Changes Impacting Casual Employees: Closing Loopholes Bill 2023

Fair Work Legislation Amendment Closing Loopholes No. 2 (‘the Bill’) introduces several fundamental changes in the workplace relations landscape that impact employers in Australia. One particular change that employers should be alert to is the definition of a ‘casual employee,’ which will take effect on 26 August 2024.

Change in definition of casual employee

Currently, the definition of a casual employee per section 15A of the Fair Work Act 2009 (Cth) is:

A person is a casual employee if they accept an offer for a job from an employer knowing that there is no firm advance commitment to ongoing work or an agreed pattern of work.

In this definition, to substantiate a point that the business cannot guarantee firm advance commitment, two key factors must be present:

1. employer can choose to offer the employee work and it’s the employee’s choice to work or not; and

2. employee will be offered work when the business needs them to work.

The Bill will change the definition of a casual by requiring that ‘there is an absence of a firm advance commitment to continuing and indefinite work’.  Therefore, the definition of a casual employee will move away from one that focuses on the terms of the offer and acceptance in a contract (as is the current definition), to instead focus on the post contractual conduct in assessing the relationship.  This will include assessment of whether there is a regular pattern of work undertaken by the employee in question.

It is important to note that an employee who has a regular pattern of work may still be a casual employee if there is no firm advance commitment to continuing and indefinite work.  In this regard, upon the change taking effect, the Fair Work Ombudsman will evaluate the following factors to determine whether there is a legitimate inability to guarantee a firm advance commitment to continuing and indefinite work:

1. Whether there is an inability of the employer to elect to offer, or not offer, work or an inability of the employee to elect to accept or reject work (and whether this occurs in practice).

2. Whether, having regard to the nature of the employer’s enterprise, it is reasonably likely that there will be future availability of continuing work in that enterprise of the kind usually performed by the employee.

3. Whether there are full‑time employees or part‑time employees performing the same kind of work in the employer’s enterprise that is usually performed by the employee.

4. Whether there is a regular pattern of work for the employee.

It is important that members consider these factors when categorising an employee as a casual and seek advice from the MPAQ HR Advisory team when in doubt.

Casual Conversion

As part of the Closing the Loopholes reform, the Bill also introduces a new right for a casual employee request to convert to permanent employment after 6 months (or 12 months for small business employers characterised by less than 15 employees). This change will allow employees to request conversion sooner than what has historically been available.

Where such a request occurs, employers must give an employee a written response to a request within 21 days after receipt. If the employer does not accept a request for conversion, they must, within 21 days, provide a written response outlining in detail the reasons for the rejection. The grounds for an employer to not accept a notification include that: 

• the employee still meets the new definition of a casual employee; 

• accepting the notification would be impracticable because substantial changes to the employee’s terms and conditions would be reasonably necessary to ensure the employer does not contravene a term of an enterprise agreement, a modern award, a Fair Work Commission order or a workplace determination would apply the employee as a full-time or part-time employee; or 

• accepting the notification would result in the employer not complying with a recruitment or selection process required by or under a law of the Commonwealth or a State or Territory if the employer were to accept the notification. 

Takeaways for members

• The status of employees, particularly casual vs permanent employees, can have a major impact on the benefits and entitlements owed to employees. 

• This in turn creates an underpayment risk if employee is categorised incorrectly (i.e. as either permanent or casual). 

• From the outset of hiring, members are encouraged to seek advice from our MPAQ HR Advisory team before categorising employees as either casual or permanent.

• Once a decision is made as to the status of an employee, clear communication with employees regarding their employment status, entitlements, and reflecting the nature of the relationship properly in employment contracts is crucial.

If you have any further questions surrounding this change, please feel free to contact our MPAQ HR Advisory team on 07 3273 0800, and one of our team can support you in navigating this further.