Government defines casual work – but what does it mean for you?

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March 23 2021
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While much of the government’s industrial relations reforms failed to please the Senate, the Morrison government was successful in seeing through the definition of a casual employee for the first time in history.

The controversial IR Omnibus Bill was introduced to Parliament in December last year, containing provisions regarding casual work, wage theft, award simplification, enterprise bargaining and greenfield agreements.

The final bill passed both houses of Parliament last week, in a revised and significantly reduced form, and while it has been critiqued as a failure on many front, the bill did manage to introduce a definition of casual employment into the Fair Work Act 2009 for the first time.

“While key aspects of the bill were jettisoned last week, the passing of the bill remains a landmark development as it reforms a substantial and often problematic feature of the industrial relations system – casual employment,” managing director at Australian Business Lawyers and Advisers, Luis Izzo, said.

Casuals defined for the first time

The measures to define a casual staff member were introduced following a Federal Court case last year, which ruled that casual employees working regular and systematic hours with “predictable periods of working time” are entitled to personal leave, compassionate leave and public holiday payments.

The court ruled that regardless of what their contract says and regardless of the payment of a casual loading, casuals are likely to be considered permanent employees based on their nature of work.

Conventional wisdom has been that casuals do not accrue annual leave entitlements, because the casual loading sees them effectively paid a higher hourly rate in lieu of such accrued entitlements.

As a result of the bill, under the FW Act, if a person is:

offered employment without a “firm advanced commitment to continuing and indefinite work”; and
the person accepts that offer,

then the person is a casual employee regardless of any changes in the employment relationship.

“That is, the assessment of whether a person is a casual occurs on the basis of the offer of employment, not on the basis of any subsequent conduct of the parties,” Mr Izzo explained.

Right to casual conversion

Another key aspect of the changing casual environment is the inclusion of casual conversion mechanisms, which will allow for the easier transition from temporary to permanent work.

“The offer must be to convert to either full-time employment (where the casual has worked the equivalent of full-time hours) or part-time employment consistent with the casual’s regular pattern of hours (where the casual has worked the equivalent of part-time hours),” Mr Izzo explained.

Employers must offer to convert a casual employee to permanent employment if the employee:

has been employed for 12 months; and
during the last six months, has worked a regular and systematic pattern of hours without significant adjustment.

Casual loading offset created

Mr Izzo also explained that the changing definition of a casual worker will help deal with the historical problem of workers being misclassified as casuals, which saw them miss out on accrued leave entitlements.

“Where an employee is found to have been incorrectly engaged as a casual (that is, they are at law a permanent employee), the bill creates an express right for employers to offset any leave entitlements owed to the employee against the casual loading that is often paid to the casual employees,” Mr Izzo said.

What should employers do next

According to the industrial relations lawyer, for employers these changes mean it could be time to "clean the house" in terms of the arrangements and instruments that business owners have in place governing casual employment.

Employers are advised to look at:

introducing new casual contracts that align with the recent amendments; and
introducing processes for dealing with casual conversion that ensure the employer’s operational requirements are considered whilst simultaneously ensuring compliance with the FW Act.

“For some businesses, it might also be time to reassess your workforce mix and labour strategies to determine whether your existing arrangements can be optimised having regard to the changed regulatory landscape,” Mr Izzo concluded.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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