The Fair Work Act 2009 covers various forms of employment that exist to accommodate the different needs of employers and employees in various fields. Employment arrangements differ not only on the number of hours that an employee works, but also in relation to issues such as the employee’s ongoing entitlement to work and the employee’s entitlements under the National Employment Standards (NES). Deciding which form of employment is appropriate for your business requires careful consideration and drafting of relevant employment agreements to ensure compliance with the Fair Work Act 2009.
What is Casual Employment?
In contrast to permanent employment (full-time or part-time), casual employment is created by an offer of employment involving no firm advance commitment to continuing and indefinite work, and the employee accepting the offer on this basis. In other words, casual employees are generally engaged on a sporadic, shift-by-shift or roster basis, rather than on the basis of a regular pattern over time.
Employers may choose to hire casual employees to meet specific needs of their business that are only relevant at a specific time, after which the employee’s services will no longer be required. Employees may also elect to work on a casual basis due to the ability to accept or reject shifts at will, as unlike permanent employees, casual employees do not need to provide notice to leave their position. For example, casual employment agreements are commonly used for businesses that hire transient sectors of the population, such as university students in the hospitality industry who need increased flexibility to fit work around their other commitments.
Casual Employee Entitlements
Casual employees are paid a casual loading, commonly equivalent to an additional 25% on top of their standard hourly rate. This is to account for the non-ongoing nature of the employment relationship and the reduced entitlements that casual employees are provided. While casual employees are covered by the NES, which sets out the minimum entitlements applicable to all employees covered by the Fair Work Act 2009, unlike permanent employees, casual employees do not enjoy the full entitlement to all of the NES entitlements, as explained below.
There are some entitlements under the NES that apply equally to permanent and casual employees. These are:
- ten days of paid family and domestic violence leave per year;
- two days of unpaid carer’s leave per instance, in specific circumstances;
- unpaid leave to engage in eligible community service activities (such as voluntary emergency management activities); and
- maximum weekly hours, which is 38 hours or the employee’s ordinary weekly hours (whichever is less), plus reasonable additional hours.
In other cases, the entitlements apply equally to permanent employees and casual employees, but only where the casual employee works regular and systematic hours and has the expectation that regular work will continue. This applies to the entitlements to long service leave and unpaid parental leave.
Then there are those entitlements under the NES that are applicable to both permanent and casual employment, although unlike permanent employees, casuals are not entitled to be paid by their employer for this leave. This is the case for compassionate leave (two days of leave per occurrence), leave for jury service and leave for public holidays.
Finally, there are the entitlements that don’t apply at all to casual employment (annual leave, personal (sick) leave, notice of termination and redundancy) and those that only apply to casual employment. The entitlements that only apply to casual employment are:
- the requirement to receive a Casual Employment information Statement on commencement of employment; and
- casual conversion.
Casual Conversion
“Casual conversion” is the term used to describe the process whereby casual employees become ongoing full-time or part-time employees. So long as eligibility criteria are met, casual conversion can be:
- offered by an employer to a casual employee or
- requested by a casual employee.
These are explained below.
Employer Offer
An employer that is not a small business employer (i.e. with 15 or more employees) must offer a casual employee casual conversion if:
- the employee has been employed by the employer for 12 months;
- the employee worked a regular pattern of hours on an ongoing basis for at least the last six months; and
- the employee could continue working that regular pattern of hours as a permanent employee without significant changes.
An employer doesn’t have to offer casual conversion if there are reasonable grounds not to offer casual conversion.
An employer who is required to offer an eligible casual employee casual conversion must either make an offer or say why they are not making an offer for casual conversion within 21 days of a casual employee’s 12-month anniversary. A casual employee who receives an offer of casual conversion must either accept or decline their offer within 21 days.
Both the offer and the response must be in writing.
Employee Request
Casual employees are entitled to request casual conversion from their employer if they:
- have worked for them for at least 12 months and 21 days (or just 12 months if the employer is a small business employer);
- have worked a regular pattern of hours on an ongoing basis for at least the last six months and could continue working the same pattern of hours as a permanent employee without significant change; and
- haven’t, during the previous six months:
1. refused an offer of casual conversion from their employer;
2. been told by their employer that they’re not being offered casual conversion because of reasonable grounds; or
3. made a request for casual conversion that was refused by the employer on reasonable grounds.
A request to convert from casual to permanent must be in writing.
An employer who receives a request for casual conversion must consult with the employee and respond in writing within 21 days of receiving the request. An employer refusing a request for casual conversion must give reasons why. An employer who refuses a request for casual conversion must consider a subsequent request (if any) made by that employee at least 6 months later.
The ‘reasonable grounds’ for not offering or refusing a request for casual employment will depend on individual circumstances. Reasonable grounds can include that making the offer or granting the request would not comply with a recruitment or selection process required by or under a Commonwealth, State or Territory Law.
Proposed amendments to the Fair Work Act 2009
The entitlement to casual conversion is set to be expanded under the Commonwealth’s Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Bill). The Bill, introduced on 4 September 2023 and currently before the Senate Education and Employment Legislation Committee for inquiry and report by 1 February 2024, includes a new ‘employee choice’ regime, whereby casuals can notify their employer that they believe they no longer fit the definition of a casual employee and seek to convert from casual to permanent after just six months (12 months for employees of small business employers). This new regime will operate alongside the existing casual conversion pathway. The Bill also proposes to expand the Fair Work Commission’s powers to resolve disputes under the proposed employee choice regime and the existing casual conversion regime by mandatory arbitration.
What’s the difference between part-time and casual employment?
Part-time employment, despite seeming similar at first glance, is conceptually distinct from casual employment. This is because part-time employment involves a firm advance commitment to continuing and indefinite work, meaning there is regularity in the scope of the employee’s engagement with the employer. Part-time employees are expected to work regular hours, albeit working less than full-time employees. Accordingly, part-time employees cannot simply leave an employer without giving adequate notice, as the employer also has a greater reliance upon the employee’s continuing labour.
What this means is that part-time employees can expect to have regular work available and cannot be dismissed or made redundant solely at the employer’s choosing. Employers must ensure a proper process is followed. For example, where a part-time employee meets certain eligibility criteria, the unfair dismissal regime will apply such that termination of their employment must not be harsh, unjust or unreasonable.
MV Law’s Role
Prior to hiring employees, employers should be aware of the implications surrounding the different types of employment, and the link to their continuing obligations both to the business and to their employees. Employers must ensure that the arrangement is appropriate from the get-go, as making subsequent changes can be both time-consuming and inconvenient. Further, employers risk choosing an inappropriate arrangement that proves highly detrimental to the operation of their business. Defending against Fair Work Commission applications and Fair Work Ombudsman prosecutions should be the last thing on any employer’s mind.
MV Law can assist you in a wide variety of matters such as advising on the suitability of casual employment arrangements, drafting a suitable employment agreement, and helping you to understand your rights and obligations in relation to your employee’s casual employment.
For further assistance on workplace relations, call the MV Law Employment Team on (02) 6279 4444.
Author:
Amy Sydney
Special Counsel, Employment Law
MV Law Canberra