New Casual Employment Requirements: Top 3 Tips for Employers
Since 27 March 2021, the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 has been in force. Changes to Australia’s casual employment regime are certain to impact employers, such as the new statutory definition of casual employee. With more employers becoming aware of the new Fair Work changes to casual employment requirements, we are providing our top tips to navigate changes to the casual employment landscape.
Review your casual workers
With the new Fair Work requirements, you will want to review their workforce and assess any exposures. The amendments require employers to take steps to ensure that casual employees are aware of their rights.
For example, some casual employees may be entitled to convert to permanent employment. If this is the case, you should offer these employees casual conversion in writing. You must assess your employees’ eligibility for permanent employment by 27 September 2021, and provide an offer for casual conversion within 21 days of making the assessment. If you have “reasonable business grounds” not to offer casual conversion, you should also provide this information to employees in writing. If you decide not to offer an employee casual employment, you must also write to the relevant employee outlining your reasons by 27 September.
If you are a small business, you don’t have to offer casual conversion nor agree to it. However, your casual employees do have the right to request it. You are a small business if you maintain fewer than 15 employees.
Provide information and prepare casual conversion contracts
If you are a small business, you should provide the Casual Employment Information Statement to all casual employees as soon as possible.
If you are not a small business, you should provide the Casual Employment Information Statement to all casual employees engaged on or after 27 March 2021 as soon as possible. For casual employees engaged before this date, you must provide them with a copy of the Casual Employment Information Statement from 27 September 2021.
In either circumstance, it is smart to prepare the necessary employment contracts and associated documents in advance of 27 September 2021. This will ensure that your business is ready to proceed with casual conversion in accordance with the specified timeline. Start now to draft new employment agreements, and confirm applicable changes to pay and entitlements.
Consider your ability to engage the statutory offsetting rule
If one of your employees believes they have been misclassified as a casual employee, they may be able to claim for unpaid permanent employee entitlements. This is what happened last year in Workpac v Rossato.
In the case that a court determination is made in the employee’s favour, there is now a statutory offsetting rule to prevent an employee from benefitting both from a higher casual employment rate as well as the backpay of employee entitlements. This new offsetting rule, encompassed in s 545A of the Fair Work amendment, allows a court to reduce any amounts payable by the employer with respect to the casual loading already paid.
To access this offsetting rule, the employment agreement should clearly describe the employment as a casual role, and identify the casual loading as a separate amount paid to compensation for permanent employee entitlements. There is some uncertainty with how to identify the separate loading amount. Best practice is for an employment agreement to stipulate a base rate, and then clearly identify a loading amount paid in addition to the base rate in lieu of employee entitlements. While we are waiting for courts to provide further guidance on this matter, if you have been paying your casual employees a fair loading rate in accordance with their particular employment award, this may be identifiable as a separate loading amount.
If you are unsure if your employment agreement clearly identifies the casual rate and separate loading amount, it may be prudent to obtain legal advice. In such circumstances, you generally cannot compel your existing casual employees to sign a new employment agreement. For any new casual employees, ensure that the base rate and loading rate are separately identified, as well as any entitlements that the loading is intended to compensate for. Some of these are outlined in s 545A(4) and include paid annual leave; paid personal/carer’s leave; paid compassionate leave; payment for absence on a public holiday; payment in lieu of notice of termination; and, redundancy pay.
If you would like assistance in assessing your current employee entitlements, casual employment requirements, and risk of claim by your employees, contact one of our experienced employment lawyers at (02) 4929 7002, email us or complete an enquiry form.