Big changes to casual employment laws are coming – Are you across them?

A new set of laws redefining and resetting the nature of how employers engage with casual employees are due to come into effect on 26 August 2024. The introduction of the new rules is particularly relevant to the early childhood education and care (ECEC) sector given the high prevalence of casual workers employed within it. 

 

This article aims to step through the new rules as a means of supporting both employees and employers to prepare for the changes. 

 

What are the changes to casual employment laws?

 

The changes fall into three main buckets:

 

1. The definition of a ‘casual employee’ will change
2. A new pathway for casual to permanent employment conversion will be introduced
3. New general protections for casual employees will start

 

Where did the changes come from and when will they be implemented?

 

The changes were included in a recent piece of employment focused legislation called the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Closing Loopholes No. 2 Act).

 

This was passed by the Senate in December 2023 and contained a whole raft of new rules designed to address historical gaps in prior legislation that were collectively falling short of offering protection to employees or other stakeholders. 

 

The implementation date for the casual employee related rules is 26 August 2024. 

 

Why is this so important for the ECEC sector in particular?

 

As noted above, the usage of casual employees across the ECEC sector has always been relatively high, but since COVID-19 and the advent of the workforce shortages experienced thereafter many employers who have been unable to find permanent staff have increased their casual usage. 

 

In addition, the post pandemic period also saw employees who were once permanent opting to move to casual positions as a means to achieving work life balance, or perhaps to secure higher loadings in their wages to help financially.

 

Either way, casual usage spiked higher after COVID-19, and as a result changes to how casual employees are treated will have an impact on the providers and casual employees alike. 

 

What is the new definition of a casual employee?

 

The new definition for a casual employee will be an employee that is in a working relationship that:

 

• is characterised by an absence of a ‘firm advance commitment to continuing and indefinite work’; and 
• the employee is entitled to a casual loading or a specific rate of pay for casual employees.

 

Although the words in the definition are clearly different from prior definitions, the main thrust of the change is around clearly articulating that an employee’s status as casual or otherwise is not defined by what is written in a contract but what is actually happening on a day to day basis in the service. 

 

For example, under the new definition, a casual employee who has consistent shifts on a Monday and a Thursday, and ‘fills in’ at other times may no longer be considered casual, because there is an element of predictability to their working pattern. 

 

What does a “firm advance commitment to continuing and indefinite work” mean?

 

This is really at the heart of the definition change and the new laws provide five areas of focus for consideration when evaluating whether a team member is casual or not, namely:

• Is there a degree of uncertainty about whether the employer can offer work in the future?

• Is there a degree of uncertainty about whether the employee can conduct work in the future?

• Is there likely to be work of a similar type available in the future?

• Are there full-time or part time employees performing the same kind of work?

• Is there an irregular pattern of work offered to the employee?

 

If when evaluating an employee’s circumstances it is concluded that work patterns are irregular, employee availability to take shifts is uncertain and employer availability to offer shifts is uncertain then more than likely a casual arrangement exists and in turn a casual loading will apply. 

 

Now that we have a new definition of what a casual is, what does that mean for ECEC?

 

It basically means that team members who are on a “casual contract” are now able to review the actual nature of their working arrangements and conclude, if the criteria are met, that the true nature of their arrangements is not actually casual in nature. 

 

If that is the case, and the employee then wants to convert to a permanent or permanent part time position within the organisation they have the legal grounds to do so. 

 

What does that look like in practice?

 

The second part of the new casual employment laws focuses on creating a “pathway for casual conversion” to a more permanent type of contract which is employee, not employer, driven. 

 

Under the new rules an employee that does not meet the new casual definition AND has  worked for at least six months (12 months if employed by a small business employer) at the business may notify their employer in writing and inform them that they believe that they are no longer a casual employee and would like to convert to a permanent contract instead. 

 

Does the employer have to accept the request?

 

That depends on three things:

 

1. Whether the employee meets the definition of a casual or not
2. Whether there are ‘fair and reasonable operational grounds’ for converting (or not)
3. Whether the employer not complying with a recruitment or selection process required by or under a law of the Commonwealth or a State or a Territory is impacted or not

 

If when reviewing the request the employer concludes that the employee is actually a casual or there are operational reasons why converting doesn’t make sense or if they are prevented from converting due to process related issues the application can be rejected. 

 

If however, the employee is a casual, operational conditions allow for it and there are no other employment processes to consider the employer must accept the request and transition the employee onto a permanent contract. 

 

Either way, the employer has 21 days to respond after receiving the notification. 

 

What happens if the employer and the employee can’t reach an agreement?

 

The Fair Work Commission (FWC) will be empowered to deal with disputes about the operation of the new employee choice arrangements including by compulsory arbitration. 

 

This is key for both employers and employees as a means to settle disputes that may arise. 

 

Do employees that do meet the new casual laws HAVE to apply to convert?

 

Absolutely not. 

 

These new rules are largely targeted at casual employees who for all intents and purposes are being employed in an arrangement that looks and feels permanent but lacks the security, and benefits that an actual permanent engagement brings who are keen to remedy that by converting.  

 

Casual employees who meet the new definition and are comfortable with the arrangements as they already are do not have to convert if they don’t want to. 

 

Are there any other changes to be introduced on 26 August? 

 

Yes, there are two that fall under the new protections section and include new protections will make it unlawful for employers to:

 

• dismiss or threaten to dismiss an employee to engage them as casual employees; and
• knowingly make false representations in relation to casual employment.

 

These new provisions will be civil remedy provisions, meaning that employers may be subject to penalties for contraventions if they are found to contravene them. 

 

 What happens next if you are a casual employee?

 

Casual employees who may be interested in converting to a permanent position need to review their current working arrangements carefully to understand if they meet or do not meet the new casual definitions. 

 

If they do not, they can apply to convert. 

 

What happens next if you are an employer of casuals?

 

The most important thing an employer can do in the lead up to the implementation date is conduct a review of casual engagement across the business with a view to understanding how many potential conversion requests may be forthcoming and that the processes and documentation are in place to manage them effectively. 

To review the guidelines provided by Fair Work click here.