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The new “casual employee” definition explained

15/12/2020

On 9 December 2020 the Minister for Industrial Relations introduced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (the Bill) into parliament.

Among other things, the Bill seeks to establish a statutory definition of casual employment by inserting a new section into the Fair Work Act 2009 (Cth). This new section would define a person as a casual employee if they accept an offer of employment that has “no firm advance commitment to continuing and indefinite work according to an agreed pattern of work”.

The concept of a “firm advance commitment” comes from the recent decisions of the Full Court of the Federal Court of Australia in WorkPac Pty Ltd v Skene [2018] FCAFC 131 and WorkPac Pty Ltd v Rossato [2020] FCAFC 84, where two employees who were described as casual employees were in fact held by the Court to be permanent employees and therefore entitled to permanent employment entitlements, including annual leave.

However, the new definition also contains the following criteria that a court is to consider when determining whether or not there has been a “firm advance commitment”:

  • whether the employer can elect to offer work;
  • whether the person can elect to accept or reject work;
  • whether the person will work only as required;
  • whether the employment is described as casual employment; and
  • whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.

This proposed definition is a significant and concerning step backwards for casual employees.

This is because the proposed definition restricts what a court can consider when determining whether a person is a casual employee. Traditionally, courts will look at the “totality of the relationship” and all of the surrounding circumstances of the employment. This allows the court to understand how the relationship actually operates in practice, rather than accepting at face value the label that the employer has given it in the employment contract.  Under the new proposed definition, the court can only look at a limited set of factors, most of which can be easily manipulated by employers.

The new proposed definition also specifically prevents a court from examining the conduct of the parties after the offer of employment has been made. This allows an employer to artificially construct a casual employment relationship on paper, only to then direct an employee to work regular full-time hours once the employment commences. In this scenario, the court would be forced to ignore that subsequent direction and only look at the terms that were proposed at the outset of the employment when determining whether the person is a casual or permanent employee.

The new statutory definition also expressly provides that a regular pattern of hours does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work. This means that an employee could still be defined as a casual employee, even if they work regular full-time hours.

This is all worsened by another proposed section which provides that a person will continue as a casual employee until they are converted to permanent employment or they accept an offer of permanent employment in another position. Unfortunately, both of these things are controlled by the employer. This could see workers consistently working regular full-time hours over prolonged periods of time and still be defined as casual employees, thereby missing out on valuable paid leave and other entitlements.

For all of these reasons the new statutory definition of the casual employee is deeply flawed and would constitute yet another significant shift in the balance of power in favour of employers at the hands of the federal government.

Further updates about the progress of the Bill will be provided as it makes its way through federal parliament over the coming months.