Major amendments to the Fair Work Act 2009 (Cth): What employers need to know
On 22 March 2021, the Federal Parliament passed the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (‘the Bill’), which amends the Fair Work Act 2009 (Cth) (‘Fair Work Act’).
With the changes to the Fair Work Act having come into effect on 27 March 2021, a vast majority of the originally proposed reforms, including the criminalization of wage theft, were scrapped. What the reforms do, however, is provide both employers and employees with clarification around casual employment.
The reforms address uncertainty resulting from the decisions of the Full Court of the Federal Court in WorkPac Pty Ltd v Skene  FCAFC 131 (‘Skene’) and Workpac Pty Ltd v Rossato  FCAFC 84 (‘Rossato’). In both decisions, long-term casual employees were found to be permanent by the court meaning that the employer was required to pay the employees various entitlements, despite the employees having previously received casual loading.
To address the issues associated with the Fair Work Act not previously including a definition of ‘casual employment’, as well as the employees in both decisions having effectively ‘double-dipped’, the amendments:
- · Introduced a statutory definition of ‘casual employment’;
- expanded the right to conversion as a workplace right; and
- seek to prevent ‘double dipping’ by employees where their employment has been misclassified as ‘casual’.
With no previous statutory definition of ‘casual employment’ in Australian legislation, employers had to rely entirely upon the common law meaning when making decisions about their employee’s work arrangements and entitlements.
Both the decisions in Skene and Rossato exacerbated the uncertainty and confusion of Australian employers when attempting to classify their employees. The decisions also highlighted the associated risks should the employers get that classification wrong.
Consequently, the reforms to the Fair Work Act provide that someone will be a ‘casual employee’ where an offer of employment is made and accepted without any firm advance commitment that the work will continue indefinitely and according to an agreed pattern of work.
Focusing on the offer of employment as accepted by the employee, and not the subsequent conduct of either the employee or employer, the meaning of ‘agreed pattern of work’ will be guided by:
- whether the employer can elect to offer work and whether the employee can accept or reject such work;
- whether the employee will work only as required;
- whether the employment is described as ‘casual employment’; and
- whether the person is entitled to casual loading (currently 25 per cent), or a specific rate of pay for casual employees contained in the offer of employment or an industrial instrument.
Furthermore, the employee’s status will remain casual for the duration of their employment unless:
- the employee’s employment is converted to either permanent employment; or
- the employee accepts an alternative offer of employment by the employer.
CONVERSION OF EMPLOYMENT
In a win for employees, the reforms now make it compulsory for employers to offer casual employees conversion to permanent full-time or part-time employment if:
- the employee has been employed by the employer for a period of 12 months;
- during at least the last 6 months of employment, the employee has worked a regular pattern of hours on an ongoing basis; and
- there are no reasonable business grounds for the employer to not make the offer.
Importantly, an employer is not required to make an offer of conversion of employment if there are reasonable business not to make such an offer. For example, the position will cease or the hours will be significantly reduced in the preceding 12 months.
The decisions in Skene and Rossato were significant in that both decisions effectively left the door open for permanent casuals to “double dip” with respect to certain entitlements where it is found that an employee has been incorrectly classified as a casual employee.
Under the reforms, employers will be able to offset an identifiable casual loading amount against entitlements, including:
- annual leave;
- compassionate leave;
- payment in lieu of notice of termination;
- payment for absence on a public holiday ; and
- redundancy pay.
If this article has raised any concerns for you or your organisation please do not hesitate to contact either John Hayward or Kate Smith on (07) 4046 1124, for advice specific to your circumstances.