On the 9th of December 2020, the Morrison Government introduced the IR Omnibus Bill (Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery), which was drafted as a result of the COVID-19 roundtable process.

On the 18th of March 2021, this Bill passed both houses of Parliament after it was substantially reduced and the Government dropped all schedules from the Bill, except Schedule 1. It is expected that this will become law when it receives Royal Assent, which is usually within a fortnight after passing Parliament

Schedule 1 deals with casual employment and will require employers to assess their policies and procedures regarding casual employment.

What you need to do

• Review any casual contracts to ensure they align with the recent developments.
• Review your casual conversion process.
• Give each casual employee a Casual Employment Information Statement (CEIS).

In summary, the Bill provides:

1. a definition of a casual employee;
2. an obligation for employers to offer casual employees who work regular and systematic hours conversion to permanent employment;
3. the obligation to provide a Casual Employment Information Statement; and
4. the right to offset paid casual loading against any paid leave entitlements.

The Bill also requires the Fair Work Commission to review the casual employment terms in all awards to ensure they operate consistently with the amendments. This must be done within a six-month period from commencement of the Bill.

1. Casual employment

As a result of the Bill, 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 defined as a casual employee regardless of any changes in the employment relationship afterwards. This is because the assessment of whether a person is a casual occurs on the basis of an offer of employment, not on the basis of the conduct of the parties later.

When determining whether a firm advanced commitment to continuing and indefinite work exists, the Bill requires a court to have regard to only the following considerations:

• 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.

2. Casual conversion

The casual conversion right goes further than what is currently provided for in the Awards, which provide the entitlement for employees to request the conversion.

Employers now have an obligation to assess the casual employment and offer conversion to all eligible casual employees, including those not covered by an Award, unless there are reasonable business grounds to not make an offer or the casual employee does not qualify.

In all cases, the employer must notify the employee, in accordance with the provisions of the Bill, of the outcome of the assessment. Where a casual employee has declined or be informed that no offer will be made, they have the residual right to request conversion at a later date.

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 for either full-time employment (when worked the equivalent of full-time hours) or part-time employment.

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 as including:

• 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 that 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 the days of times on which the employee’s hours of work are required to be performed in the 12 months after the conversion right arises.

If 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.

The FWC has six months to review and update the casual conversion clauses in the Awards where necessary.

3. Casual Employment Information Statement

Employers will be required to provide all casual employees with a Casual Employment Information Statement (CEIS) on commencement of employment alongside the Fair Work Information Statement.

4. Casual loading offset created

Importantly, the Bill also deals with the problem that has been 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), the Bill creates an express right for employers to offset any leave entitlements owed to the employee against the casual loading that is often paid to the casual employees.

In order 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.

If you have any queries regarding this Bill or require assistance in ensuring you are compliant with these changes to casual employment matters, contact Bayside Group Workplace Relations today.