The Australian employment law landscape is changing with plenty of new rules and regulations taking hold in 2024, particularly for casual workers. Under changes to the Fair Work Act, many casual workers may become eligible to opt to change to full or part-time employees, providing for equal access to annual leave, sick pay, and employee benefits.
Changing definition of casual employees
While the changes are aimed at improving casual workers’ rights, they are also causing some issues for employers. The new definition states that a casual employee is someone with no firm advance commitment to continuing and indefinite work, which is the touchstone of casual employment.
The new definition of casual employment will essentially overturn the relevant authority in the High Court. Before the change in definition, employers could rely on what had been included in a written contract; and that would largely decide whether someone was casual or not.
Now, the definition requires a broader consideration, not just of the written contract, but of real substance, practical reality, and true nature of the employment relationship.
Changing definitions of working contracts
Under the new legislation, casual employees who no longer meet the definition of casual employment will not automatically become permanent employees, but rather the legislation introduces the concept of employee choice.
Casual employees no longer meeting the definition of casual employment will now be able to choose to become permanent if their employment situation includes a firm advance commitment to continuing and indefinite work.
This refers to an employee who is engaged as a casual employee, and then after a particular period believe that they are not really a casual employee, and no longer want to be a casual employee. If the employee decides to convert to permanent status, the employer then has a relatively limited scope to refuse.
This conversion grants the employee benefits such as annual leave, personal carers leave, and notice of termination. The goal of this change is to provide more security for casual employees who prefer permanent status. But, for those happy with their arrangements, it is business as usual.
Employees happy with casual engagement
While the updates now provide clarity and ease with which employees can make this change, many casual workers enjoy the flexibility and additional pay loading that comes with casual employment and may not wish to convert. For these employees, the status quo remains. The change in definition is only relevant to a minority of casual employees who are unhappy with casual status.
Getting prepared
Employers need to be prepared for this shift and understand how it might impact the workforce. As with any legislative change, staying informed and proactive is key. Businesses most affected will be those with a large proportion of casuals, or employers whose business structure relies on casual employees.
There is a level of operational uncertainty for employers with a large number of casual employees, knowing that at any given time a significant proportion of the ongoing workforce may request to become permanent employees. This only solidifies the importance of affected employers being proactive and prepared for the changes.
The risk of misclassification
Misclassifying an employee on commencement could have significant financial implications. It is not enough to simply have a decent contract anymore. Regardless of how clear an employment contract is about casual employment; the actual work arrangement might suggest otherwise.
If an employer mistakenly engages an employee as a casual when the nature of the employment is actually permanent, the employee might claim retrospective entitlements. It comes down to the importance of understanding these nuances and preparing accordingly. Employers need to be vigilant about classifying and managing casual employees to avoid potential pitfalls.
These changes mean that businesses must align the true nature of the employment relationship with the contractual terms, ensuring compliance and reducing risks associated with misclassification. If you need help preparing your business for the upcoming changes around casual employment, get in touch with our team today.
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