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HR to Go podcast episode 11: A casual conversation (transcript)

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Welcome to HR to Go by Effective Workplace Solutions. In this episode of HR to Go, we’ll be chatting about casual employment and the new laws regarding casual employees that come into effect in August 2024.

We’ll be looking at:
• casual entitlements under Award and legislation
• the definition of casual employment and the new definition of casual employment under the Closing Loopholes Bill
• casual conversion and how this will operate under the new laws
• the new laws around the Casuals Information Statement, and
• dismissal of casual employees

Keep listening to the end where I share some valuable tips on how to prepare for upcoming legislative changes.

Casual Entitlements
Under the NES, casual employees are entitled to:
• 2 days unpaid carer's leave per occasion
• 2 days unpaid compassionate leave per occasion
• paid family and domestic violence leave
• unpaid community service leave.

They are also entitled to flexible working arrangements and also take unpaid parental leave if:
• they have been employed by their employer as a casual employee on a regular and systematic basis over at least 12 months
• they reasonably expect to continue being employed by the employer on a regular and systematic basis.

Under the NES, casual employees are not entitled to:
• Annual leave
• Paid personal leave and compassionate leave
(entitled to unpaid carers leave and unpaid compassionate leave)
• Payment for jury service leave
• Notice of termination
• Redundancy pay
• Payment for being absent on a public holiday

In lieu of the above, casuals are paid a casual loading which is generally 25% above the standard rate of pay for a full-time or part-time employee in most Awards.

Definition of Casuals
This is now a complex area of employment, and this is in part due to the constantly changing employment law landscape.

Let’s start with a bit of history.

We go back to two cases in the Federal Court in 2018 and 2019 (WorkPac cases) - these cases are central the definition of casuals and the issue of ‘double dipping’. In this matter there were two employees who worked for Workpac and were casual employees working as FIFO employees with a projected roster some 12 months in advance. On that basis, they argued that they were not genuinely casual employees and the Federal Court agreed and ordered that they be back-paid annual leave and sick leave.

The employer argued that they were paid a casual loading, and the back pay of annual leave and sick leave should be discounted by the casual loading. The Federal Court dismissed this argument and said that the loading should be treated as an over-Award payment.

The matter was appealed to the High Court and the High Court overturned the Federal Court decision. The High Court said what will determine if an employee is a casual is “the character of the relationship between the parties as established by, primarily the contract of employment”.

The result of that High Court decision was the establishment of the notion of ‘contract is king’.
In other words, if the contract of employment says that an employee is casual, then the employee will be deemed to be a casual — it doesn’t really matter how that contract was played out in real life — it didn’t matter that they worked regular shifts or not, as long as the contract stated that they were engaged as a casual, then the employee is deemed to be a casual employee.

New Definition as from 26 August 2024
However, the Closing Loopholes Act is about to undo all of that, and we will revert to new a definition. The new definition is actually not dissimilar to the current definition, however, there are two very important subsections of Section 15A (Definition of Casuals) missing, and they are subsections (3) and (4), which read:
3) To avoid doubt, a regular pattern of hours does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
and
(4) To avoid doubt, the question of whether a person is a casual employee of an employer is to be assessed on the basis of the offer of employment and the acceptance of that offer, not on the basis of any subsequent conduct of either party.

Which means that the definition will no longer say that a regular pattern of hours doesn’t necessarily equal a continuing and indefinite work arrangement. It will also no longer say that the primary consideration in determining casual employment or otherwise, is the contract of employment.

Under the new definition, an employee will only be a casual employee where:
• the relationship 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 rate of pay for casual employees under a fair work instrument or contract of employment.

Under the new definition, the factors to be considered when deciding if there is a firm advance commitment to continuing and indefinite work include:
• the "real substance, practical reality and true nature of the employment relationship"
• whether a firm advance commitment exists, which may be found in a contract of employment, or in the form of a mutual understanding or expectation (regardless of the terms of a contract)
• an inability of the employer to elect to offer work or of the employee to accept or reject work (and whether this practically occurs)
• whether there are permanent employees performing the same kind of work at the workplace; and
• whether there is a regular pattern of work for the employee.

So clearly this new definition is moving more toward the more traditional casual employment where the employment is truly casual and are employed on a non-regular basis.

This new definition will be in place from 26 August 2024.

No Double Dipping
The other issue that arose from the WorkPac cases was ‘double dipping’ where the Federal Court decided that the casual loading was to be considered as an ‘over-Award payment’ and the employer had to back pay annual leave and sick leave for the employees and not be able to discount the back-pay by the casual loading.

The Morrison Government remedied that by making legislative changes by ensuring that where a casual employee is paid a loading and that loading is clearly identified in employment contracts as ‘off-setting’ or ‘being in lieu’ of other provisions that apply to permanent employees (e.g. annual leave and personal leave), then an employee cannot claim such annual leave or sick leave retrospectively, if it is determined further down the track that the casual employee was not, in fact, a casual employee and was permanent.

In a practical sense, this means that employers should ensure that a casual employee’s letter of appointment or employment contract should specify the casual loading and what Award or NES provisions it is designed to cover.

It appears that these provisions will remain in place, even under these new laws.

New Rules Around Casual Conversion
From 26 August 2024, there will also be new rules for the conversion of casuals to permanent employment.

Currently, for businesses with 15 or more employees, if a casual employee has been working regular and systematic hours for a period of 6 months in the first 12 months of employment and continues working that regular pattern of hours as a permanent employee without significant changes, then the onus is on the employer to make an offer of conversion to full-time or part-time, if they are able to accommodate such change.

Under the new laws, casual employees will themselves be able to initiate a change to their employment status by providing their employer with a written notification seeking conversion of their employment if the employee:
• believes they no longer meet the definition of a casual employee;
• has been employed for at least 6 months (12 months for small business); and
• has not (in the last 6 months) received notice from their employer about their casual employment status, rejected a casual conversion offer or been given a response from their employer under the current casual conversion provisions.

So, in essence, an employee can only make an application every 6 months.

The employer must then respond within 21 days in writing.

The employer will only be able to reject the conversion notification where:
• the employment relationship still meets the definition of a casual employee;
• fair and reasonable operational grounds exist, such as:
o that substantial changes would be required to the organisation of the employer's business
o that there would be significant impacts on the operation of the employer's business, or that
o the employer would have to substantially change the employee's terms and conditions of employment in order not to breach a term of a fair work instrument applying to the employee as a permanent employee (for example minimum shift periods), and
o accepting the notification would result in the employer's failure to follow legally-required recruitment or selection processes (this would more likely apply to the public sector).

In addition to providing a response in writing, regardless of whether or not you accept the request to convert to part-time or full-time employment, there needs to be consultation with the employee to either;
(i) to advise and explain to the employee the reasons why you cannot accept the request or
(ii) to discuss new rostering arrangements

Casual Employment Information Statement
In addition to the requirement to provide the Casual Employment Information Statement on commencement of employment, the Casual Employment Information Statement must now also be provided every 6 months from when employment commenced (or every 12 months for small businesses).

Unfair Dismissal and Casual Employees
There is a myth that exists which suggests that you can simply dismiss a casual employee with an hours notice, and that it’s easier to get rid a casual employee than a permanent employee. It has been our experience that that is why many employers prefer to employ casuals than permanent employees. However, this myth is not quite accurate, and many of those who have relied upon this have found themselves in hot water.

It is generally true that a ‘genuine’ casual cannot take an unfair dismissal case, however if they have been employed on a regular and systematic basis, and they had a reasonable expectation of on-going employment on a regular and systematic basis for a period of 6 months (12 months for a small business), then they can take an unfair dismissal claim.

So, this myth that exists, that it's easier to get rid of a casual employee is not quite, completely accurate.

On the issue of, dismissal of casual employees, we turn now to a case study. And this is a case study of, a matter before a full bench of the Fair Work Commission, and it's Amy Greene versus Floreat Hotel in 2020. In this case, the full bench found that a casual employee who worked in accordance with an established rostering system was protected from unfair dismissal under the Fair Work Act. In other words, she was able to take an unfair dismissal case even though she was a casual employee.

The Fair Work Commission found the timesheet records demonstrated that Miss Greene's employment was regular because, apart from the periods in which he took holidays by arrangement with the company, Miss Greene was consistently engaged to work a substantial number of hours in every week, although the hours were different each week.

Miss Greene's employment was found to be systematic because she worked in accordance with a roster that was established by the company in consultation with her.

Miss Greene's rostered hours constituted the large majority of the hours she actually worked in every week, with the additional hours worked to cover business needs, making up only a majority of the proportion of the total hours.

In terms of the expectation, noting that Miss Greene was effectively able to select when and for how long she worked out of the available hours for each coming week. The full bench of the Fair Work Commission said it was difficult to avoid the conclusion that she had a reasonable expectation of continuing employment on the same basis as her past regular and systematic employment. So, the Fair Work Commission, as I said at the start, found that the casual employee had worked, an established rostering system and therefore was protected from unfair dismissal and could take an unfair dismissal case.

So, what do employers need to do to prepare for these upcoming changes? Here's a couple of tips:

• Firstly, check your employment contracts and letters of appointment for casuals to ensure that the wording is consistent with the new definition of casual employment.
• Put reminders in calendars or payroll systems for the issuing of the Casual Employment Information Statement every 6 months (12 months for small businesses)
• Make sure you have the most up-to-date Casual Employment Information Statement
• Where possible and where practical roster your casual employees on a genuinely casual basis rather than on a regular and systematic basis if you want to avoid claims for conversion, or indeed legal claims for retrospective payment for annual leave and personal leave
• Be aware that a casual employee employed on a regular and systematic basis, and they had a reasonable expectation of on-going employment on a regular and systematic basis for a period of 6 months (12 months for a small business), can take an unfair dismissal claim
• This means that you should follow the same due process when looking at terminating a casual employee as you would do with a permanent employee, otherwise, you could end up with an unfair dismissal claim.

If you would like assistance or advice in relation to any of these tips, please don’t hesitate to contact us at Effective Workplace Solutions.

If you'd like to know more, visit ewsolutions.com.au/contact

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