You will be forgiven if you see workplace law in Australia as a labyrinth that only a law degree could work through. Compared to many jurisdictions throughout the world, Australian workplace law is complex, due to many factors including the nature of our federal system of government and historical developments in labour law. In recent years, however, businesses have faced a greater degree of confusion and uncertainty with many changes in workplace laws including criminalisation of wage theft, the right to disconnect, the implementation of workplace harassment prevention plans and casual to permanent employment pathways. This blog is focused on the latter.
Casual employment has undergone significant change over the last few years with most recent changes occurring in 2024 with the introduction of a new definition of casual employment and the “Employee Choice Pathway”, enacted under the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024.
With the new laws, the definition of casual employment now places emphasis on the “practical reality” of the employment relationship, rather than relying solely on the terms of the employment contract and eligible employees are now able to request casual conversion to permanent employment.
It is important that employees and businesses alike understand the new laws and how employees can convert from casual employment. This article seeks to provide a simple outline of the amendments. However, it is general in nature, and we encourage to you to discuss your matter with an employment lawyer to ensure you obtain specific advice to your circumstances. Details on how to claim your complimentary 15-minute consultation with one of our experienced lawyers is set out below.
A New Definition of Casual Employment
The new definition of “casual employee” focuses on the absence of a “firm advance commitment” to ongoing work. This is assessed by considering the real substance and practical reality of the employment relationship, not just the written contract. Factors include:
- The ability of the employer to offer or not offer work, and the employee to accept or reject work.
- The likelihood of ongoing work.
- Whether other employees perform the same work on a permanent basis.
- The regularity of the employee’s work pattern.
Legal and Practical Implications
From 26 August 2024 eligible casual employees will be able to notify their employer if they wish to convert their casual employment to permanent (full-time or part-time) employment.
For casuals employed before 26 August 2024, transitional rules apply, and previous service may not count towards eligibility for the new pathway until specified dates in 2025.
The obligation for employers to offer permanent employment to casual employees is no longer the case. Instead, employers are now only required to address a request made by an eligible employee. Employers can refuse a request but only on limited, prescribed grounds, such as operational requirements or compliance with other legal obligations.
Another factor employers must be mindful of is ensuring they do not take adverse action, such as reducing hours, changing rosters, or terminating employment to avoid their obligations under the pathway.
If disputes arise and cannot be resolved internally, they may be referred to the Fair Work Commission for mediation, conciliation, or arbitration.
Checklist
Set out below are general steps that need to be taken when making, considering, or responding to, a request for casual conversation. However, it is important to note that depending on the employee and situation, further matters set out in the Fair Work Act may need to be considered to ensure laws are not breached.
Step 1. Is the Employee Eligible?
Casual national system employees who believe they no longer meet the definition of a casual employee who have been employed for at least 6 months (or 12 months for small businesses) are able to make the request. The definition of casual employee is set out in section 15A of the Fair Work Act. The general rule is set out in subsection (1) as follows:
(1) An employee is a casual employee of an employer only if:
- the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work; and
- the employee would be entitled to a casual loading or a specific rate of pay for casual employees under the terms of a fair work instrument if the employee were a casual employee, or the employee is entitled to such a loading or rate of pay under the contract of employment.
The remainder of section 15A seeks to clarify the general rule. Subsection (2) in particular, sets out a list of indicia that apply for the purposes of the general rule set out in subsection 1.
Step 2. Employee makes the Request
Eligible employees will need to make the request by providing a written notice to the employer. There is no specific form of notice but must be in writing (i.e. an email).
Step 3 – Employer consults and responds to the Employee.
Employers must respond in writing within 21 days, either accepting or refusing the request. Refusals must be based on specific grounds, such as the employee still meeting the casual definition or operational reasons.
Before responding, employers must consult with the employee about the implications of the change, including hours, status, and commencement date.
Important information and practical steps for businesses
In moving the onus on to employees to initiate the request, employers must be vigilant to ensure they do not take adverse action against employees for exercising their rights under the pathway. As noted above, this could include reducing hours, changing rosters, or terminating the requesting employee’s employment because the employee exercised their workplace right by making the request.
Below are practical steps businesses should take to ensure they properly manage requests and in turn their legal obligations.
- Ensure all casual employment contracts and workplace policies are updated to reflect the new definition of casual employment and the Employee Choice Pathway process.
- Establish clear internal procedures for receiving and responding to written requests from casual employees seeking conversion to permanent employment. Ensure that all requests are acknowledged and processed within the required 21-day timeframe. Failure to comply with these requirements may constitute a breach of the Fair Work Act and could expose the business to legal consequences, including penalties.
- Provide training to managers and supervisors on the new requirements, including how to consult with employees about conversion requests and the lawful grounds for refusal.
- Keep thorough records of all consultations with employees regarding conversion requests, including the reasons for any refusal and the basis for decisions made.
- Regularly review casual work patterns and arrangements to ensure compliance with the new laws and to avoid inadvertent breaches, such as adverse action or anti-avoidance provisions.
- Do not take adverse action against requesting employees.
- Be ready to engage with the Fair Work Commission if a dispute arises, and ensure all relevant documentation and communications are readily available.
Conclusion
Whilst businesses have had to pivot once again meet the changes previously made in 2021, the new laws are beneficial to both employers and employees in that they eliminate the administrative burden on businesses to positively and proactively address offers of casual conversion, and they provide greater agency to employees who are now able to determine their employment status by allowing them to initiate the conversion process.
The new definition of casual employment also places emphasis on the “practical reality” of the employment relationship, rather than relying solely on the terms of the employment contract.
With the Employee Choice Pathway now in effect, both employees and employers should be aware of their rights and obligations under the new laws to ensure a fair and compliant transition process.
Employees should assess their eligibility and formally request conversion if their work has become regular and ongoing and they wish to covert to permanent employment. Employers on the other hand should implement procedures for handling such requests, respond within the required timeframe, and ensure any refusals are based on valid grounds.
Our experienced team at TLB Law & Co is here to help. Contact us today at www.tlblaw.com.au or telephone our team at (02) 9191 9856 for a confidential discussion.