Casual worker rights: What IR reforms mean for employers

Casual worker rights will be one of the biggest shake-ups under the coalition government’s hotly anticipated IR reforms bill.

The first section of the omnibus bill was announced on Monday with full details of the legislation due for release in Parliament by the Attorney General Christian Porter today.

The bill comes as a response to widespread job losses caused by the pandemic and the recent Federal Court rulings which found that casual employees could be owed entitlements like annual leave and sick pay if they performed regular, ongoing work.

The legislative shake-up will see amendments to employment law in five key areas but the most seismic change is around casual worker rights.

HRD spoke to Trent Hancock, principal at Jewell Hancock Employment Lawyers, about the main points employers with a casual workforce need to be aware of next year.

Statutory definition of casual employment

“This is significant amendment to the Fair Work Act because it will be the first time we have what hopefully is a clear statutory definition of casual employment,” Hancock said.

“It’s a reaction to the recent decision of WorkPac Vs Skene and WorkPac Vs Rossato which the coalition government said has cast doubt on who is and isn’t a casual employee.

“It appears the bill will define a casual employee as when the work has been offered and accepted on an indefinite basis without an agreed pattern of work.”

But Hancock warned there will be factors that influence the definition of a casual, such as the ability to accept or reject work, whether the job is described by the employer as being a casual job and whether the employee receives casual loading.

“For employers, it may give greater certainty and freedom when hiring and characterising casual employees,” he said.

“But it might give employers the ability to deem a worker a casual employee even if they’re working regular and systemic hours usually consistent with permanent work.”

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That is one of the big concerns from Sally McManus, president of the ACTU, who said if an employer has the ability to legally deem a worker a casual, despite ongoing and regular hours, it does little to change the current situation they face.

Casual loading offset

The second big change is giving employers the ability to offset the cost of potential claims from employees wrongly deemed as casual with the 25% loading in their previous pay packets.

The coalition government estimated the total cost to employers resulting from claims by mischaracterised workers at $39 billion and this legislative change looks to directly to reduce that number.

“That provision is designed to address and essentially overturn what the coalition government has referred to as double dipping, again arising from those recent federal court decisions,” Hancock said.

“Most importantly, it looks like that is going to have retrospective application so it will apply to all current employees from the commencement of their employment and there is a limitation period of six years on those types of claims.

“What they are essentially seeking to do is extinguish the potential claims where employees have been genuinely mischaracterised as casual.”

If the characterisation by the employer was genuine and they have paid their employee an identifiable casual loading, they can now use that portion of pay to offset the cost of any retrospective entitlements.

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For a lot of employees, Hancock estimated that this will extinguish a claim for entitlements in its entirety.

Conversion to permanent employment

Under the bill, it appears employers must offer permanent employment to a casual if they have been employed for 12 months and worked a regular pattern of hours for six months.

The Attorney General described the amendment as a “very strong right” for casual employees but Hancock said there are two reasons why that is not necessarily the case.

“The first is that an exception applies if an employer has reasonable grounds not to convert the employee to casual employment,” Hancock said.

“In other areas of the law where we have a reasonable business grounds type test the definition is quite wide.”

Asked whether businesses would have to prove the financials behind that decision, Hancock said he did not believe there would be any real onus on the employer to show exactly why were not in a position to convert a casual employee into a permanent one.

The other issue, he said, is that there appears to be no enforcement options for an employee if their employer were to deny their request for permanent employment.

“If an employer refuses the request, all the employee can do is apply to have the matter conciliated at the FWC or have the matter determined by consented arbitration,” Hancock said.

“The employer can refuse a conversion and then refuse to have that decision reviewed by an industrial umpire.”

Under fair working practice, employers should be reviewing the work patterns of their casual employees and offering conversions to permanent contracts where appropriate.

Hancock also noted that casual conversion clauses already exist under some awards.

He said employers may even find workers declining the option of conversion if it results in the removal of their casual loading and an immediate reduction in their salary.