New arrangements for casual employees under the Fair Work Act 2009 (the Act) come into effect from 26 August 2024. Some key points about the new changes are as follows:

  • a casual employee must initiate an ‘employee notification’ to the school in order to seek to be converted to permanent employment;
  • existing casual employees as at 26 August 2024 can remain casual if they wish to, even if their work situation does not meet the definition of a casual employee under the Act;
  • employers cannot force a casual employee to convert;
  • if an employee becomes permanent, they will no longer be entitled to a casual loading and will instead receive paid leave entitlements and job security that permanent work provides;
  • there will be no backpay for permanent employee entitlements where an employee was correctly classified as a casual from the commencement of their employment and an appropriate contract of employment was in place.

The changes to casual employment are set out in more detail below.

Please note that the new rules do not apply to existing casual employees, who are subject to transitional arrangements. See further details on the changes below.

New Definition of Casual Employment

The definition of casual employment at s15A of the Act will move from being focused on the employment contract to being focused on the employment relationship. Currently, an employee’s casual employment status is determined by what was set out in the employment contract, with any subsequent conduct of the parties not taken into account.

Under the new definition, the practical reality of the employment relationship will be considered, including any changes to the work arrangements that have occurred since the employee commenced. Two factors will be considered:

  • Whether the employee is entitled to a casual loading or specific casual rate under an industrial instrument or employment contract.
  • Whether the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work.

Assessments of whether an employee has a firm advance commitment to continuing and indefinite work will be considered:

  • based on the real substance, practical reality and true nature of the employment relationship
  • on the basis that a firm advance commitment can be in the form of a contract of employment or in the form of a mutual understanding or expectation between the employer and employee
  • having regard to the following (non-exhaustive) factors:
  • whether the employer can choose to offer (or not offer) work to the employee, and whether the employee can choose to accept or reject an offer of work
  • whether continuing work is reasonably likely to be available given the nature of the business
  • whether part-time or full-time employees are undertaking similar roles in the same workplace
  • whether the employee has a regular pattern of work.

No single consideration is determinative of whether an employee is a casual and not all considerations need to be satisfied. 

A pattern of work can be regular even if it is not absolutely uniform and includes some fluctuation or variation over time (including for reasonable absences such as for illness, injury or recreation).

What happens if a casual employee is misclassified?

If after 26 August, an employee is initially classified as a casual employee and they do not meet the new definition, then they can bring a claim for entitlements they would have received if they were properly classified as a full-time or part-time employee e.g. paid leave entitlements.

However, employers can offset any casual loading that has been paid to an employee against claims for full-time or part-time entitlements. As such, it is important for employment contracts to specify a casual loading, and that it is in lieu of leave entitlements.

There are new civil remedy provisions that apply where an employer makes a statement that they know to be false to persuade or influence someone to enter into a contract for casual employment when they will not be a casual employee.

Notification Process for Conversion

Under the new rules, a casual employee will remain ‘casual’ and if they wish to be converted to part-time or full-time employment they must make an ‘Employee notification’ to their employer that they wish to be converted.

Under the new provisions, casual employees who have been employed for at least six months (or 12 months in a small business1) can make an ‘Employee notification’ that they wish to be converted to permanent employment as they believe their work circumstances have changed such that they no longer meet the definition of ‘casual employee’. Employees can make an ‘Employee notification’ notification once every six months.

One positive change under the new provisions is that the onus is on the employee to notify the employer in writing if they wish to convert as they believe their employment is no longer casual.

Employer Response

Employers will have 21 days to respond in writing, either converting the employee to full-time or part-time employment or giving reasons why the notification is not accepted. Employers must consult with the employee about their notification before providing a response.

Where the employer accepts the notification, the employer’s response must state:

  • Whether the employee is converting to full-time or part-time employment
  • The employee’s hours of work following conversion
  • The date the conversion takes effect. This will normally be the first full pay period on or after the date of the response unless otherwise agreed with the employee.

Employers may not accept a notification on specified grounds, including where the employee still meets the definition of a casual employee or where there are fair and reasonable operational grounds to do so.

Fair and reasonable operational grounds for not agreeing to conversion include:

  • Substantial changes would be required to the way in which work in the school is organised
  • There would be significant impacts on the operation of the school
  • Substantial changes to the employee’s terms and conditions would be reasonably necessary to ensure the employer does not contravene a term of a fair work instrument that would apply to the employee as a full-time or part-time employee.

“Substantial changes” include changes that significantly affect the way the employee would need to work.

If the employer does not accept the notification their response must state:

  • The grounds on which they do not accept the notification
  • The reasons for their decision.

Employers are not required to increase an employee’s hours of work under the conversion process.

AISNSW has prepared template letters schools can use when responding to notifications from casual employees. These can be found here.

Dispute Process

An employee can apply to the Fair Work Commission (FWC) as part of settling a dispute about the new conversion provisions. The FWC can make an order converting the employee to part-time or full-time employment.

Workplace Rights & Anti-Avoidance

The rights afforded to casual employees under the casual conversion provisions are workplace rights for the purposes of the general protection provisions of the Act. It is unlawful for an employer to take adverse action against an employee because of those workplace rights.

Additionally, an employer must not:

  • reduce or vary an employee’s hours of work
  • change their pattern of work; or
  • terminate their employment,

to avoid a right or obligation related to casual conversion.

Transitional Arrangement for Existing Casual Employees

Casual employees engaged before 26 August 2024 (existing casual employees) will continue to be considered casual employees from 26 August 2024.

Existing casual employees can remain employed under their current contracts of employment, and the new definition of casual employment does not affect such existing casual employees when it comes into effect on 26 August. Existing casuals can remain casuals unless they are converted to permanent employment under the transitional provisions (the pre-reform process), or make an Employee notification under the new provisions.

In terms of the conversion process, there will be a six-month transitional period (ending on 25 February 2025) for existing casual employees. During this time, the current casual conversion arrangements will continue to apply.

After the transition period ends, the new ‘Employee notification’ provisions will apply to existing casual employees. Those employees can then make notifications under the new arrangements, noting that only employment on and from 26 August 2024 counts towards the six-month employment pre-requisite.

Note that different transitional arrangements apply to small businesses. Please contact AISNSW for advice if you are a small business employer (less than 15 employees).

Casual Employee Information Statement

New rules apply for providing the Casual Employee Information Statement to staff.

As is the case now, employers must provide the Statement before a casual employee commences employment, or as soon as practicable following commencement.

They must also provide the Statement to each casual employee as soon as practicable after they reach the following periods of employment:

  • 6 months
  • 12 months
  • Each subsequent 12-month period of employment.

Small business employers must only provide the Statement when a casual employee commences employment and after they reach 12 months of employment.

The Casual Employee Information Statement can be accessed here. Note that an updated version will be available from 26 August 2024.

What action do I need to take?

To comply with the legislative changes, Schools can:

  • Ensure casual employees engaged on or after 26 August 2024 meet the new definition of a casual employee at s15A of the Act. (Where an employer knowingly misclassifies a casual, this may attract civil penalties under the Fair Work Act 2009).
  • When engaging new casual employees, ensure the contract of employment includes wording consistent with s15A of the Act and is specific regarding the casual loading payable to the employee. AISNSW has updated its template casual employment contracts, these are available here.
  • Ensure the new Casual Employee Information Statement is issued to casual employees at the required intervals (set out above).
  • Apply the new conversion provisions to casual employees first employed on or after 26 August 2024. The earliest action required by an employer would be to respond to an Employee notification, which will not occur before 25 February 2025 (the earliest date any new casual employees could achieve 6 months of employment following the commencement of the new arrangements).
  • For existing casual employees (i.e. those first employed prior to 26 August 2024), the existing casual conversion arrangements to existing casual employees until 25 February 2025.

If you have any questions in relation to the new casual employment provisions, please contact the Workplace Management Team on 02 9299 2845

AISNSW will hold a webinar on the right to disconnect and the new casual employment arrangements on Friday 23 August 2024 from 8am to 9am. Members can register for the webinar via the AISNSW Courses and Events portal.