Australia: Offsetting arrangements – Fair Work changes to casual employment

On 9 December 2020, the Morrison Government introduced a major workplace reform Bill with significant changes to casual employment.

Key changes to casual employment can be viewed here.

The purpose of the employment law reforms are to provide greater certainty for both employer and employee, particularly with respect to casual employees and accrued leave entitlements following the decision of Workpac Pty Ltd v Rossato [2020] FCAFC 84(Rossato).

The definition of casual employee will be amended to include those who have received an offer of employment on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work, and the employee accepts the offer. Employers will also be required to provide casual employees with a Casual Employee Information Statement provided by the Fair Work Ombudsman.

Furthermore, an employer must offer a casual employee conversion to permanent employment after 12 months of continuous employment, and during the last six (6) months of that period, the employee has worked a regular pattern of hours on an ongoing basis (i.e. the employee's employment was regular and systemic). Likewise, casual employees may request conversion on this basis.

However, the amended legislation will not allow for "double dipping", thus overriding the decision of Rossato by requiring Courts to apply an offset when assessing back pay claims. The Courts must reduce any amount payable by an employer to the employee by an amount equal to the loading amount (e.g. 25% casual loading). The offsetting amendment will not apply to matters which have already settled (outside of Court) or determined by a Court decision.

These changes will apply retrospectively and for all future casual employees, and will become law within 10 business days of receiving Royal Accent on 22 March 2021 – i.e. early April 2021. A transition period of 6 months will be provided from the commencement of the Bill.

Employers and employees should review their existing casual employment contracts and/or pro forma against the new definition of 'casual employees' to ensure correct classification.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.