Definition Of Casual Employee

On 27 March 2021 the Commonwealth Government introduced legislation which included a definition for a “casual employee”.  The Fair Work Act 2009 (Cth) (FW Act) now provides a process by which casual employees may convert to full time or part time employment, and requires that employers provide casual employees with a Casual Employment Information Statement.

The changes apply to all casual employees, including existing employees and those employed on or after 27 March 2021, so long as they meet the new definition of casual employee.  

How does the FW Act define a casual employee?

Including a definition of casual employee is in stark contrast to considering whether an individual was a casual employee in accordance with the principle set out in the matter of WorkPac Pty Ltd v Rossato [2020].  In that case the Court stated that a court is ultimately required to assess how the employer and employee have conducted their working relationship during the period of employment to determine whether it was of a genuine casual nature or not. Ultimately, the amendment to the FW Act provides a simplified process by which an employer may determine that an individual is a genuine casual employee.

Specifically, subsection 15A(1) of the FW Act provides that a person is a casual employee if:

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

2. the person accepts the offer on that basis; and

3. he person is an employee as a result of that acceptance.

When determining whether, at the time the offer is made, there is no firm advancement to continuing and indefinite work, consideration ought be given to:

1. whether the employer can elect to offer work and whether the employee can elect accept or reject the work;

2. whether the person will work as required according to the needs of the employer;

3. whether the employment is described as casual employment; and

4. whether the person will be entitled to a casual loading or a specific rate of pay for casual employees.

Employers should note that the above four factors are the only factors which must be considered, and further that no single factor is determinative and all factors need not be satisfied

Significantly, the tests for determining if an employee is a casual employee within the meaning of the FW Act are considered on what is agreed at the commencement of employment and are not affected by future conduct.

Casual conversion

The new legislation also amended the FW Act to allow a process for conversion of casual employees to full-time or part-time employment. As a general rule, an employer must offer to convert a casual employee where the employee:

1. has been employed for at least 12 months;

2. during the last 6 months has worked a regular pattern of hours on an ongoing basis without significant adjustment; and

3. could continue working those hours as a permanent (full-time or part-time) employee without significant adjustment.

The offer for conversion must be in writing, offer to convert the employee to full-time or part-time employment (as appropriate) and be provided to the employee within 21 days after the end of the 12 month period referred to above.

Importantly for employers, an employer is not required to convert an employee to a permanent position where it has reasonable grounds to not do so, or where the employer is considered a small business employer (meaning an employer that has less than 15 employees).

Subsection 66C(2) of the FW Act provides a list of reasons which may be considered reasonable grounds for not making an offer to convert an employee and include, among others, that the employee’s position will cease to exist in the 2 month period after deciding not to make an offer, the hours of work which the employee is required to perform will be significantly reduced and there will be a significant change in either or both of the days and times in which the employee is required to work which cannot be accommodated by the employee.

Employers must provide employees with written notice in circumstances where any employer decides not to offer conversion based on reasonable grounds, or where the employee has been employed for the required period but has not met the requirement to have worked a regular pattern of work over the prior 6 months.

Employees must respond to an offer to convert within 21 days and if the employee fails to respond it is presumed the employee has declined the offer. In the event an employee wishes to accept an offer of conversion the employer must, within 21 days after acceptance, provide written notice to the employee regarding whether he or she is converting to full-time or part-time employment, hours of work after conversion and the day the conversion will take effect (which must be the first day of the employee’s full pay period after notice is given, unless otherwise agreed). The employer must discuss this with the employee prior.

In certain circumstances employees can request a conversion to full-time or part-time employment.

Further information in relation to casual conversion can be provided upon request.

Casual Employment Information Statement

In addition, pursuant to section 125B of the FW Act an employer must provide casual employees with Casual Employment Information Statement before, or as soon as practicable after, the employee starts employment as a casual employee.

The current Casual Employment Information Statement can be accessed here.

Next steps for employers

In the event you require any assistance with managing the above changes, please contact a member of the Harwood Andrews employment team.

Jim Babalis
Special Counsel
T 03 5225 5205
E jbabalis@ha.legal