Important changes affecting casual employment

Jun 22, 2021

Significant reforms to casual employment have been introduced to the Fair Work Act 2009 by the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act.

Up until now, the Fair Work Act (which governs the laws of employment in Australia) did not define a ‘casual employee’, leaving it to the Courts to assess whether a casual employment relationship existed.

Following the decision in Workpac Pty Ltd v Rossato [2020] FCAFC 84, employees who worked ‘regular, certain, continuing, constant and predictable’ shifts became entitled to receive the benefits and entitlements of full-time workers. This decision left many employers exposed to historic claims for unpaid entitlements due to misclassification of casual employment, despite already paying casual employees a 25% casual loading.

The recent amendments to the Fair Work Act (Act) now provide a clear statutory definition of what constitutes a casual employee and will apply retrospectively to protect employers from claims resulting from historical misclassification.

Definition of casual employee

According to section 15A of the Act, an employee will be a casual employee where:

  • an offer of employment was made to the employee with no firm advance commitment to continuing and indefinite work according to an agreed pattern of work; and
  • the offer is accepted on that basis.

To determine whether the employment meets this definition, the following factors must be considered:

  • whether the employer can elect to offer work and whether the employee can elect to accept or reject work;
  • whether the employee will work only as required;
  • whether the employment is described as casual employment; and
  • whether the employee will be entitled to a casual loading or specific rate of pay for casual employees under the terms of the offer or any applicable Award or Enterprise Agreement.

Importantly, it is only the nature of the offer and acceptance at the time of the offer that are to be considered when assessing where a casual employment relationship exists. Subsequent conduct throughout the employment relationship is no longer taken into account.

Employees hired on a casual basis will remain a casual employee until the employment is converted to permanent employment.  See earlier article on casual conversion.

Offset casual loading

If an employee is found to have been misclassified as a casual, the Act now allows the employer to offset the 25% casual loading already paid to the employee against any entitlements, such as leave and notice, that arise following the misclassification.

This offset is welcomed by employers.

Casual Employment Information Statement

The Fair Work Ombudsman has published a new Casual Employment Information Statement which employers are required to provide to all casual employees. This can be downloaded from the Fair Work Ombudsman website.

For advice on the changes to casual employment or your obligations as an employer generally, please contact Heather Richardson or Isabella Royce.