Casual employees – review of the new rights and obligations under the NES

The amendments to the National Employment Standard regarding casual employees are about bringing certainty to casual employment arrangements.

Employers should now be considering what steps they need to take to comply with the NES including assessing offers of conversion for employees who commenced employment prior to 27 March 2021. This is particularly relevant as there are a number of steps that employers must take prior to 27 September 2021.

The amendments to the NES follow on from the amended Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (Casual IR Reforms) passed 22 March 2021.

Summary

The amendments made on 27 March 2021:

• introduced a statutory definition of casual employees that focuses on the offer and acceptance of employment;
• oblige employers (but not small business employers, that is, employers with fewer than 15 employees) to offer regular casual employees conversion to full or part-time employment, unless there are reasonable business grounds not to do so;
• enable casual loading amounts to be offset against claims for leave and other entitlements in certain circumstances (addressing the potential for ‘double dipping’); and
• require casual employees to be provided with a Casual Employment Information Statement published by the Fair Work Ombudsman.

There are also steps that employers must take during the transitional period, being prior to 27 September 2021, in relation to casual conversion for their employees who commenced employment prior to 27 March 2021. This obligation is discussed later in this Update.

Should employers need any advice on their casual conversion obligations, or assistance with contract reviews and template casual conversion documentation, Gadens is well placed to assist.

Casual employee – definition

The definition will provide both employer and employee with certainty about the casual employee’s status and entitlements.

A person will be a casual employee if:

• an offer of employment is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work;
• the person accepts the offer on that basis; and
• the person is an employee as a result of that acceptance.

The absence of a firm advance commitment to continuing and indefinite work is assessed at the time the offer of employment is made. The factors against which this criteria is assessed are:

• whether the employer can elect to offer work and whether the person can elect to accept or reject work;
• whether the person will work only as required;
• whether the employment is described as casual employment; and
• whether the person is entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer, an award or enterprise agreement.

It is a matter of priority for employers to now be reviewing and updating their casual employment contracts so that they meet these requirements. Contract reviews should also focus on ensuring that employers are in a position to seek to offset the casual loading paid against claims for leave and other relevant entitlements.

Casual conversion

When offers must be made

The NES requires an employer to offer eligible casual employees conversion to ongoing full-time or part-time employment within 21 days after the end of the employee’s 12 month anniversary of commencing employment, subject to specified exemptions.

A casual employee will be eligible if the employee:

• has been employed by the employer for a period for 12 months beginning the day the employment started; and
• during at least the last six months of that period, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time or part-time employee.

Employers should seek advice if there are any concerns about an employee’s eligibility to receive an offer of conversion, including in relation to assessing the date on which the employee’s employment commenced or whether the employee worked a regular pattern of hours on an ongoing basis.

Form of offer

The offer must be in writing and be an offer to convert to either:

• full-time employment, if the employee has worked the equivalent of full-time hours in the relevant 6 month period; or
• part-time employment that is consistent with the regular pattern of hours worked during the relevant period.

If the offer of conversion is accepted, the employee is taken to be a full-time or part-time employee for the purpose of all laws and the employee’s contract of employment.

Deciding not to make an offer

An employer is not required to make an offer of conversion if there are reasonable business grounds not to do so.

The reasonable grounds must exist at the time of deciding not to make the offer and include (but are not limited to):

• the employee’s position will cease to exist within the next 12 months;
• the hours of work the employee is required to perform will be significantly reduced within the next 12 months; or
• there will be a significant change in either or both of the days or times that the employee will be required to work which cannot be accommodated with the days or times the employee is available to work.

There may be other reasonable grounds on which an employer could decide not to make an offer of conversion, including those that relate to the workplace or the employee’s role.

If an employer decides not to make an offer of conversion, it must advise the employee in writing within 21 days after the end of the employee’s 12 month anniversary of commencing employment. The employer must also include reasons for not making the offer, including setting out the grounds on which the employer has decided not to make an offer.

Employee response

An employee has 21 days after receiving an offer of conversion to either accept or decline the offer.

If the offer is accepted, the employer must then give the employee written notice within 21 days of receiving the acceptance of the following matters:

• the employee’s new employment status – full-time or part-time;
• the employee’s new hours of work; and
• the day on which the conversion takes effect.

The employer is also required to discuss these matters with the employee during the 21 day period before confirming them in writing.

Residual right to request conversion

Casual employees who have not received or accepted an employer offer to convert have a residual right to request conversion in certain circumstances.

However, an employee cannot make a request under the NES during the six month transitional period, being prior to 27 September 2021.

Employee requests

A casual employee will be eligible to make a request for conversion if the employee is an eligible employee as noted above and all of the following apply:

• the employee has not, in the six months before making the request, refused an offer from the employer to convert;
• the employer has not, in the six months before the employee’s request, advised the employee of its decision not to offer conversion on reasonable grounds;
• the employer has not, in the six months before the employee’s request, refused a previous request from the employee; and
• the employee’s request is not made during the 21 days after the 12 month period of the employee’s anniversary.

If an employer fails to comply with its obligation to provide a notice advising an employee that an offer of conversion will not be made within the required 21 days, an eligible employee will be able to request conversion, and will not have to wait a further six months after the anniversary of their employment.

Further, if an employer gave notice that the employee did not meet the requirement of working a regular pattern of hours, the employee will be entitled to make a request at the point that this requirement is met (without having to wait a further six months).

Form of offer

The employee’s request must be in writing and may be a request to convert to full-time or part-time.

The employer must respond in writing within 21 days after the request, advising whether the request is granted or refused.

Employer response

The employee’s request can be refused on the same grounds as those for an employer not making an offer. However, before refusing the request, the employer must consult with the employee. This enables the employer and employee to discuss the request, including any reasons upon which the employer proposes to refuse the request or alternative arrangements outside the NES that might suit the needs of both the employer and the employee.

If the employer grants the request, it must take the same steps as if the employer was making an offer of conversion (as noted above).

Transitional steps

By 27 September 2021, being the end of the transitional period, employers are required to assess all of their casual employees who started their employment prior to 27 March 2021 against the conversion criteria and either:

• offer conversion to all eligible casual employees (unless there are reasonable grounds not to); or
• provide notice to those casual employees who will not be offered conversion and include reasons (including that the employee has not met the eligibility criteria to be made an offer or that the employer has reasonable grounds for not making an offer).

Employers should seek advice if there are any concerns about an employee’s eligibility to receive an offer of conversion during the transitional period, including in relation to assessing the date on which the employee’s employment commenced or whether the employee worked a regular pattern of hours on an ongoing basis.

Other matters

The NES prohibits an employer from deliberately varying or reducing an employee’s hours of work or terminating their employment in order to avoid its obligations or to deprive an employee of their new entitlement to seek casual conversion.

However, the NES does not:

• require an employee to convert to full-time or part-time employment; or
• permit an employer to require an employee to convert; or
• require an employer to increase the hours of work of an employee who requests conversion.

Therefore, an employee who does not wish to convert may continue as a casual employee even if they meet the requirements for an offer to convert.

Disputes

The NES provides that a dispute in relation to casual conversion is to be first addressed at the workplace by discussion between the parties.

However, if discussions at the workplace level do not resolve the dispute, either party may refer the dispute to the Fair Work Commission.

Employers should note that if there is any applicable dispute resolution procedures (such as those under an applicable Award or enterprise agreement), then the dispute resolution procedure in the NES will not apply.

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Authored by:

Steven Troeth, Partner
Diana Diaz, Special Counsel