conversion

The Fair Work Act 2009 (Cth) (Act) has been amended with effect from 27 March 2021 in relation to casual employees.

Here are the 4 practical steps that most employers should take to help ensure compliance with the Act and prevent disputes from arising with their casual employees:

1.            Casual Employment Information Statement

The Fair Work Ombudsman has now made available a new Casual Employment Information Statement (CEIS). Both new and existing casual employees must be given a CEIS.

From 27 March 2021, all employers must give every new casual employee a CEIS before, or as soon as possible after, they commence their employment.

Small business employers (those with less than 15 employees) must give their existing casual employees (those employed before 27 March 2021) a copy of the CEIS as soon as possible after 27 March 2021.   All other employers must give their existing casual employees a copy of the CEIS as soon as possible after 27 September 2021.

Note that the CEIS does not replace the Fair Work Information Statement (FWIS). The FWIS is still required to be provided to every new employee (casual employees should receive both the FWIS and the new CEIS).

2.            Update casual employment contracts

The Act now includes a definition of ‘casual’ employee. Under the new definition, 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.

With retrospective effect, the question of whether an employee is a casual is now assessed based on what was agreed when the employment was offered and accepted, not on the pattern of hours later worked or some other subsequent conduct occurring during the course of their employment.

Employment contracts for casuals, if they don’t already, should:

• state that the employment is casual;
• specify that the employer can elect to offer work and that the employee can elect to accept or reject it; and
• confirm that there is no guarantee of ongoing or regular work and that the employee will only work as required.

3.            Specify the casual loading in employment contracts and payroll documentation

The changes to the Act also remove the ability (which arose from several recent cases such as Workpac v Rossato) for employees to “double-dip” and receive entitlements as permanent staff as well as retaining the casual loading already paid to them (in lieu of such other entitlements).

The amounts actually paid to the employee as casual loading operate as a reduction to, or are set off against, of any amount that may later be determined to be payable by the employer for permanent employee entitlements.

Casual employment contracts thus should:

• clarify that the employee is paid a casual loading (usually 25%) and that the loading is paid on the basis that the employee is not entitled to relevant permanent employment entitlements such as annual leave, paid personal leave, redundancy pay and the like; and
• identify the dollar amount of the loading from the base hourly rate where possible.

Further, payroll documentation (including payslips) should separately identify the dollar value of the casual loading paid in each pay period.

4.            Identify eligibility for casual conversions

Once employed as a casual, an employee will continue to be a casual until they either:

a)       become a permanent employee through:

(i)            casual conversion, or

(ii)           are offered (and accept the offer of) full-time or part-time employment, or

b)      stop being employed by the employer.

Although many employers had pre-existing casual conversion obligations in relevant Modern Awards or enterprise agreements, these casual conversion provisions are now included in the National Employment Standards (NES), which means that now employers that were not historically subject to such conversion obligations are subject to the casual conversion pathway regime. Small business employers (with fewer than 15 employees) are not subject to these rules.

The new provisions require employers to offer permanent employment to any casual employee who has:

• been employed for 12 months; and
• worked a regular pattern of hours on an ongoing basis for at least the last 6 months of that period; and
• the employee could continue working those hours as a permanent employee without significant change.

An employer need not make an offer of casual conversion if there are “reasonable grounds” not to, based on facts that are known or reasonably foreseeable (such as where the employee’s position will cease to exist within 12 months, the hours of work that employee is required to perform in the following 12 months will be significantly reduced or the employee’s availability cannot accommodate the significant change in the employees’ hours/days required to be worked).

During the 6-month transition period ending 27 September 2021 and from then on, employers should identify any employees that may meet the criteria for conversion and make an offer of casual conversion to an eligible employee within 21 days of the employee attaining 12 months of employment. There is a form and process relating to the offer (and its acceptance).

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to any employment related issue or any business/commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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