The Government’s new Industrial Relations legislation – has made changes to the Fair Work Act 2009 (Cth) (FW Act) with effect from 27 March 2021.

Much has been written about all of this, but in terms of what it all actually means for employers, it can be confusing. Here are the key practical steps which we think employers should take now to meet their obligations.

1. Provide all casual employees with the Fair Work Ombudsman’s ‘Casual Employment Information Statement’

The Fair Work Ombudsman (FWO) has made available a new Casual Employment Information Statement (CEIS). Both new and existing casual employees must be given a CEIS.

Employers are now required to give every new casual employee a CEIS before, or as soon as possible after, they start their new job.

Small business employers with fewer than 15 employees must give their existing casual employees a copy of the CEIS as soon as possible after 27 March 2021 (so, really, now). All other employers must give their existing casual employees a copy of the CEIS as soon as possible after 27 September 2021.

The CEIS can be downloaded from the FWO’s website.

It is important to note that the CEIS does not replace the FWO’s Fair Work Information Statement, which is still required to be provided to every new employee (for casual employees: in tandem with the CEIS). In view of the recent changes to the FW Act, the FWO intends to revise the Fair Work Information Statement, but as at the time of publication has not yet done so.

2. Revise casual employment contracts to contend with the new definition of ‘casual employee’

One of the key changes is the introduction of a definition of ‘casual employee’ – a term which the FW Act hasn’t previously defined. The new definition provides that a person will be a casual employee if they accept an offer of employment in circumstances where the employer made “no firm advance commitment to continuing and indefinite work according to an agreed pattern of work”.

In a nutshell, this means that the question of whether an employee is a casual is now assessed based on what was agreed when the employment was offered and accepted, and not on the pattern of hours later worked or some other subsequent conduct occurring during the employment.

Whilst the new definition has retrospective effect (in most instances, it also applies to offers of employment given before 27 March 2021), now is the time for employers to ensure that all casual employees have employment contracts, and that those contracts properly contend with the new definition, including by:

  • Ensuring that it is specifically stated that the employment is casual
  • Specifying that the employer can elect to offer work and the employee can elect to accept or reject the work, and
  • Setting out that the employee will only work as required and that there is no guarantee of ongoing or regular work.

It’s important for employers to note that there can be some complexities and prospective issues in both the drafting and introduction of new contractual employment terms (particularly where they are being introduced into existing employment arrangements). Obtaining specific legal advice is recommended.

3. Properly specify the payment of the 25% casual loading in employment contracts and payroll documents

Another key change is the introduction of double-dipping protections for employers. These protections operate when the retrospective application of the 'casual employee' definition does not apply and a claim is made by a person who was paid as a casual, but is later found to be a permanent employee entitled to additional entitlements. They operate to facilitate a reduction or “set off” of any amount payable by the employer by an amount equal to the casual loading already paid.

However, the protections will only facilitate a reduction or 'set off' in circumstances where the employer can demonstrate that the employee has been paid a separately identifiable casual loading to compensate them for not being entitled to permanent employee benefits (such as annual leave, paid personal leave, redundancy pay and other relevant entitlements). On that basis, it is important that employers ensure that casual employment contracts:

  • Make it clear that the employee is paid a 25% casual loading and that the loading is paid on the basis that the employee is not entitled to relevant permanent employment entitlements (which should be specified in each case and listed, to generally include entitlements such as annual leave, paid personal leave, redundancy pay etc), and
  • Separately identify the dollar amount of the 25% loading from the base hourly rate.

Similarly, employers should ensure that all relevant payroll documents (including payslips) separately identify the dollar value of the casual loading.

4. Identify eligibility for casual conversion and contend with new NES obligations

As a result of the changes, casual conversion provisions are now included in the National Employment Standards (NES). While many employers have had pre-existing casual conversion obligations in accordance with one or more applicable Modern Awards or enterprise agreements, the inclusion of casual conversion provisions within the NES means that employers not historically subject to such obligations (other than small business employers with fewer than 15 employees), now are subject to them.

The new provisions require employers to offer permanent employment to any casual who has been employed for 12 months and has worked a regular pattern of hours on an ongoing basis for at least the last six months of that period, provided that the employee could continue working that pattern of hours as a permanent employee without significant adjustment. An employer need not make an offer of casual conversion if there are reasonable business grounds not to (such as where the position will cease to exist within 12 months, for instance).

Employers should take steps to identify any employees that may meet the criteria for conversion and must make an offer of casual conversion to an eligible employee within 21 days of the employee attaining 12 months of employment.