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Codifying the meaning of “casual employment” in Australia

Daniel Tracey et Shae McCrystal
p. 234-239
Cet article est une traduction de :
Australie [fr]

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1In many countries around the world, regulators are seeking solutions to tackle the rising problem of “zero hours” employment - where workers are paid only for the hours they work each week, no minimum hourly engagement is guaranteed, and no leave entitlements are provided.

2In Australia, the concept of “zero hours” employment is known as “casual employment” and has long existed as part of the industrial landscape. The Australian approach to the problem has been to allow casual employment to occur, but only where it is paid at a higher rate to “compensate” for the loss of permanency, predictability and other benefits. However, this approach has led to the entrenchment of “casualization” in the Australian employment landscape. Workers may be engaged as casuals, and paid as such, irrespective of the reality of their work relationship (as otherwise stable, reliable employment), making this form of engagement just one option for employers to choose, with relatively few disadvantages. Further, the longstanding failure on the part of Australian regulators adequately to define the term ‘casual’ for different regulatory purposes has created a regulatory tangle where employees have been considered casual for some purposes, but not others, creating uncertainty over their employment entitlements.

  • 1 Those cases were WorkPac Pty Ltd v Skene [2018] FCAFC 13 (‘Skene’); and WorkPac Pty Ltd v Rossato ( (...)

3Prompted by a series of cases in the Federal Court of Australia which dealt with historical claims for annual and other leave entitlements from employees who had been treated as “casual” by their employers1, the Australian Parliament introduced a legislative solution to the issue of “zero hours” employment, in the form of the enactment of the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth) (“Amendment Act”) in March 2021. The Act has (among other things) codified the meaning of ‘casual employment’ in Australia. The impact of the Amendment Act on casual employment in Australia is the subject of this update.

I - The scope of the Amendment Act

  • 2 For reference, the Amendment Act also provides courts with the authority to offset casual loadings (...)

4The key changes introduced by the Amendment Act are those relating to identifying casual employment. Specifically the Amendment Act has introduced a definition of casual employment, requires employers (other than small business employers) to offer casual employees engaged on a regular basis the option to convert their engagement to continuing full-time or part-time employment after 12 months (in certain circumstances), and requires employers to provide casual employees with a ‘Casual Employment Information Statement’ before they begin their employment, or as soon as practicable after their employment commences2.

II - A new definition of “casual employment”

5The FW Act has not previously contained a definition of casual employment. This has created difficulties because certain provisions of the FW Act create statutory entitlements to minimum employment standards including annual and personal leave, but exclude from those entitlements “casual” employees who had not been otherwise defined. With the introduction of the Amendment Act, the FW Act now provides some clarity to employers and employees about who can be characterised as a casual, and who cannot.

  • 3 FW Act s 15A(1).

6Under the FW Act, a person is a casual employee if3:

  • an offer of employment is made to that person on the basis that the employer makes no firm advance commitment of continuing and indefinite work according to a regular pattern of work;

  • the person accepts the offer of employment on that basis; and

  • the person is an employee as a result of accepting that offer.

7This definition of casual employment raises the question of when an employer will have made no firm advance commitment of continuing and indefinite work.

  • 4 FW Act s 15A(2).

8In answer to this question, the FW Act provides that only the following factors may be considered4:

  • whether the employer can elect to offer work and whether the person can elect to accept or reject work;

  • whether the person will work as required according to the needs of the employer;

  • whether the employment is described as casual employment; and

    • 5 This casual loading is usually a payment of 25% of the employee’s base salary and is usually paid i (...)

    whether the person will be entitled to a casual loading or an equivalent payment under an industrial instrument given effect under the FW Act5.

  • 6 FW Act s 15A(3).

9The time at which these factors are to be considered is the time at which the offer of casual employment is made by the employer and then accepted by the employee. The subsequent conduct of the employer and the employee cannot be considered in determining whether the employer has made a firm advance commitment of continuing and indefinite work, and the FW Act makes it clear that a regular pattern of hours does not, in and of itself, indicate such a firm advance commitment6.

III - A right to convert from casual employment to full-time or part-time employment

10In addition to providing a new definition of casual employment, the Amendment Act also introduced new obligations on employers to offer casual employees the opportunity to convert to continuingemployment.

  • 7 FW Act s 66B.

11Under the FW Act, employers are now required to make such an offer if7:

  • the employee has been employed for at least 12 months;

  • during at least the last six months of the employee’s employment, the employee has worked a regular pattern of hours on an ongoing basis, that could continue if the employee becomes a part-time or full-time employee without significant adjustments;

  • no exceptions under the FW Act apply.

  • 8 FW Act s 66C.
  • 9 FW Act s 66C(2).

12From an employer’s perspective, this obligation to offer casual employees ongoing employment may seem onerous. However, the exceptions on which an employer might seek to rely to excuse themselves from this obligation are broad (and arguably, generous). For example, an employer is not required to make a conversion offer to a casual employee if there are reasonable grounds not to make the offer8. Such “reasonable grounds” might include, but are not limited to, that the employee’s position will cease to exist in the 12 month period after the decision not to make the offer, that the hours of work which the employee is required to perform will be significantly reduced in that same period, or that there will be a significant change to the days or times at which an employee will be required to work which cannot be accommodated within the days or times that the employee will be available to work9.

  • 10 FW Act s 66C(3).

13If an employer decides not to make a conversion offer to a casual employee, or if the employee has not worked a regular pattern of hours on an ongoing basis during at least the preceding six months, the employer must give the employee a written notice to advise them that a conversion offer will not be made10. That written notice must set out the reasons for why an offer is not being made to the casual employee and must be given to the employee within 21 days.

  • 11 FW Act s 66F. This reflects that changes already made to modern awards by the Fair Work Commission, (...)

14Casual employees also retain the right to request that their engagement be converted tocontinuing employment, provided that in the preceding six months, they have not been issued with a written notice by their employer, have not had a request for conversion rejected, and have not rejected a conversion offer from their employer11.

  • 12 FW Act s 66M.

15Importantly, and in light of the somewhat nebulous nature of what might constitute “reasonable grounds” on which to refuse to make a conversion offer to a casual employee, the Amendment Act also provides employees (and employers) an opportunity to challenge these specific provisions if a disagreement arises. That is, if an employee disagrees with an employer’s reasons for refusing to make a conversion offer, or disagrees with the application of any other aspect of these casual conversion provisions, the employee may file a dispute in the Fair Work Commission (FWC)12. However the Commission will have no power to arbitrate the dispute unless both parties agree to arbitration, and therefore will not be able to enforce outcomes on employers who do not agree, Further, access to the FWC can be removed through an alternative term in the contract of engagement or other written agreement providing an alternative manner of dispute resolution (which again, need not include arbitration of the dispute). The extent to which this jurisdiction will be utilised by employees and employers to resolve casual conversion issues, however, remains to be seen.

IV - The new Casual Employment Information Statement

  • 13 FW Act s 125A.

16Lastly, as a result of the Amendment Act, the FW Act now requires the Fair Work Ombudsman (Australia’s primary enforcement regulator) to prepare a “Casual Employment Information Statement” (‘Statement’) and publish that Statement13.

  • 14 FW Act s 125(2).

17The Statement must contain information about, for example, the meaning of casual employment and the new obligation on employers to offer casual conversion, as well as the Fair Work Commission’s new jurisdiction to deal with disputes about changes brought in by the Amendment Act14. Employers are required to provide the

  • 15 FW Act s 125B.

18Statement to each casual employee before their casual employment begins or as soon as practicable after they commence working with the employer15.

V - Key implications arising from these changes to the FW Act

19The changes to the FW Act described in this update, and brought about by the Amendment Act, have provided new parameters for “zero hours” employment in Australia.

20Importantly, the amendments to the FW Act apply retrospectively, and in doing so, provide certainty for employers by minimising the risk that casual employees may seek to challenge the characterisation of their employment at a later date. On the other hand, employers must also ensure that they afford casual employees the right to casual conversion enshrined in the FW Act, and in doing so, must carefully consider the circumstances of each casual employee to determine whether those employees are entitled to casual conversion, and must only rely on reasonable grounds to not offer, or reject a request for, more stable and ongoing employment.

21In the wake of years of court challenges and politically-charged social debate about the nature and treatment of casual employees in Australia, the FW Act provides a path forward (albeit a path on which many disputing parties will tread, as the notion of “reasonableness” for offering casual conversion is tested and these latest amendments find their feet).

  • 16 Rossato, [94].
  • 17 WorkPac Pty Ltd v Rossato & Ors [2021] HCA 23, 66.

22This is not to say, however, that the way forward paved by the Amendment Act answers all questions and resolves all issues arising from “zero hours” employment. Over time, work changes; employees’ duties change, industries change, and the way in which work is undertaken changes too. The Amendment Act has characterised casual employment as something that may only be identified with reference to a limited set of criteria, not the least of which are the terms set out in the contract of employment. Fixing the nature of an employment relationship by reference to a contractual agreement made at a particular moment in time risks ignoring the dynamic and often fluid nature of employment relationships. This is because the “characterisation of [a] relationship in a written contract… will not always reflect the true reality”16 of that relationship, even if the High Court has recently ruled that such an approach to characterising casual employment “stray[s] from the orthodox path”17 of contractual interpretation principles.

23All things considered, the changes brought about by the Amendment Act, despite seeming to address the ambiguities that have historically attended the meaning of casual employment in Australia, do not go far enough in terms of addressing some of the systemic definciences in the Australian system with respect to precarious work. The approach to defining casuals will further entrench this type of engagement in the Australian labour law landscape, rather than reserving casual employment for engagements that are genuinely casual, irregular and unpredictable. While the Amendment Act does present options for allowing casual employees to convert to continuing employment, the ways in which employers might side-step obligations to facilitate conversation are numerous, and may be subject to exploitation. It remains to be seen how effectively the new casual conversion provisions in the FW Act will be regulated, and until such time as that regulatory environment becomes clear, employees engaged under “zero hours” contracts will remain vulnerable in the face of continuing economic insecurity, which arises predominantly from uncertainty about the consistency of their future engagements for work and denial of access to basic employment rights like annual and personal leave.

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Notes

1 Those cases were WorkPac Pty Ltd v Skene [2018] FCAFC 13 (‘Skene’); and WorkPac Pty Ltd v Rossato (2020) 278 FCR 179 (Rossato). The cases were discussed at length in an earlier addition of this Revue in S. McCrystal “Casual Employment and Labour Standards in Australia”, Comparative Labour and Social Security Law Review, 2020-4, p. 180 (English Electronic Edition). Notably, after the passage of the Amendment Act, the decisions in Rossato and Skene were overturned by the High Court of Australia. The High Court found, contrary to the lower court decisions that a casual employee is someone who does not have a firm advance commitment from their employer that they will receive continuing work, and whether such a firm advance commitment has been made is determined by the terms of the employment contract. Put simply, the High Court has ruled that if an employee’s contract states that they are a casual worker, then that is the nature of their employment.

2 For reference, the Amendment Act also provides courts with the authority to offset casual loadings paid to an employee against claims for unpaid entitlements (FW Act s 545A), and gives the Fair Work Commission (Australia’s national industrial relations tribunal) the power to vary an enterprise agreement to resolve inconsistencies between that agreement and the new casual employment terms in the FW Act (FW Act Schedule 1, clause 45). However, these particular changes are not discussed in detail in this update, as they relate more to processes flowing from other disputes between employers and employees and less about identifying casual employment and the rights that flow from that identification.

3 FW Act s 15A(1).

4 FW Act s 15A(2).

5 This casual loading is usually a payment of 25% of the employee’s base salary and is usually paid in lieu of an employee’s entitlement to things like annual leave and personal (sick and carer’s) leave.

6 FW Act s 15A(3).

7 FW Act s 66B.

8 FW Act s 66C.

9 FW Act s 66C(2).

10 FW Act s 66C(3).

11 FW Act s 66F. This reflects that changes already made to modern awards by the Fair Work Commission, into which clauses were inserted that provide for casuals to request conversion to ongoing employment. Most modern awards were amended to include this provision on 1 October 2018, with remaining awards amended shortly afterwards through the Commission’s 4 Yearly Review process.

12 FW Act s 66M.

13 FW Act s 125A.

14 FW Act s 125(2).

15 FW Act s 125B.

16 Rossato, [94].

17 WorkPac Pty Ltd v Rossato & Ors [2021] HCA 23, 66.

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Référence papier

Daniel Tracey et Shae McCrystal, « Codifying the meaning of “casual employment” in Australia »Revue de droit comparé du travail et de la sécurité sociale, 4 | 2021, 234-239.

Référence électronique

Daniel Tracey et Shae McCrystal, « Codifying the meaning of “casual employment” in Australia »Revue de droit comparé du travail et de la sécurité sociale [En ligne], 4 | 2021, mis en ligne le 31 décembre 2021, consulté le 17 juin 2025. URL : http://journals.openedition.org/rdctss/2770 ; DOI : https://doi.org/10.4000/rdctss.2770

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Auteurs

Daniel Tracey

Faculty of Law, University of Sydney

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Shae McCrystal

Faculty of Law, University of Sydney

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