Casual employment changes – Employment contracts to be key as focus switches to initial ‘offer and acceptance’

It’s been less than a year since the infamous decision of Workpac Pty Ltd v Rossato, which confirmed (at the time) that the determination of whether an employee is casual depends on the ‘real substance, practical reality and true nature’ of the relationship. Parliament have now introduced a new casual employee definition, which focuses on the initial ‘offer and acceptance’ of casual employment.

In line with this change in focus, which applies to both existing casual employees and future casual employees, it is important employers review their casual employment contracts, as those contracts may now be decisive in establishing whether an employee is a casual employee.

The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 came into operation on 26 March 2021, introducing a new definition for a casual employee into the Fair Work Act 2009. As a result, a casual employee is defined as a person who:

• has been given 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 (Casual Offer)
• accepts the offer on the above basis
• is an employee as a result of that acceptance.

This new definition makes it clear that the question of whether a person is a casual employee will be assessed on the basis of the offer of employment and acceptance of that offer, not on the basis of any subsequent conduct of either party. This reverses the approach taken by the Court in the Workpac decisions, which instead looked at the totality of the employment relationship.

In determining whether, at the time the Casual Offer is made, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work, it is necessary to consider whether the:

• employer can elect to offer work and whether the person can elect to accept or reject work
• person will work as required according to the needs of the employer
• employment is described as casual employment
• person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.

With a change in emphasis from the totality of the employment relationship to the initial offer and acceptance for current and future casual employees, now is the time for employers to review their contracts of employment to ensure those contracts satisfy the new casual definition.

If your business currently employs casual employees whose employment contracts do not meet the new definition, make sure they are updated to reduce the risk of those casual arrangements not being consistent with casual employment under the Act.