Thinking | 24 March 2021

End to double dipping for casual employees: stripped-back Omnibus Bill passes Parliament

Updated 31 March 2021

By Fay Calderone and Jessica Kamleh

After axing all provisions except for those relating to casual employment, Parliament passed a diluted version of the Omnibus Bill earlier this week.

What’s changed?

Click on the headings below to read more about each of the changes.

The changes to the FW Act specifically address the situation where an employee in receipt of a casual loading and makes a claim for NES entitlements such as unpaid annual leave, payment in lieu of notice or redundancy pay, on the basis that they were not really a ‘casual employee’.

Under the amendments, where an employer can show that the employee has been paid a separately identifiable casual loading to compensate the employee for not having one or more relevant entitlements during a period, the employer can ask the Court to rely on the payment of the casual loading to make an order to reduce the amount the employer may have otherwise been ordered to be paid, which can be nil.

In order to be able to rely on this provision, a contract of employment (or other relevant instrument) must adequately identify the relevant entitlements the loading is being paid in compensation for, ie 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.

If a contract of employment (or other relevant instrument) only lists some entitlements the casual loading is paid in compensation of, the Court will not be able to offset the casual loading against any claim for omitted entitlements.

The FW Act will now define a ‘casual employee’. This definition will override the definition of casual employee at common law.

A person will be classified as a casual employee if an offer of employment is made and accepted on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person.  

Whether there is a firm advance commitment to continuing and indefinite work according to an agreed pattern of work will be assessed at the time the offer is made against the following exhaustive factors:

  • 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 will be entitled to a casual loading or specific rate of pay for casual employees under the terms of the offer or a fair work instrument (or other relevant instrument).

A New Division 4A - Offers and requests for casual conversion will be included as part of the NES in the FW Act.

This means that employers will no longer be able to omit (or provide less favourable) casual conversion clause under enterprise agreements.

All employers will now be required to make an offer of full-time or part-time employment to an eligible casual employee within 21 days of the employee having been employed for 12 months, subject to certain exceptions.

An eligible casual employee is an employee:

  • who has been employed by the employer for a period of 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 employee or part-time employee, as the case may be.

The FW Act sets out procedural requirements to be met when making an offer, responding to an offer and the agreement to convert.

Importantly, the FW Act includes examples of ‘reasonable grounds’ an employer can rely on for not making an offer to covert a casual employee’s employment to permanent, which include:

  • the employee’s position will cease to exist in the period of 12 months after the time of deciding not to make the offer;
  • the hours of work the employee is required to perform will be significantly reduced in that 12 month period;
  • there will be a significant change in either or both of the days on which or times at which the employee will be required to perform work in the period, which cannot be accommodated within the days or times the employee is available to work; or
  • making the offer would not comply with a requirement or selection process required by or under a law of the Commonwealth or a State or a Territory.

There may be other reasonable grounds on which an employer can decide not to make an offer, including those specific to their workplace or the employee’s role. Such reasonable grounds will be considered to be taking into account all relevant circumstances.

Additionally, small businesses are exempt from the requirement to offer casual employees conversion to permanent employment, but causal employees of small businesses can still make a request.

There will also be a residual right to request casual conversion in certain circumstances, which include when employees have not received or accepted an employer offer, failures by employers to convert, and situations where an employee doesn’t meet the eligibility criteria at the relevant time but later do meet the criteria.

The FWO has published the Casual Employment Information Statement (Statement) which employers must provide to new casual employees before (or as soon as practicable after) the employee starts casual employment.

The Statement includes information about casual employment and requests and offers of casual conversion.

The Statement need not be given more than once in any 12-month period, and is to be provided in addition to a Fair Work Information Statement.

What didn’t make the cut?

Proposed changes to enterprise and greenfield agreements, modern awards and compliance and enforcement, including the criminalisation of wage theft, were all abandoned.

What do employers need to do?

In response to the newly inserted casual employment provisions, employers should:

  • review all casual contracts of employment to ensure they contain the adequate provisions to prevent double dipping;
  • ensure they are complying with the timeframes and requirements in respect to casual conversion requirements; and
  • provide a copy of the Casual Employee Information Statement as well as a Fair Work Information Statement to new casual employees before (or as soon as practicable) after the employee starts employment.

Hall & Wilcox can assist your organisation to navigate these legislative changes and advise your organisation on its obligations under the FW Act.  

When do the changes come into effect?

The effective date of these changes is 27 March 2021.

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