'

5.1.?? What is the ‘Employee Choice Pathway’?

A new pathway has been introduced for eligible employees to request to change from casual to full-time or part-time employment under the National Employment Standards. It is no longer the responsibility of the employer to offer casual conversion (as it was previously) – it is now the responsibility of the employee to make a written request to their employer.

5.2. ? Making a Notification

Edwards HR is here to assist you in complying with your obligations and creating a safe, respectful workplace. If you need help with policy updates or team training, please do not hesitate to reach out.

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