What every business needs to know about a casual employee

Who is a Casual Employee?

There has been a bit of confusion over who is a permanent part time employee entitled to paid leave (such as holiday leave) and who is a casual employee not entitled to any paid leave.

To eliminate this confusion, there have been some recent changes to the Fair Work Act 2009.

Definition of a Casual Employee

The most important of these changes is that there is now a definition of a casual employee.

Under the new definition, a person is a casual employee if they are offered and accept employment without a “firm advance commitment that the work will continue indefinitely with an agreed pattern of work”.

Key factors considered when determining if the person is employed as a casual employee include whether the:

• employer can elect to offer work and whether the person can elect to accept or reject work;
• person will work as required according to the needs of the employer;
• employment is described as casual employment; and
• person will be entitled to a casual loading or a specific rate of pay for casual employees.

This means that it is imperative for all employers of casuals that they have a written employment agreement with their casual employees, specifically covering the above.   And you also have to give each casual employee a copy of the “Casual Employment Information Statement”.

Do they stay a casual employee for ever?

Potentially no.  The changes to the Fair Work Act also include a right of conversion from casual employee to permanent employment in selected circumstances.

Businesses with 15 or more staff must offer to convert a casual employee to permanent employment if:

1. the employee has been employed for 12 months, and during the last 6 months;
2. the employee has worked a regular and systematic pattern of hours without significant adjustment; and,
3. there are no reasonable business grounds to not make such an offer.

Reasonable business grounds to not make such an offer

A business with 15 or more staff does not have to make the offer if there are reasonable business ground not to.  These grounds need to be known or reasonably foreseeable at the time of declining to make the offer and 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.

But you must tell your employee this in writing.

Does the employee have to accept the offer of conversion from casual to permanent?

No.  But, if they want to accept the offer, they need to respond to the offer within 21 days, otherwise the offer lapses.

When does the business with 15 or more staff have to make the offer of conversion from casual to permanent?

Casual Staff employed at 27 March 2021 – Before 27 September 2021

A business with 15 or more staff must advise all casual staff employed on 27 March 2021 in writing either:

1. they are offering to convert the employee from casual to permanent and on what grounds;
2. that you are not eligible under rules noted in a) above; or
3. that there are reasonable business grounds not to make an offer of conversion.

Casual staff employed after 27 March 2021

Within 21 days of them meeting the requirements in a) above the employer must advise in writing either 1 or 3 above.

Note this offer of conversion only has to be offered once by the employer.

Can the employee request conversion from conversion from casual to permanent?

Any casual employee can request conversion from casual to permanent employee made at least 21 days after them meeting the requirements in a) above.  This includes for businesses with less than 15 staff.

But they can’t make a request if, in the previous 6 months:

• they refused a conversion offer from the employer, or
• they made a request which was denied on reasonable business grounds; or
• the employer advised them there was reasonable business grounds to not to make such an offer.

Effectively the employee can request conversion from casual to permanent every 6 months once they meet the requirements in a) above.

Importantly, the business does not have to accept the requested conversion from casual to permanent if there are reasonable business grounds not too (see previous comments on this).  But you must consult with the employee about this and advise them in writing.

How are disputes handled?

If the employee disputes your decision to not to convert them from casual to permanent, then they can take this to the Fair Work Commission and even take the matter to the Federal Circuit Court including the small claims court.

What to do for new casual employees

If you want to employ a new casual employee, provide the employee with a written employment contract:

• which clearly identifies the employee’s employment type as casual.
• does not include any commitment in advance to work on specific days or hours.
• clearly shows the casual loading is a separately identifiable amount in the employee’s employment contract and payslip.
• That includes a provision that outlines exactly what entitlements are covered by the casual loading.

And don’t forget to give each casual employee a copy of the “Casual Employment Information Statement” which can be found here  https://www.fairwork.gov.au/employee-entitlements/national-employment-standards/casual-employment-information-statement

Current as 12 May 2021

If you want some help, contact me below.

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Wayne Wanders, A Real CFO

wayne@aRealCFO.com.au