Changes to employment of casual employees took effect on August 24^th, 2024. As part of a wider range of new or amended provisions for employers, The Fair Work Act definition of a casual employee has substantial ramifications for employers. 

Firm Advance Commitment

One of the big changes is the new definition of a casual employee. One of the lesser-known changes is outlined in Section 15A(3) of the Act. It deals with the real or practical substance of the employment relationship. In other words, an employment contract on its own is not enough to insulate or protect employers from a claim. And unless you also have set off clauses and rates of pay explained and broken down correctly in your employment agreement, that claim could be very costly.

A firm advance commitment from an employer to a casual employee can be demonstrated through various actions and statements. Here are some examples of what an employer might say or do that could indicate such a commitment:

• Regular Scheduling: Consistently scheduling the employee for a set number of hours each week over an extended period suggests an ongoing need for their services.

• Promises of Future Work: Explicitly stating that the employee will be needed for upcoming projects or shifts can imply a commitment to continued employment.

• Indications of Long-Term Employment: Discussing the employee's role in the context of long-term goals or projects, rather than just temporary or sporadic tasks.

• Training and Development: Investing in the employee's training or development for specific tasks or roles may indicate a commitment to their ongoing employment.

• Feedback and Performance Reviews: Conducting regular performance reviews and providing feedback on how the employee fits into the team or future plans can signify a commitment.

• Inclusion in Team Meetings: Actively including the casual employee in team discussions, planning sessions, or decision-making processes can show that they are valued as part of the team.

• Communication of Benefits: Discussing terms typically associated with permanent roles, such as leave, returning after Christmas break etc, even if not formally granted, can signal a firm commitment.

• Expressing Dependency: Providing elevated responsibilities to a casual employee for specific tasks or projects can imply a long-term need for their services.

• Consistency in Work Hours: Offering consistent hours over a significant period, even if technically classified as casual, could demonstrate an expectation of ongoing work.

Casual Employee Rights and Remedies

If an employer classifies a worker as a casual employee when they should be employed as a full-time or part-time employee, the costs and consequences could be substantial:

• Back Pay: Employers may be required to pay back pay to the employee for any entitlements they missed out on, including annual leave, personal leave, and other benefits associated with full-time or part-time employment.

• Fines and Penalties: The Fair Work Ombudsman can impose significant fines on employers for breaching employment laws. These fines can vary depending on the severity and nature of the breach.

• Breach of Award or Agreement: If the employee is covered by a specific modern award or enterprise agreement, the employer may face penalties for failing to adhere to the terms outlined in that document.

• Compensation Claims: Employees may lodge a claim for compensation through the Fair Work Commission or other legal avenues if they believe they have been unfairly treated or denied their entitlements.

• Legal Costs: Employers may incur legal costs if disputes arise and require legal representation or if cases are brought before tribunals or courts.

• Increased Scrutiny: Once a breach is identified, an employer may be subject to increased scrutiny from regulatory bodies, which could lead to further investigations into their employment practices.

What should employers do?

1. Update your employment agreements for casual employees. These are not minor changes, there are a range of terms and provisions which must be part of your employment agreements for casual employees.
2. Review how you manage causal employees, particularly hours of work and duration of employment. The practical relationship between you as the employer and the casual employee is also assessed when determining whether or not the employment arrangement is of a casual nature.
3. Engage a labour hire agency, because the triangular relationship offers a unique safeguard for Company’s. For this to be effective, the agency must have the right employment agreements in place with their casual employees.
4. Consult with legal or employment law specialists.

To assist with the update to your employment contract, you are welcome to download our Example Casual Employee Agreement which includes highlighted sections and clauses to accommodate the necessary changes to employment of casual workers.

Please note this is only an example, IRP strongly recommends seeking legal advice before implementing or modifying your employment agreements.

If you have any questions or would like to discuss the best way to engage and manage casual employees, please contact Peter Spark at IRP by email at peter@irp.net.au or call 0418 905 376.