Casuals: The Comprehensive Guide to Employing Casuals in Australia

Many businesses in Australia use casual employees as part of their operations. Over 20% of all people employed are casuals. Casuals make sense – they can be arranged at short notice, and there is no obligation of ongoing employment. In return, they receive an additional pay loading to compensate.

Unfortunately, casual employment is no longer this simple. There are many rules that govern exactly when casuals can and can’t be used. Read on, and we’ll tell you all the key legal concepts behind casual employment.

What is casual employment?

Casual employment is a series of individual engagements. A casual engagement might be:

• week to week;
• day to day;
• shift to shift;
• hour to hour; or
• for any other agreed short period.

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What is the definition of casual employment?

The new definition of casual employee comes into effect on 14 August 2024. Under this definition, an employee is only a casual if:

• there isn’t a firm advance commitment to continuing and indefinite work, taking into account a number of factors, including the real substance, practical reality and true nature of the employment relationship
• they’re entitled to receive a casual loading or specific casual pay rate.

Employees who start as a casual, will stay casual until their employment status changes either through:

• a conversion process or Fair Work Commission order, or
• accepting an alternative employment offer and starting work on that basis.

The Fair Work Commission (the Commission) is the national workplace relations tribunal and registered organisations regulator.

Firm advance commitment

The courts will decide whether there is a “firm advance commitment” based on the real substance, practical reality, and true nature of the employment relationship. The courts can also include several other factors, like:

• Whether the employer can offer or not offer work to the employee.
• Whether the employee can accept or reject the work.
• Whether future work will likely be available.
• Whether there are full-time/part-time employees doing the same kind of work.
• Whether the employee has a regular pattern of work.

How is casual employment regulated?

The Fair Work Act includes provisions that regulate casual employment. The Act includes:

• a definition of casual employment;
• a scheme to set-off casual loading against claims for NES entitlements;
• an NES obligation on employers to offer for eligible casuals to convert to permanent employment;
• an NES right for eligible casuals to request conversion to permanent employment; and
• an obligation on an employer to provide a Casual Employment Information Statement (CEIS).

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Set-off casual loading against claims for entitlements

The law allows businesses to “set off” casual loading paid to a casual employee against any claim for paid leave, notice or redundancy pay if they’re found to not be casual by the courts. This applies when the business employs a person in circumstances where the employment is described as casual employment;

• The business pays them an identifiable amount to compensate them for not having one or more entitlements.
• During the employment period, a court has determined the person was not a casual employee.

If employee makes a claim for payment of the entitlements, the court must reduce any amount payable by the business to the employee for the relevant entitlements by the amount of loading you have paid them.

The reduction may be affected by any term in an award, enterprise agreement or employment contract that specifies that a part of the loading is for a particular entitlement.

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Casual Conversion

The Fair Work Act creates an obligation on an employer to make an offer to casual employees to convert to permanent employment, provided they meet several conditions:

• If they have been employed for at least 12 months.
• During that 12 months, they have worked a regular pattern of work for at least the last six months.
• If the employee has worked less than the equivalent of full-time hours during the last 6-month period, you must offer for the employee to convert to part-time employment that is consistent with the regular pattern of hours worked during that period.

The offer must be in writing, and must be made within 21 days of the employee’s 12 month anniversary.

After the initial 12-month period, you don’t have to revisit the issue unless the employee requests to become permanent.

You don’t have to make an offer of casual conversion if there are reasonable grounds not to, which include the following:

• The employee’s position will cease to exist.
• You require the employee to work significantly reduced hours.
• There will be a significant change in the employee’s working days or hours.

If you decide not to make a conversion offer to an employee, you must give written notice detailing the reasons for not making the offer within 21 days.

The employee has 21 days to accept a casual conversion offer. If they accept, you need to discuss:

• Whether they are converting to full-time or part-time employment.
• Hours they will work.
• when the conversion takes effect.

You must then notify the employee in writing of these matters within 21 days of the employee accepting the offer.

Requests for Casual Conversion

Some casual employees can request conversion to part-time or full-time basis. This is different to the 12 month rule that we discussed earlier that requires employers to offer conversion.

Casuals can ask to convert if they’ve been employed for at least 12 months, worked a regular pattern of hours for the past six months, and could continue to work as a full-time or part-time employee without significant adjustment.

This right doesn’t apply if the casual has refused a conversion offer in the last six months.

You cannot refuse the request unless you have both consulted the employee, and there are reasonable grounds to refuse it based on facts that you know. If you do refuse the request, you must give the employee written reasons within 21 days.

If you accept the conversion, you must notify the employe of the hours they will work and when the conversion takes effect.

Regular pattern of hours

The concept of a regular pattern of hours is new under the law, and there is no formal definition of exactly what a regular pattern is just yet.

Modern Awards treat a regular pattern of work as fixed weekly working hours, varying only through an agreed change or when the employee takes leave. If the casual hasn’t worked this kind of pattern, it’s arguable that they are ineligible to convert.

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Summary

There are yet more rules that govern how casuals can be employed in Australia. This guide covers only the most common legal issues with employing casuals. For further advice, you should consult a lawyer.