Amended Omnibus Bill passed—What it means for casual employment

On 22 March 2021, the Government passed an amended version of the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (Amended Omnibus Bill).

The amendments provide a statutory definition of casual employee, the ability to convert from casual to permanent employment and enabling orders to be made to prevent “double-dipping” in relation to entitlements and the casual loading.

Other proposed amendments set out in the initial draft of the Omnibus Bill, including proposed changes to modern award flexibilities, enterprise bargaining and compliance and enforcement and other areas that were summarised in our update dated 22 January 2021, were not pursued at this time.

Set out below are the changes to casual employment arrangements that are to take effect shortly.

Definition of “casual employee”

The Amended Omnibus Bill introduces a statutory definition of a casual employee to be included in the Fair Work Act 2009 (FW Act). This is the first time a definition has been included in federal workplace legislation.

The definition provides that a casual employee is a person:

• who is offered work with no firm advance commitment to continuing and indefinite work according to an agreed pattern of work

• who accepts the offer of work on that basis, and

• who is employed as a result of that acceptance.

There are a number of limited circumstances that must be considered to determine whether the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work. In particular, it is worth noting that these changes focus on the basis of the offer and acceptance of employment rather than subsequent conduct and expressly state that a regular pattern of hours does not, of itself, indicate a firm advance commitment to continuing and indefinite work. This will bring the focus of whether an individual is a casual employee to the terms and conditions of engagement, and care should be taken when preparing these. We expect this provision will lead to disputes and litigation between employers and employees, with the Fair Work Commission (FWC) and courts being called upon to adjudicate.

Casual conversion

The Amended Omnibus Bill includes provisions that enable offers and requests for casual conversion to permanent employment.

Under the proposal, an employer may offer or an employee may request conversion in certain circumstances.

Both options require a casual employee to have been employed for 12 months, and during at least the last six months, the employee must have worked a regular pattern of hours on an ongoing basis which, without significant adjustment, they could continue to work as either a permanent full-time or part-time employee.

An offer or request need not be made or can be rejected where there are reasonable grounds based on facts that are known, or reasonably foreseeable, at the time. The “reasonable business grounds” exception is also likely to be subject of dispute and litigation.

However, small business employers (being employers who employ less than 15 employees) are not obligated to make offers of casual conversion under these new provisions although their casual employees are still entitled to make a request for casual conversion.

Casual Employee Information Statement

In order to increase awareness of these new provisions relating to casual employees, the Amended Omnibus Bill requires the Fair Work Ombudsman to prepare a Casual Employee Information Statement that must be given by an employer to each casual employee before or, as soon as practicable, after the employee starts their employment as a casual. This is a similar arrangement for the provision of Fair Work Information Statements by employers.

Payment of casual loading and prevention of “double-dipping”

The Amended Omnibus Bill includes several provisions that provide for orders relating to casual loading amounts to prevent so called double-dipping issues that have arisen in recent cases in which casual employees have been found to be permanent employees.

The Amended Omnibus Bill provides that a court must reduce (but not below nil) any amount payable to the person for relevant entitlements by an amount equal to the loading amount:

• where a person is employed in casual employment

• the person is paid an identifiable amount to compensate them for not having a relevant entitlement (being an entitlement to paid annual leave; paid personal/carer’s leave; paid compassionate leave; public holiday pay; payment in lieu of notice of termination; or redundancy pay)

• during the employment period, the person was not a casual employee (e.g. where a court makes this determination), and

• the person (or their representative) make a claim to be paid an amount for one or more of the relevant entitlements.

There are also other options available to a court to deal with the interplay of the loading paid and the claim made.

Employers should be mindful that in order to rely on this provision there must be a figure, which is identifiable as being paid to compensate for one or more relevant entitlements. In the absence of written terms of engagement, which identify such an amount, the provisions will not work as intended. Employers paying flat rates may not be able to rely on this new provision for protection against double-dipping unless, when setting the flat rate, the employer also identifies the loading that is a component of the flat rate.

This amendment is a direct result of recent Federal Court decisions. These decisions determined that persons employed as casual employees were not, in fact, true casual employees, as well as finding that these persons were not, in those circumstances, double-dipping when paid entitlements (such as annual leave), which are usually intended to be covered by a casual loading.

FWC dispute resolution

The Amended Omnibus Bill empowers the FWC to deal with disputes relating to the new casual employee provisions. Parties, at first instance, must attempt to resolve the dispute themselves through discussions but if this does not resolve the dispute, then one of the parties may refer to the matter to the FWC. If the parties agree, the FWC may arbitrate the dispute.

Small claims jurisdiction expanded

The Amended Omnibus Bill will also expand the Federal Circuit Court’s (or a relevant Magistrates’ Court’s) jurisdiction under the small claims provision of the FW Act. Previously, the small claims jurisdiction of the FW Act allowed the court to deal with issues relating to certain amounts owed to employees up to the amount of $20,000 via a cheaper and more informal process than traditional court proceedings. The Amended Omnibus Bill will now expand this jurisdiction to include dealing with whether:

• a casual employee meets the criteria for an offer from an employer for conversion

• an employer has reasonable grounds to not make an offer of conversion

• a casual employee may make a request of an employer for conversion, and

• an employer has reasonable grounds to refuse the request from an employee for conversion.

What should employers do?

As a result of the new amendments becoming law, employers should:

• review their engagement of casual employees, including the manner of engagement and the terms and conditions that apply, to ensure compliance with the new provisions

• consider what, if any, obligations they will have under the new casual conversion regime, and

• review the terms and conditions of engagement for casual employees to ensure they clearly establish the loading component of a casual employee’s hourly rate to enable the employer to rely upon the double-dipping provisions.

Further information

Please contact our Workplace team if you wish to discuss further or have any questions.