In a win for Australian employers, the Morrison government successfully passed the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 on March 22.

The bill contains significant reforms to offsetting arrangements and the definition of casual employment, prompted by cases like Workpac Pty Ltd v Rossato, which saw one of Workpac’s employees awarded both casual loading and entitlements like annual leave.

The bill’s clarification of casual employment is, in part, intended to stop casual employees ‘double dipping’ by receiving both casual loading and other workplace entitlements already included in their loading.

The bill also contains other reforms, including:

• flexibility under modern awards for industries impacted by COVID-19;
• the making and approval of enterprise bargaining agreements;
• greenfield agreements and major projects; and
• compliance and enforcement, including in relation to wage theft.

Legislative Definition of Casual Employment

Previously, there was no legislative definition of ‘casual employee’.  The amended legislation now provides that a person is a casual employee if:

• there is an offer of employment made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work; and
• the person accepts the offer on that basis.

To determine whether there is a ‘firm advance commitment’ or not, only the following criteria can be considered:

• whether the employer can elect to offer work and whether the person can elect to accept or reject work;
• whether the person will work only as required;
• whether the employment is described as casual employment; and
• whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.

Right to Casual Conversion

The amended legislation also clarifies when an employer must offer an employee casual conversion into part- or full-time employment.

The offer must be made if:

• the employee has been working for a period of 12 months; and
• during the last 6 months of that period, the employee has worked a regular pattern of hours and, without significant adjustment, the employee could work as a part- or full-time employee.

The employer does not need to make this offer if they have less than 15 employees or if there are reasonable grounds not to make the offer, including factors such as:

• the employee’s position will cease to exist within 12 months;
• the hours of work which the employee is required to perform will be significantly reduced in that period;
• there will be a significant change in the days or times of work (or both) which cannot be accommodated within the days or times the employee is available to work; or
• making the offer would not comply with a recruitment or selection process required by or under a law of the Commonwealth or a state or a territory.

What the Fair Work Amendment Means for Employers

Under the new definition of ‘casual employee’, employers should review their casual employees to make sure they’re correctly classified.

Although the legislation’s amended casual loading laws safeguard against cases like Workpac v Rossato, incorrectly classified employees will now have entitlement claim amounts reduced by casual loading amounts. However, casual employees who are actually full- or part-time employees can still be problematic for employers under the amended legislation.

The obligation to offer casual conversion is also placed on employers – this means employers need to be mindful of eligible employees who may be approaching the 12-month mark.

Ultimately, the legislation has clarified ‘casual employment’ in Australia, preventing entitlement/loading ‘double dipping’, but it has also created new obligations for businesses.