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Changes to Casual Employment – What do you need to know?

The Federal Government’s proposed Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (the Bill) has now passed both houses of Parliament in a revised and significantly reduced form.

Not all proposed changes were passed, but the Bill introduces a definition of casual employment into the Fair Work Act 2009 (Cth) (FW Act) for the first time and gives a statutory right on long term casual employees to request conversion to permanent employment.

New Definition

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

1. offered employment without a “firm advanced commitment to continuing and indefinite work”; and
2. 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 based on the offer of employment, not on any subsequent conduct of the parties.

When determining whether a firm advance commitment to continuing and indefinite work exists, a Court will have to only consider:

• whether the employer can elect to offer work and whether the person can elect to accept or reject work;
• whether the person will work as required according to the needs of the employer;
• 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 second key inclusion is the casual conversion mechanism. These are in addition to current Award obligations.

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

1. has been employed for 12 months; and
2. during the last 6 months, has worked a regular and systematic pattern of hours without significant adjustment.

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).

However, employers are not obliged to make an offer if there are “reasonable business grounds” to not make the offer. Such grounds must be known or reasonably foreseeable at the time of declining to make the offer.

The Bill defines reasonable business grounds to include:

• where the conversion would require a significant adjustment to the employee’s hours of work in order for the employee to be employed permanently;
• where the employee’s position will cease to exist in the 12 months after the conversion right arises;
• where the hours of work which the employee is required to perform will be significantly reduced in the 12 months after the conversion right arises; and
• if there will be a significant change in either the days or times on which the employee’s hours of work are required to be performed in the 12 months after the conversion right arises.

Where an employer determines not to make an offer of conversion, they must give notice of the decision to employees within 21 days of when the right to be offered conversion arose. If an employer fails to give this notice, the employee retains a residual right to request conversion at a later date.

Please note that these casual conversion provisions go further than the existing Award provisions. This is because the existing provisions entitle employees to request conversion. Now, employers have an obligation to offer conversion regardless of any employee request. That is, there is a new proactive obligation on employers.

These casual conversion rights do not apply to employees of small business employers (employers with a headcount of fewer than 15 employees).

Conversion right can be lost

Where an employee refuses an offer to convert, they no longer hold a right to request conversion at a later date.

Equally, where an employer has determined that there a reasonable business grounds to not make an offer of casual conversion and notifies the employee in accordance with the provisions of the Act, then the employees also cease to hold a right to request conversion at a later date.

New Casual Employment Information Statement

The Fair Work Ombudsman has created a new Casual Employment Information Statement that must be provided to each casual employee when they commence employment.

Find a copy of the statement here.

This is in addition to the existing Fair Work Information Statement.

Casual loading offset

One of the most important changes will be the issues created where employers misclassify employees as casuals and fail to accrue leave entitlements for these employees.

Where an employee is found to have been incorrectly engaged as a casual (that is, they are at law a permanent employee), there will now be an express right for employers to offset any leave entitlements owed to the employee against the casual loading that is paid to the casual employees.

To have the benefit of this offset arrangement, the loading paid must have had components that can be identified as being paid to the employee instead of one or more leave entitlements.

What should employers do next?

All employers should be looking to:

• Review their Casual employment agreements to ensure they are compliant with the changes
• Reassess your workforce mix to determine whether your existing arrangements need to be amended to avoid unnecessary risk
• Consider the business factors that will impact their ability to convert (or not convert) longer-serving regular casuals to permanent employment.
• Introduce processes for dealing with casual conversion that ensure the operational requirements are considered whilst simultaneously ensuring compliance with the FW Act.

Small Businesses with less than 15 employees

• If you currently employ Casuals, you will need to provide them with a copy of the new Casual Employment Information Statement (CEIS) as soon as possible.
• All new casual employees you engage must receive a copy of the CEIG in addition to the current Fair Work Statement.

Businesses with more than 15 employees

• If you currently employ Casuals, you must give your existing casual employees (employed before 27 March 2021) a copy of the CEIS as soon as possible after 27 September 2021.
• All new casual employees you engage must receive a copy of the CEIG in addition to the current Fair Work Statement.

If you have any questions on this process, please reach out to our team.

Working From Home – Have things changed at your workplace?

For employers that were able to work flexibly over the last 12 months, the reduction of COVID-19 restrictions across the country has meant that most employees are now back working onsite.

Some businesses have decided to continue to offer their employees the benefit of continuing to work from home. But have you taken the time to reassess your Working From Home policies as circumstances have evolved?

In early 2020, many businesses implemented policies on the fly in response to the pandemic. Now is a good time to review these policies to ensure that they are still relevant to how you intend to operate in 2021.

If you need help with this process, speak to a member of the Strawberry Seed team.

2021 Superannuation Increase

Effective 1 July 2021, employers will be required to increase the minimum superannuation contribution to employees from 9.5% of “Ordinary Time Earnings” (OTE) to 10%.

Depending on whether an employee’s salary is expressed as inclusive or exclusive of superannuation, it may decrease an employee’s take-home pay or increase costs for the employer. Now is an excellent time to carefully review how this increase will affect your employees.

Is your remuneration inclusive or exclusive of superannuation?

Superannuation is often framed as an add-on to wages. Therefore we say, “your salary is $60,000 plus 9.5 % super”.  Every time we use the phrase “plus super”, we are saying that remuneration is exclusive of superannuation.

The benefit of structuring pay as exclusive of superannuation is that it makes it easy to compare the pay rates against Award rates as Modern Awards rates are exclusive of superannuation. It also makes it much easier to implement an increase in superannuation.

Executives and professionals may sometimes have their wages expressed inclusive of superannuation. For example, “The salary is $60,000 inclusive of super” or “$54,794 plus 9.5% superannuation”.  For this group of employees, their take-home pay will reduce on 1 July 2021.

Now is a good time to consider how this impending increase will impact your business. For assistance with this process, speak to a member of the Strawberry Seed team.