Casual employees: A new definition, a new conversion process and new information statements

At a glance

• This article takes a deeper dive into the changes to casual employment, including the new definition in the Fair Work Act 2009 (Cth) (FW Act).
• These changes come into effect on 26 August 2024.
• The meaning of ‘casual employee’ has changed to account for the ‘real substance, practical reality and true nature of the employment relationship’.
• The changes also give employees a new process to convert to permanent employment.
• The final key change to casual employment is the requirement to issue a Casual Employment Information Statement.

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Following our overview of the Closing Loopholes No. 2 legislation, this article takes a deeper dive into the changes to casual employment, including the new definition in the FW Act.

Meaning of ‘casual employee’

The meaning of ‘casual employee’ under section 15A of the FW Act has changed to account for the ‘real substance, practical reality and true nature of the employment relationship’.

This is a shift back in time to previous understandings of casual employment and is a direct response to Federal Court and High Court decisions providing determinative weight to the substance of the employment contract (ie if your contract states you’re a casual then it’s very likely you are a casual).

The primary question now to be asked is whether the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work.

There are several indicia included in the new meaning under section 15A to assist with the assessment of whether the relationship is characterised by an absence of a firm advice commitment to continuing and indefinite work, including but not limited to:

• whether there is an inability of the employer to elect to offer, or not offer, work or an inability of the employee to elect to accept or reject work (and whether this occurs in practice);
• whether, having regard to the nature of the employer’s enterprise, it is reasonably likely that there will be future availability of continuing work in that enterprise of the kind usually performed by the employee;
• whether there are full-time employees or part-time employees performing the same kind of work in the employer’s enterprise that is usually performed by the employee; and
• whether there is a regular pattern of work for the employee.

None of the above indicia are determinative of the relationship on their own. The FW Act also specifically notes that a regular pattern of work does not of itself indicate that an employee is not a casual employee and reiterates that the key factor is whether there is a firm advance commitment to continuing and indefinite work.

Casual conversion (employee choice)

The changes also give employees a new process to convert to permanent employment. This replaces the existing process in the FW Act by which employers must offer conversion to permanent employment in certain circumstances. This does not alter any casual conversion processes in a modern award or enterprise agreement.

Subdivision B of Division 4A, Part 2-2 of the FW Act provides for an ‘employee choice about casual conversion’. Under this subdivision, an employee may give an employer written notification that they believe they are no longer a casual employee and seek to convert to permanent employment.

There are several conditions the employee must meet, namely:

• the employee is not in a current dispute with the employer about casual conversion;
• the employee has been employed with the employer for six months (or if a small business 12 months);
• in the six months leading up to the conversion notification, the employee has not received a response from the employer regarding a previous conversion notification; or
• in the six months leading up to the conversion notification, the employee has not had a dispute with the employer relating to operation of the casual conversion provisions in the FW Act.

If an employer receives a written conversion notification, the employer must provide a written response within 21 days after the conversion notification is given, stating whether they accept or reject the conversion notification.

Finally, the Fair Work Commission will have the power to arbitrate disputes about this casual conversion process.

Casual employment information statement 

The final key change to casual employment is the requirement to issue a Casual Employment Information Statement. That is, an employer must give a casual employee a Casual Employment Information Statement:

• before or as soon as practicable after the employment starts; and
• before or as soon as practicable after six months of employment; and
• before or as soon as practicable after 12 months of employment.

Next steps for employers 

We recommend employers:

• update casual contracts of employment and any relevant policies and procedures;
• consider the practical relationship between casual employees and the business, specifically the arrangement for how engagements are offered and accepted by casual employees; and
• include issuing a Casual Employment Information Statement as a checklist item when engaging casual employees.

These changes come into effect on 26 August 2024. 

Don’t hesitate to reach out to our team if you would like to discuss this further and understand how best to prepare your business.