It has been difficult to precisely define the term ‘casual worker’ according to Fair Work legislation in Australia. But a new definition has been set down and it started on the 26th August 2024.
“Under this definition, a person is a casual employee if, when they start employment:
- the employment relationship has no firm advance commitment to ongoing work, taking into account a number of factors, and
- they’re entitled to a casual loading or specific casual pay rate under an award, registered agreement, or employment contract.”
If an employee was employed as a casual before the 26th August 2024, they will stay casual employees under the new definition unless they move to permanent employment either through:
- a conversion process or Fair Work Commission order (that they will have 6-12 months to access the new conversion pathways depending on the size of the business), or
- accepting an alternative employment offer and starting work on that basis.
See more information at Casual Employment Changes
Firm Advance Commitment
A firm advance commitment means that the employer and employee have agreed to ongoing, predictable work with set expectations. When there is no firm advance commitment, the employer does not guarantee regular shifts or continued work, and the employee is free to accept or decline shifts as they come up. This flexibility is a key characteristic of casual employment.
To determine whether there is a firm advance commitment, the following things are considered:
- Does the employer decide when to offer work, and does the employee have the option to accept or reject it?
- Is there a realistic chance of more work being available in the future?
- Are there permanent employees doing the same kind of work?
Even if a casual employee works regular hours for a time, that alone doesn’t mean there’s a firm advance commitment. The nature of the work must allow for flexibility and uncertainty about future shifts. Remember “a regular pattern of work does not automatically mean there is a firm advance commitment”.
For example, Josh works as a bartender at a summer pop-up restaurant. Each week, he’s offered shifts but he can choose whether to accept them. He gets paid extra to make up for not having guaranteed work or paid leave. Josh is considered a casual employee because there is no promise of continued work after the summer, and he can decide when he wants to work.
If a casual employee no longer meets the casual employment definition, they may be eligible for conversion to permanent employment.
Pathways for Casual Conversion
Casuals will have a new pathway to full-time or part-time (permanent) employment under the National Employment Standards. The ‘employee choice pathway’ will allow eligible casuals to notify their employer in writing of their intention to change to permanent employment. An employer can only refuse the notice for certain reasons.
A casual will be able to provide written notice to their employer to change to permanent employment under the employee choice pathway if they:
- have been employed for at least 6 months (12 months if employed by a small business)
- believe they no longer meet the requirements of the casual employee definition.
An employer can refuse conversion requests only for certain valid reasons, such as if the employee’s role is expected to cease or if significant changes to hours are likely.
There are a number of rules and factors that influence when an employee can provide a notice – see the full breakdown of how this works at Fair Works article – Changing from casual to full-time or part-time employment (casual conversion)
How was Casual Employment described before?
In the past it was accepted that a casual is hired on an informal, uncertain and irregular basis, which is still basically true.
Bar staff or shop assistants who are never exactly sure when they will be required for work are prime examples. Casual positions are sometimes used to trial workers and permanent work is offered as a reward for good performance.
The main characteristics of casual employment are:
- No entitlement to overtime, holiday, sick or parental leave;
- Casual loadings in compensation for a lack of entitlements;
- Irregular patterns or rosters;
- Hourly pay rates;
- Irregular hours or less than full-time employees;
- No expectation of ongoing employment; and
- Series of separate contractual engagements
In essence, a regular and systematic engagement with a reasonable expectation of continuing employment are not usually characteristic of casual employment.
There are, however, so-called ‘permanent casuals’ in the Australian labour force or workers who have ongoing and stable jobs but are treated legally as casuals. Some casuals are better categorised as ‘permanent casuals’, whose hours or rosters may vary to some degree, subject to demand. The most common definition in awards refers to a casual as ‘engaged and paid as such’.
Even if a casual employee works regular hours, they might still be considered casual under the new framework if there is no firm advance commitment to ongoing work.
A distinctive feature of casual employment is that there is a separate contract of employment, each time the employee accepts an offer.
When assessing whether an employee is casual the key test it whether there is firm advance commitment to ongoing work.
Sham Arrangements
Sham arrangements, where employers try to avoid paying entitlements by misclassifying employees as casuals, are now subject to stronger protections. It is illegal for employers to:
- Lie to convince a full-time or part-time employee to switch to casual employment for the same or similar work.
- Dismiss or threaten to dismiss an employee to rehire them as a casual for the same or similar work.
Courts can now impose penalties of up to $93,900 for individuals and $469,500 for businesses involved in sham arrangements.
Termination
Unless a casual employee’s contract or an applicable award or enterprise agreement provides otherwise, casual employees can be dismissed at the end of an existing shift.
Employers need to be fully aware of a casual employee’s entitlements when ending an employment relationship. A casual employee is open to claim that he or she is not a casual but a permanent employee in view of the factual circumstances surrounding the employment. If successful, then access to the unfair dismissal and redundancy provisions would be open.
Ensure your casual employees are aware of their employment status and avoid any misunderstanding by defining each parties rights with a Compliant Casual Employment Agreement. Kits available here