What changes are coming?

New casual employee definition

From 26 August 2024, a new definition of casual employment will apply to new casual employees on or after 26 August 2024.

The new definition commencing from 26 August 2024 is as follows:

an employee is only a casual if:

1. there isn’t a firm advance commitment to continuing and indefinite work, taking into account a number of factors, including the real substance, practical reality and true nature of the employment relationship; and
2. they’re entitled to a casual loading or specific casual pay rate.

This means, stating that an employee is a casual employee in an employment contract will not be enough. The court/tribunal will look at the ‘real substance, practical reality and true nature of the employment relationship as well, i.e how you and your employee treat each other after the employment has begun.

To establish whether the employment is casual or not, in no order or importance, the court/tribunal will factor in, without limiting, the following:

• the employer can elect to offer (or not offer) work;
• the employee can elect to accept or reject work;
• the employee has a regular pattern of work;
• the employee will work on an as-needed basis;
• the work to be performed by the employee is different to the work of permanent employees in the workplace; and
• there is a guarantee or not of future or continuing work being available to the employee.

The above factors are only a guide. The ultimate question is whether there is an ‘absence of a firm absence of a firm advance commitment to continuing and indefinite work’.

Changes to Casual Conversion

From 26 August 2026, new casual employees who have been employed for at least 6 months (or 12 months for a small business) can make a written request to convert to permanent employment if they believe they no longer meet the requitement of the new casual employment definition.

This removes the current obligation on you as employers to proactively offer conversion to regular casuals. You must provide a written response within 21 days either accepting or rejecting the employees’ request to convert to permanent employment.

Employees cannot provide a notification if they are engaged in an ongoing dispute with the you (the employer) about casual conversion or if in the last 6 months, you refused a previous notification or they resolved a dispute with you about casual conversion.

If you reject a conversion request, you must provide a reason from the available grounds for declining such a request under the Fair Work Act. You can refuse the change if any of the following apply:

• the employee still meets the definition of a casual
• there are fair and reasonable operational grounds for not accepting the notification, including:
  • substantial changes would be required to the way in which work in the employer’s business is organised
  • there would be significant impacts on the operation of the employer’s business, or
  • substantial changes to the employee’s employment conditions would be reasonably necessary to ensure the employer doesn’t break any rules (such as in an award or agreement) that would apply to the employee.
• accepting the change means you are not complying with a recruitment or selection process required by law.

What about current casual employees, i.e casual employed before 26 August 2024?

Employers still have the obligation to offer casual conversion under the former casual conversion regime until:

• 26 February 2025 for casuals employed prior to 26 August 2024 by non-small business; and
• 26 August 2025 for casuals employed prior to 26 August by a small business.

The new employee choice regime will apply to all new casuals employed from 26 August 2024.

How does the new regime of casual conversion ‘Employee Choice’ process work?

Once a casual is correctly employed as a casual, they remain a casual until:

• the employee is offered permanent employment by their employer, and they accept.
• the employee converts to permanent employment under an applicable award or enterprise agreement; or
• the employee “elects” to converts to permanent employment under what is called the ‘employee choice’ process.

If none of the above occurs the employee remains a casual.

What penalties apply?

Employers who misclassify an employee as casual or dismiss and employee in order to re-engage them as a casual employee may face up to $93,900 for individuals and $469,500 for companies per offence. Employers also face potential back pay from the start of the employee’s employment for unpaid permanent employee entitlements such as annual leave, personal leave etc.

The BetterHR portal contains a checklist that can assist employers when engaging casuals from 26 August 2024. The letter wizard has also been updated with templates employers can use to accept or refuse a notification to convert to permanent employment. These are available to our HR Professional subscribers and above. Other subscribers can purchase the templates via our HR Shop.

Need help with HR?

Employers, who need help regarding the above or any other employment law questions, can contact BetterHR’s experienced HR consultants, and qualified lawyers on 1300 659 563 or visit: Subscribe to BetterHR.