What do the recent casual employment changes mean for your practice, in practice?

Around one in four employees work as ‘casuals’ in Australia, therefore it’s no surprise that many medical or allied health practices engage their support staff (or even their professional staff) as casuals. The recent amendments to the Fair Work Act (‘FW Act’), which came into effect on 26 August 2024, brought some notable changes relating to casual employment, including (but not limited to):

• A new definition of casual employment;

• New requirements regarding the provision of the Casual Employment Information Statement;

• Increased protections for employees engaged under ‘sham’ arrangements; and

• A new pathway for casual conversion.

As a refresher, casual conversion is the conversion of casual employees to full-time or part-time employment and is a National Employment Standard (‘NES’) entitlement. This article will be a deep dive into these new changes (particularly the new definition and casual conversion process) and what they mean for you and your practice, in practice.

The new changes

Under the new definition of casual, a person will be a casual if, when starting employment, there is no ‘firm advance commitment to continuing and work’ (section 15A) and they are entitled to a casual loading. Unless they have converted to permanent employment, employees hired before 26 August 2024 can remain casual under the new definition.

The ‘real substance, practical reality and true nature of the employment relationship’ will be the basis for the assessment of whether there is this ‘firm advance commitment’ (section 15A(2)). This will therefore require consideration of the contract, as well as what is happening in practice. Questions you might want to ask yourself may include:

• Are they working regular hours in a pattern?

• Do your full-time and part-time employees work in a similar way?

• Could they reject the work? Could you not offer the work?

The answers to each of these questions alone will not be determinative, but it is important to turn your mind to them so that you aren’t calling something casual that is definitely not ‘casual’. Whether the relationship between the practice and the employee would likely be considered ‘casual’ at law is something that You Legal can help you understand, so please feel free to reach out if that is what you would like some clarity about.

Another key change in this 2024 legislation relates to casual conversion. The ‘employee choice pathway’ is a new pathway into full-time or part-time (permanent) employment if the employee wants to under the NES. Casual employees will now have the right to advise you of their intention in writing to change to permanent employment if:

• they believe they aren’t a casual employee (under the new definition, as discussed above); and

• they have been employed for 6 months, or if you are a ‘smaller’ business, after 12 months.

The nitty gritty: 6 or 12 months from which date?

For your current casuals who you have engaged prior to 26 August 2024, this new pathway will apply from 6 or 12 months after this date. As for anyone you hire as a casual after the 26 August, this will apply after the employee has been employed for at least 6 (or 12) months.

There is also a transitional period, wherein the previous law will continue to apply and require businesses to offer casual conversion for 6 months (except if you are a small business), and allow the casuals to request conversion for 6 months (or 12 months if a small business), after 26 August 2024.

How big is your business?

If you have less than 15 regular employees, then you are classified as a ‘small business’. This small business distinction is something to keep in mind if your business is growing, as your obligations could change, just as your success does!

What happens if I get a notice from an employee?

Essentially, you should discuss with the employee what this change will mean in practical terms (i.e. would it be full-time or part-time hours, which hours, when would this start). After this discussion, but no later than 21 days after receiving the employee’s notice, you must notify the employee in writing that you accept or reject this change.

If you are accepting this change, you will document the details of this discussion (i.e. the confirmed hours etc) in the written response. It is a requirement that this change commences from the ‘first day of the employee’s first full pay period starting after the employer gives their response’, unless otherwise agreed between you both.

If you are rejecting the change, there is a bit more for you to do. You will need to include reasons for this decision. These are not necessarily onerous and may be as simple as the employee still satisfies the casual employee definition (which you can engage a legal professional to help you assess). However, it could also be that there are ‘fair and reasonable operational grounds’ for rejecting it. This may include, for example, that the change would significantly impact how your practice operates.

Of course, we wanted to take this opportunity to reiterate that you can’t take steps to avoid this notification coming, otherwise you could be breaching your obligations (i.e. you can’t deliberately change your employees’ hours or terminate the agreement).

What do these changes mean in practical terms?

Ultimately, the casual conversion change would come as a partial relief for employers because for many employers, it is no longer their obligation to offer and assess eligibility for casual conversion themselves. Outside of that, it may not result in much change for your practice at all. Why? Most long-term casuals do not want conversion because it comes with a large pay cut. As the right to conversion only kicks in after 6 or 12 months, most casuals, at this point in time, will be used to this pay rate and will not be wanting pay cuts.

Regardless, it is important to be across the changes as there may be penalties for non-compliance. There is no better time than the present to check the reality and the contractual terms of your arrangements to ensure that your ‘casual’ is a casual.

Need any more help or information?

We can help you understand your rights and obligations as an employer under these new changes and ensuring you are not putting your practice at unnecessary risk. More specifically, we can assist with reviewing, updating or creating a casual employment agreement which reflects the reality of your arrangements and contemplates these changes. We would be delighted to assist, so please don’t hesitate to contact us.