Circular 2022/10: Fair Work Act casual employment provision

Purpose

1. The purpose of this circular is to inform agencies about the Australian Government’s policy concerning the application of the casual conversion provisions in the Fair Work Act 2009 (FW Act).
2. This circular revokes and replaces Circular 2021-03 Fair Work Act changes to casual employment.

Key expectations

3. As a model employer, the Government expects agencies to convert casual employees to ongoing roles where the required criteria are met.
4. Agencies are to be mindful of the Government’s intention to facilitate more secure work in Commonwealth agencies.
5. APS agencies are bound by the Public Service Act 1999 (PS Act) and are required to apply the APS Employment Principles, including when engaging employees. APS agencies are to apply the FW Act casual conversion provisions in a manner that is consistent with the APS Employment Principles.
6. The APS Employment Principles recognise the usual basis for engagement is as an ongoing APS employee and that decisions relating to engagement and promotion are based on merit.
7. In line with the APS Employment Principles, a casual employee cannot be offered casual conversion without a competitive merit selection process having been undertaken.
8. Non-APS Australian Government employers, and employers with dual staffing powers, should consider the requirements of their own enabling legislation.
9. The ongoing operational impact of the casual conversion provisions will differ between APS and non-APS Australian Government employers. The process for each is detailed below.
10. Agencies should regularly review the makeup of their workforce for consistency with the FW Act, and to ensure it meets their contemporary requirements and workforce strategies.

What are the casual conversion provisions?

11. The casual conversion provisions in the FW Act commenced on 27 March 2021 and include:
    
    1. a definition of a casual employee;
    2. a pathway for casual employees to convert to full-time or part-time employment; and
    3. an obligation to provide casual employees with a Casual Employment Information Statement.
        
12. The casual conversion provisions in the FW Act apply to all former, existing and new casual employees, providing their initial employment offer meets the new definition of casual employment.[1]

Definition of a casual employee

13. The FW Act provides for a definition of a casual employee at subsection 15A(1), which states:
    
    1. A person is a casual employee of an employer if:
       
       1. an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and
       2. the person accepts the offer on that basis; and
       3. the person is an employee as a result of that acceptance.

14. This definition reflects a key element of the previously relied on common law ‘test’ of casual employment – that there is an absence of a firm and advance commitment to an agreed pattern of work between the parties (e.g. the days or hours the employee is expected to work).
15. The following four factors are exclusively used to assess casual employment status at the time of offer and acceptance (subsection 15A(2)):
    
    1. whether the employer can elect to offer work and whether the person can elect to accept or reject work;
    2. whether the person will work as required according to the needs of the employer;
    3. whether the employment is described as casual employment; and
    4. whether the 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.

16. No single factor determines casual employment status, and there is no requirement for all factors to be satisfied. It is what is agreed at engagement that determines a person’s casual status.

What are the impacts of this new definition?

17. The new definition clarifies that an employee could be a casual even if they are engaged to perform a regular pattern of hours (subsection 15A(3)).
18. Where an agency intends for an employee to be engaged on a casual basis, this should be communicated to the employee clearly at the time of engagement.
19. Agencies should ensure that terms in contracts of employment do not circumvent the correct operation of the FW Act, for example by stating the casual conversion will not be considered for the position.

All employers

Casual conversion process

20. Generally, employers must offer to convert a casual employee to full-time or part-time (permanent) employment where the employee:
    
    1. has been employed for 12 months;
    2. during the last 6 months has worked a regular pattern of hours; and
    3. could continue working those hours as a permanent (full-time or part-time) employee without significant changes.

21. A casual conversion offer is not required to be made by the employer where there are reasonable grounds not to do so, based on facts that are either known or reasonably foreseeable. This includes (but is not limited to) where:
    
    1. making the offer would not comply with a recruitment or selection process required by or under a law of the Commonwealth or a state or a territory;
    2. the employee’s position will cease to exist within 12 months;
    3. the hours of work which the employee is required to perform will be significantly reduced in that period; and/or
    4. there will be a significant change in the days or times of work (or both) which cannot be accommodated within the days or times the employee is available to work.
        
22. Non-APS Australian Government employers, and employers with dual staffing powers, should consider the requirements of their own enabling legislation.
23. Where an offer of casual conversion is to be made, it must be made in writing to the employee within 21 days of the 12 month anniversary of their engagement. 
24. If an employer decides not to offer casual conversion, the employer needs to write to the employee within 21 days of the employee’s 12 month anniversary, informing the employee:
    
    1. that they aren’t making an offer of casual conversion; and
    2. the reasons for not making the offer – either for the reasonable grounds mentioned above, or that the employee hasn’t worked a regular pattern of hours on an ongoing basis for at least the last 6 months which they could continue working as a permanent employee without significant adjustment.

Providing the Casual employment information statement (CEIS)

25. The CEIS provides information to casual employees regarding the right to become a permanent employee.
26. The CEIS must be provided to all casual employees.
27. New casual employees employed from 27 March 2021 must be provided with a copy of the CEIS before or as soon as possible after they commence employment.
28. The CEIS can be given in person, by mail, or if the employee agrees, by email or via link to the CEIS on the Fair Work Ombudsman website. Where an employer employs a casual employee more than once in a year, the CEIS only needs to be provided once in a 12 month period.

Additional considerations for employers covered by the Public Service Act 1999 (APS employers)

Secure employment in the APS

29. As a model employer, the Government is committed to creating more secure employment within the APS and eliminating the inappropriate use of temporary forms of work. Agencies are required to uphold the APS Employment Principles, including that the usual form of employment in the APS is ongoing employment.
30. The APSC is currently reviewing the Australian Public Service Commissioner’s Directions 2022 to remove barriers to casual employees receiving an offer of conversion consistent with the decision of the Fair Work Commission in Community and Public Sector Union v Commonwealth of Australia (Services Australia) [2022] FWC 1246.
31. The following section on casual conversion offers applies as an interim measure pending these anticipated changes.
32. Agencies are encouraged to review their casual employment arrangements, particularly where the agency has a large casual workforce, or casual employees who have been employed by the agency for an extended period of time, to determine whether the work is genuinely irregular and intermittent, or whether ongoing roles should be advertised.
33. Agencies may wish to highlight opportunities for casual employees to apply for ongoing employment within their agency and more broadly across the APS.

Interaction with the APS Employment Principles

34. In addition to considering their obligations under the FW Act above, APS agencies need to consider whether an offer of conversion would comply with public sector employment legislation.
35. APS agencies covered by the PS Act are required to apply the APS Employment Principles when filling vacancies. Offers of ongoing employment to casual employees must be consistent with this requirement.
36. A reasonable ground not to offer a casual employee permanent or ongoing employment is where making the offer would not comply with a recruitment or selection process required by or under a law of the Commonwealth or a State or a Territory (subsection 66C(2)(d)).
37. APS agencies should consider whether they have reasonable grounds for not offering casual conversion under section 66C(2) of the FW Act, and rely on subsection 66C(2)(d) only where appropriate or necessary.

Casual conversion offers that comply with the merit principle

38. An offer of casual conversion will comply with the merit principle when each of the following is satisfied:
    
    1. a vacancy exists in the agency, or in accordance with paragraph 41 the agency decides it is appropriate to create a vacancy to offer conversion;
    2. the casual employee had been assessed as suitable for the same or similar vacancy in the agency which had been notified in the Government Gazette in the previous 18 months;
    3. the Agency Head is satisfied that the casual employee is at least equal in merit to any other eligible employee; and
    4. the other criteria of the FW Act for casual conversion have then been considered (in the same way these apply for other employers - see the all employers section above).

39. The Australian Public Service Commissioner’s Directions 2022 are being reviewed to more fully align these provisions with the intent of the Fair Work Act.
40. Should these circumstances arise, the agency should offer casual conversion to the employee under the FW Act. The offer is to be a ‘like for like’ offer (subsection 66B(2) FW Act).
41. An APS Agency decision maker is strongly encouraged to create an ongoing vacancy to make an offer to convert a casual employee in appropriate cases.
42. Agencies heads should be aware that if they decide not to create a vacancy as per paragraph 41, this decision may be subject to dispute before the Fair Work Commission.
43. For the avoidance of doubt, outside of casual conversion under the National Employment Standards (NES), casual employees may be offered ongoing employment where the requirements of the APS Employment Principles are met, consistent with current practice under the PS Act. The APSC is able to provide further advice on this.

44. Agencies must provide a CEIS before, or as soon as possible after, the employee commences.
45. Upon the employee’s 12 month anniversary, agencies must:
    
    1. consider whether offering the casual employee conversion to permanent employment would be consistent with the APS Employment Principles;
    2. assess the casual employee’s eligibility to receive an offer to convert to full-time or part-time (permanent) employment; and
    3. provide either:
       
       1. a written offer of casual conversion; or
       2. written notice that an offer will not be made, including where it would not comply with a recruitment or selection process under the PS Act.

Employee requests for casual conversion

Employee requests for casual conversion, and other changes

46. Eligible employees have a right to request casual conversion, and employers have obligations in response to such requests.
47. In some cases, employees may have a residual right to request casual conversion when they have previously been provided with written notice a casual conversion offer will not be made.
48. Where an eligible employee has requested casual conversion, this request may not be denied without consultation with the employee (subsection 66H 1(a)).
49. Reasonable grounds, similar to the employer grounds not to offer casual conversion, may apply to such requests. See the Fair Work Ombudsman website for further details.

Further considerations

50. The engagement and use of casual employees is particular to each agency in the Commonwealth.
51. Agencies should review their casual arrangements and practices to establish processes that ensure compliance with the FW Act. Agencies should also ensure casual conversion is offered only when consistent with the requirements of their enabling legislation.
52. This should include reviewing letters of offer, terms contained in contracts of employment including the definition of casual employment, and the payment of casual loadings.
53. As a matter of good practice, agencies should regularly review the makeup of their workforce, to ensure it meets their contemporary requirements and workforce strategies.
54. Agencies should manage any disagreements about casual conversion according to dispute resolution clauses under their agreement 'disputes about NES'.
55. Amendments have also been made with regard to offsetting casual loading amounts when assessing back payment claims for employees who were paid as a casual, but who are later found not to have been a casual employee.

Further information

56. The Fair Work Ombudsman has published information about these changes to the FW Act on its website.
57. Agencies with questions on these issues are encouraged to contact their APSC relationship manager or the Workplace Relations inbox at workplacerelations@apsc.gov.au.

[1] The changes will not apply in relation to a person if a court made a binding decision before 27 March 2021 that the person is not a casual employee of the employer, or if the person converted the employment before 27 March 2021 to some other type of employment under a term of a fair work instrument or contract of employment.