MAJOR CHANGE TO THE DEFINITION OF A CASUAL
Late last year, the Federal Industrial Relations Minister introduced the Fair Work Amendments Bill 2020 to pass significant changes to the Fair Work Act - some temporary (to dampen down the effects of COVID-19), some permanent.
The Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2021 passed both Houses of Parliament on 22 March 2021 – it is important to note that all the other changes originally sought in the Amendment were dropped, and only the changes to the definition of casual employment proceeded.
In the passing of this law which will expand the definition of a casual employee, it neatly puts to bed the Rossato case issue that was set for appeal in the High Court – a case that effectively allowed for double-dipping of casual loading and annual leave, with the potential to cause up to a $39 billion tidal wave into Australian businesses.
Let’s re-visit the casual issue
The Rossato case was heard by the Federal Court in May 2020, with the Federal Court ruling that an employee could double-dip and receive both casual loading and annual leave accruals.
Let’s be clear that the ripple effect in a strong economy would be horrific.
The effect in a post-COVID economic recovery would be catastrophic for businesses, but also harming the most vulnerable workers in our society (young workers, migrants and females).
The Rossato case had rightly been granted approval for special appeal in the High Court since July 2020 although a date of hearing was not yet set. This Fair Work Amendments Bill was introduced to head off a catastrophe by extending the definition of a casual employee to cover any worker offered irregular shifts and paid a loading, regardless of whether the future employment pattern becomes more regular, and to specifically prevent a double-dipping scenario.
If you need more background on this case and the possible flow-on effects, read more at the links below:
What are the proposed changes to the casual definition?
The Bill states that after 12 months service, a casual employee who has worked a “regular” pattern of hours in the last 6 months will receive an offer of full-time or part-time employment OR written notice as to why they have not received an offer.
Small businesses are exempt from this however see Point 2 below.
Employers should note that casual employees who meet this definition do not have to “request” conversion, but rather should receive an offer in a proactive way from the employer – the onus is on the employer.
Sound scary? Well, this definition has been strengthened to protect casual workers who should not be casual. Whilst Awards all hold casual conversion clauses, some employers like to close their eyes to these provisions – at their peril. HR Unplugged does not support the casualisation of the workforce as it has so many unconsidered social effects.
This amendment forces employers to seriously consider their workforce and undertake considered, careful workforce planning. To do this properly, employers should engage specialists like HR Unplugged to run different scenarios based on a variety of business models specific to the organisation in question. This workforce planning should be dynamic, a “live” document that allows for flexibility whilst being on the right side of changing employment legislation.
The Bill states that small business employees can also request casual conversion after 12 months employment, with a “regular” pattern of hours. If an employer refuses a request, it must be reasonable.
As opposed to Point 1 above, a Small Business employee must request this conversion, although without case law or clarity to date, it is not possible to state what issues will arise should an employer not proactively hold these conversations.
Statutory offset rule: if an employee is found to be permanent in nature, then the Commission / Court must offset any annual leave accrual from the date of the permanency, against the casual loading already paid – i.e., there can be no double-dipping.
This is a significant change, with lasting impacts on your business, regardless of the clear direction that double-dipping cannot occur. We will continue to talk about this topic in coming weeks.
Workforce planning is critical in managing your business, cashflow, liabilities and reputation.
Please reach out to discuss how this may impact your business – we are here to help. Contact Mel at mel@hrunplugged.com.au 0424 995 502. Visit our website for more info www.hrunplugged.com.au