Casual employment and the employee-choice pathway (Closing Loopholes)

What changed

The Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 brought about significant changes to casual employment. A new statutory definition of casual employment has been introduced, taking effect from 26 August 2024. This definition prioritises the genuine nature and practical application of the working relationship, rather than relying solely on the written contract.

Previously, employers initiated the process of converting casual employees to permanent roles. This has been replaced with an employee-choice pathway, giving employees greater agency in determining their employment status.

The shift in focus means that businesses must now carefully consider how casual employment is structured and operated to align with the new definition.

The new definition

The definition of a casual employee is central to determining eligibility for the employee-choice pathway. The new definition focuses on the substance and practical reality of the working relationship, rather than simply the label applied to the role. A person is considered a casual employee if there is no firm advance commitment to continuing and indefinite work.

Several indicators are considered when assessing whether a person is a casual employee. These include the method of offering and accepting work, the predictability of work patterns, the employee’s ability to accept or reject offers without consequence, and the presence of a casual loading. It is important to understand that these are indicators only.

The determination of casual status is not based on any single factor. All relevant indicators must be considered collectively to accurately assess the real nature of the employment relationship.

Employee-choice pathway

Eligible casual employees have the right to request a change to full-time or part-time employment. This request must be made in writing.

To be eligible, an employee generally needs to have worked for the employer for at least six months. This period is extended to twelve months for small business employers. The employee must also no longer meet the definition of a casual employee at the time of the request.

Following a written request, the employer is required to respond in writing, either agreeing to the change or refusing it. Refusal must be based on prescribed grounds. Employees can seek review of the employer’s response through the Fair Work Commission if they disagree with the decision.

What employers must do

Employers must now issue the Casual Employment Information Statement to casual employees. This must occur at the start of the employment, after six months, and at other relevant milestones throughout the employment period. Employers should ensure they have updated versions of the statement available and are distributing them correctly. Payday Super readiness is a related consideration for employers.

A key obligation is to audit existing casual workforces. This audit should identify employees whose current work patterns do not align with the revised definition of a casual employee. The purpose is to determine if any employees have been incorrectly classified and may be entitled to permanent employment rights.

Employers must establish a clear process for receiving and responding to employee-choice notices. This process needs to allow for responses within the required statutory timeframe. Furthermore, employers should map back-pay risk, particularly in situations where a casual loading has been paid in place of leave entitlements, to assess whether the employment relationship was, in fact, permanent.