Federal Parliament pass historic changes to Fair Work Act

Amendments to the Fair Work Act have passed both houses of Federal Parliament, bringing significant changes for the rights of casual workers and the businesses who employ them.

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The Federal Government’s proposed Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (the Bill) introduces a definition of casual employment into the Fair Work Act 2009 (Cth) (FW Act) for the first time and confers a statutory right on long term casual employees to request conversion to permanent employment.

Definition of casual employment

The Bill confirms casual employment will exist if:

  1. An offer of employment is made on the basis of no firm advance commitment to continuing and indefinite work; and
  2. The person accepts the offer on that basis.

In relation to what constitutes a ‘firm advance commitment’ regard must be had to the following list of exhaustive factors:

  1. Whether the employer can elect to offer work and whether the person can elect to accept or reject work;
  2. Whether the person will work as required according to the needs of the employer;
  3. Whether the employment is described as casual employment; and
  4. Whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.

Unlike previous cases heard by the courts, when faced with a dispute, the courts will only have regard to the point of offer and acceptance (not post-contractual conduct) and the above exhaustive list.

Double-dipping

The Bill introduces clarity and certainty for businesses by enabling a court to reduce or offset any back pay due by the sum of the casual loading paid. The offset will be conditional on the contract of employment or workplace instrument containing a suitable offset clause and setting out the casual loading as a separately identifiable amount.

Casual conversion

While many modern awards have clauses relating to casual conversion, the FW Act has previously been silent on the matter. The Bill introduces a mechanism for eligible casual employees to be entitled to receive an offer of conversion to permanent employment.

Under the FW Act, employers will be required to issue an offer of permanent employment when the employee:

  1. Has been employed for 12 months; and
  2. Has worked regularly and systematically (without significant adjustment) for the past six months.

The offer must be given to the casual employee in writing within a period of 21 days after the end of the 12-month period.

Employers are not required to make an offer where there are ‘reasonable business grounds’ not to. Reasonable business grounds are defined in the Bill and include a number of factors including, for example, where the employee’s positions will no longer be required or there will be a significant change to the hours or days the employee is engaged.

If an employer considers there are reasonable business grounds not to make an offer of conversion, these details must be specified in writing and provided to the employee within 21 days.

Where an employer fails to meet the conditions of the FW Act, as above, the casual employees’ rights to conversion will be retained.

The Bill requires the Fair Work Commission (the Commission) to review any relevant terms of modern awards - and if there is perceived difficulty or uncertainty, the Commission will be required to make a decision to vary the modern award to ensure consistency.

Small business employers

Under the Bill, the FW Act casual conversion provisions will not apply to employers with fewer than 15 employees. That said, modern award provisions will continue unless varied by the Commission.

Casual Employment Information Statement

Currently, employers are required to issue all new employees with the ‘Fair Work Information Statement’ that details the National Employment Standards and the National minimum Wage in Australia. The Bill will introduce a new requirement for employers to issue a separate ‘Casual Employment Information Statement’. This will be available for download from the Victorian Chamber website when available.

Practical suggestions for employers

When the changes to the FW Act come into effect employers are encouraged to:

  • Review employment contracts;
  • Consider casual conversion requirements including those provided under the FW Act, and modern awards;
  • Update relevant documentation such as offer letters to employees, policies, procedures, and manuals; and
  • Ensure the Casual Employment Information Statement is provided to casual employees.

Contact us for support

We encourage members to contact the Workplace Relations Advice Line on (03) 8662 5222 to discuss this or any other workplace relations matters.

We will continue to update members on this matter including when the Bill receives Royal Assent and when the changes will take effect. 

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