Understanding Changes for Casual Employees of Small and Non-Small Businesses

Coffee shop workers

It is important for business owners to keep up to date with the ever-changing requirements for employees. Changes to the The Fair Work Act 2009 (FW Act) came into effect on the 27th of March 2021 and changed workplace rights and obligations for casual employees. The amendments to the Act introduced a definition of casual employment, a casual employment information statement (CEIS), a casual employee’s right to convert to full-time or part-time (permanent) employment and protections for employers against ‘double dipping’.

Need assistance understanding the recent changes for casual employees? Read below to learn more about the requirements for your business including:

  • What defines casual employment?
  • Casual Employment Information Statement (CEIS)
  • Casual conversion for small business employees
  • Casual conversion for non-small business employees
  • What is the Assessment Process for casual conversion?
  • What must an employer do to offer or accept a request for casual conversion?
  • Stay up to date and have procedures in place regarding your obligations for casual employees

What defines casual employment?

The Fair Work Act has been amended to include a statutory definition of a “casual employee”. This is a person who is offered employment without a “firm advanced commitment to continuing and indefinite work” and accepts that offer.

In other words, a person is a casual employee if they accept a job offer from an employer knowing that there is no firm advance commitment to ongoing work with an agreed pattern of work.

Casual Employment Information Statement (CEIS)

Employers now must give all new casual employees a Casual Employment Information Statement (CEIS) before, or as soon as possible after, they start their new job. This outlines who is a casual employee, the right to become a permanent employee (casual conversion), casual conversion requirements and what to do if there is a disagreement.

Small business employers must give their existing casual employees a copy of the CEIS as soon as possible after the 27th of March 2021. Other employers must give their existing casual employees a copy of the CEIS as soon as possible after the 27th of September 2021.

Casual conversion for small business employees

Regarding a casual employee’s right to convert to permanent employment, there are different obligations for small business and non-small business.  A small businesses employer, which is one with less than 15 employees at a particular time, does not have to offer their casuals a conversion, but must, as soon as possible, give their existing casual employees a copy of the CEIS. If they meet the requirements, an employee of a small businesses can request casual conversion to their employer. While small businesses are under no obligation to offer casual conversion, they are obligated to consider a request.

Casual conversion for non-small business employees

For non-small business, every casual employee employed as of 27th March 2021 will need to be assessed. There will be a transitional period ending on the 27th of September 2021, during which you must conduct the Assessment Process. After the 27th of September, all non-small businesses must offer conversion to any casual who has been working for 12 months and a regular pattern for 6 months. As per the Fair Work Ombudsman (FWO) an employer has to offer their casual employee to convert to full-time or part-time (permanent) when the employee has worked for their employer for 12 months, has worked a regular pattern of hours for at least the last 6 of those months on an ongoing basis, could continue working those hours as a permanent employee without significant changes.

What is the Assessment Process for casual conversion?

For all businesses when a request for conversion is made the following elements must be considered:

  • Have they been employed for 12 months?
  • Have they worked a regular pattern?
  • For non-small business, are there reasonable grounds for not making the offer?
  • For small business, are there reasonable grounds for not accepting the request?

Employees can be eligible for conversion even if they have worked a small number of hours if these hours have been worked on a regular basis for 6 out of the last 12 months of service. Generally, if employees work the same number of hours per week (or per pay period), on the same days and same times, this will be a regular pattern of hours.

Regarding assessing reasonable grounds, the Bill defines reasonable business grounds to include:

  • Where the conversion would require a significant adjustment to the employee’s hours of work for the employee to be employed permanently.
  • Where the employee’s position will cease to exist in the 12 months after the conversion right arises.
  • Where the hours of work which the employee is required to perform will be significantly reduced in the 12 months after the conversion right arises.
  • If there will be a significant change in either the days or times on which the employee’s hours of work are required to be performed in the 12 months after the conversion right arises.

If there are reasonable grounds to not accept or make an offer, written notice must be provided to the employee within 21 days of the assessment but before the 27th of September 2021. It is still possible to have casuals with a regular pattern, but with no firm advance commitment to continuing definitive work as outlined in the new definition of casual employment.

If you and your employer have a disagreement about casual conversion, there are steps you can take to help resolve it. If you’re covered by an award, agreement or employment contract with a process for dealing with disputes relating to the National Employment Standards, you need to follow that process.  If not, you need to try to resolve the disagreement directly with your employer first. If you it can’t be resolved, you can refer your dispute to the Fair Work Commission. You can also seek help from the Federal Circuit Court including the small claims court.

What must an employer do to offer or accept a request for casual conversion?

If an employer decides to offer or accept a request for conversion, a written notice must be provided to the employee within 21 days of the assessment. As part of the written notice, hours of work, wages and start date of the conversion must be discussed. The employee must accept or decline within 21 days of the offer. If an employer receives no reply from the employee this means an automatic decline and the employee will continue work as a casual. If an employee declines an offer of conversion to permanent employment, they can make a request to convert in the future, but not at any point if in the last 6 months.

When offering conversion wage obligations are to provide the minimum entitlements set out in the Fair Work Act or applicable modern awards or enterprise agreements. A converting casual will in most cases be forfeiting the 25% casual loading however, as a permanent employee, the converting employee will now be entitled to 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.

It is recommended all casual employment contracts state either a % amount or a dollar figure for the casual loading. This is to take advantage of the new offsetting/anti-double-dipping provisions. The casual loading should be expressed as being paid in compensation for the employee not having one or more of the entitlements mentioned above and should also be an identifiable amount on an employee’s payslip.

Stay up to date and have procedures in place regarding your obligations for casual employees

These changes are a timely reminder to ensure processes are in place and up to date. For employers, this can include ensuring new and existing employment contracts have the correct definition of casual employment, ensuring contracts and payslips show casual loading clearly and distributing the CEIS to new and existing casual employees.

Consider best practices and have procedures in place regarding identifying those employees eligible to be offered employee conversion, making these offers and issuing the CEIS and Fair Work Information Statement to employees

Find out more about requirements that apply to offers and requests to be a permanent employee, including rules about timeframes, making the offer or request in writing and responding in writing, and what counts as reasonable grounds, at www.fairwork.gov.au/reforms.

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Source: Institute of Certified Bookkeepers Newsletter (sourced and adapted from Employment Innovations) and Fair Work Australia

Disclaimer: The information in this article is general information only. Bookkeeping Matters can assist businesses to adopt and implement changes for employees however, we do not interpret awards. We strongly advise business owners to refer to their Industry Award at all times. Bookkeeping Matters subscribes to an advisory service with Employment Innovations for assistance with client queries. Please refer to the Fair Work Ombudsman Website for specific Award advice. http://www.fairwork.gov.au/

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