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Backwards step: casual employment redefined

Backwards step: casual employment redefined

Philip Gardner, Special Counsel, Gordon Legal.

A recent amendment to the Fair Work Act has changed the meaning of casual employment in Australian employment law.

Fair Work Act amendments

In March 2021 the Morrison Government passed legislation amending the Fair Work Act to insert a definition of casual employment.

The Act, for the first time, defines casual employment. Prior to the amendments casual employment had been given its common law meaning which had developed over time.

The definition now in the Act is that a casual is someone who is offered (and accepts) work with no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.

The focus of the definition is on the terms of the original job offer, rather than what in practice occurs. Indeed, the Act provides that the absence of a firm advance commitment is only assessed at the time of the offer of employment and subsequent conduct is irrelevant.

Employers in the past have frequently employed staff as casuals and placed them on permanent rosters, sometimes even describing them as ‘permanent casuals’. Some of these employees have then claimed that because of the regular pattern of their employment over extended periods of time they are full-time or part-time employees, and accordingly are entitled to leave and other benefits denied casuals. The new definition will prevent those claims.

However, it will not prevent employers from engaging employees specifically as a casual under the Fair Work Act definition, and subsequently regularly rostering them as, in effect, a ‘permanent casual’. The terms of the original offer of employment as a casual will determine the employment status.

Related changes to the Fair Work Act involve:

  • a right for a casual employee to request conversion to permanent employment after twelve months casual employment, if the last six months of that employment has involved a regular pattern of hours on an ongoing basis and those hours can be maintained. The request can be refused on legitimate business grounds;
  • provisions preventing ‘double dipping’ by employees claiming a 25 per cent casual loading as well as leave entitlements. This is achieved by allowing an employer to count the amount of any casual loading paid to an employee towards the value of any leave or termination or redundancy benefits, if it turns out that legally the employee was in fact not a casual but entitled to permanent employee benefits; and
  • changes that allow for disputes about the new casual conversion provisions to be dealt with by the Fair Work Commission by conciliation and, if the parties agree, by arbitration. Otherwise the matter needs to go to court.

These changes apply to offers of employment made either before or after the commencement of the amendments to the Act (27 March 2021). Accordingly, it will be necessary in the case of existing casual employees to go back to the original offer of employment to determine their casual status.

High Court also rewrites casual employment meaning

Another development is a decision of the High Court in a case called Rossato.

The court overturned many years of legal authority related to determining an employee’s casual employment status.

It did so by ruling that the sole focus of attention is to be on the original agreement between the employer and employee. The courts focus was on ‘freedom’ of contract, rather than the practical reality of the employment, uneven bargaining power or the protection of vulnerable workers.

The Court’s approach to the common law meaning of casual employment is consistent with the changes to the Act mentioned above.

The practical significance of the High Court’s decision is substantially diminished by the Fair Work Act amendments because the Act definition will generally apply. However, it is anticipated the High Court’s focus on the contract alone will have implications in the near future for the legal difference between the status of employees and independent contractors.

Modern awards and enterprise agreements

The Fair Work Commission is undertaking a review of the terms of all modern awards to ensure that they are consistent with the new definition of casual employment in the Fair Work Act.

Most enterprise agreements applying to nurses and personal care workers limit the use of casual employment. Importantly most EBAs define casual employment in a manner not inconsistent with the new Fair Work Act definition.

Accordingly, those nurses, midwives and carers whose employment is regulated by an enterprise agreement agreed before the Act’s changes have effect should not be overly affected by the new definition of casual employment.

The changes to the Fair Work Act turn back significant advances made in the meaning of casual employment over many years. The employer’s original offer of casual employment, once accepted, will determine the employee’s status for years to come, regardless of changes in the patterns of work.