employing casuals

Employing Casuals.

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A quick guide for Australian employers.

EMPLOYING CASUAL S | A quick guide for Australian employers 1

Introduction.Earlier this year, the Fair Work Act 2009 (the Fair Work Act) was amended with regards to Casual Employees, effective from 27 March 2021.

Previously, the Federal Court handed down a series of decisions in which it was found, in some circumstances, “casual” workers could be considered a permanent employee for the purpose of entitlements such as annual leave.

In short, the effect of this ruling was that some “casual” employees would potentially be entitled to paid annual leave, personal/carer’s leave, compassionate leave and public holidays. In addition, the Court ruled that there were issues with offsetting casual loading against these entitlements in some cases1. This decision is currently under Appeal in the High Court.

Due to the uncertainty arising from the decision, the Fair Work Act was amended to include a definition of casual employment. The amendments provide certainty by ensuring, if an employee agrees to no firm advance commitment to continuing and indefinite work when they are first offered employment, that will be the determinative factor in assessing whether or not they are casual for the purposes of entitlements rather than the hours they work after they are employed. This is in contrast to the previous approach adopted by the Federal Court, which considered the nature of the relationship and hours worked once employed.

In addition, the legislative changes also incorporate casual conversion rights into the Fair Work Act.

The amendments have the potential to put a stop to the issue of double-dipping, as well as expanding the scope for casual conversion.

Do you employ casuals? If so, Employsure strongly recommends you review how your casuals are employed. This guide will explain casual employment further, hopefully helping you to better understand what it means for your business.

We’ll also drop in a few other topics that are unique to the casual employment type or are commonly enquired about.

But first, let’s start with the basics. From the day you hire your first employee, you need to understand how your employee can be engaged.

Having a better understanding of the varying types of employment engagements can help you better understand your staff’s entitlements as well as your obligations as an employer. In this section, we will describe the different types of employment in general, before getting on to casuals and how the amendments to the Fair Work Act impact casual employment.

1 WorkPac Pty Ltd v Robert Rossato [2020] FCAFC 84


The Different Employment Types.The employment contract should reflect the type of employment which the employee will be engaged under, as well as the employment terms and conditions that are agreed between the employer and employee.

Not all employment engagements are the same. Each type of employment engagement brings with it a different set of obligations for the employer and rights for the employee.

The following information is general in nature. The applicable modern award or registered agreement may provide different entitlements and definitions than discussed below.

Permanent (Full time or Part time)Permanent employment is the most common employment type in Australia. The term ‘permanent employment’ covers both full-time and part-time employees.

It is common for permanent employees to agree in advance to employment conditions including that they will work certain days and hours for the company on an ongoing basis until their employment is terminated one way or another (via resignation, redundancy, dismissal for misconduct, etc). This means they can expect to work regular hours each week for an indefinite period of time. Permanent employees are entitled to various entitlements including, but not limited to, paid annual leave, paid sick leave, paid long service leave and notice of termination. In many cases, these entitlements might be applied on a pro-rata basis for part-time employees.

Fixed-TermFixed-term employees have the same entitlements as a permanent full-time or part-time employee. Their employment differs from that of permanent employees in that the contract is for a fixed-term (e.g. 12 months) or for the duration of a specific project as opposed to an ongoing employment arrangement. The contract for a fixed-term employee states directly when the term of employment will end.

Fixed-term employees are often engaged to cover for an absent employee (e.g. as maternity leave cover), to fill a human resources gap, or staff a big project. Typically, fixed-term contracts will run anywhere from a few months to a year, however, can also be for as long as a few years. Fixed-term employees have the same rights under the applicable industrial instrument as permanent employees such as leave entitlements and allowances.

https://cdn.aigroup.com.au/Economic_Indicators/Research_Notes/2018/Ai_Group_casual_work_June_2018.pdf


CasualCasuals do not have a firm commitment in advance about how long they will be employed for, or the days or hours they will work. An employee is casual if they are offered and accept employment that does not include a firm advance commitment that the work will continue indefinitely, and that is not based on an agreed pattern of ongoing work.

Casual employees also have different entitlements to permanent employees, including:

An entitlement to casual loading – i.e. a higher hourly pay than a permanent employee to compensate for the lack of other entitlements

No access to paid annual or sick leave No notice of termination No obligation for the employee to be available to work (that is they can reject shifts as

they please) No guaranteed hours of work; and Casuals may also be entitled to convert to permanent employment. Casual conversion will

be explained later.

What is casual loading?Casual loading is additional payment made on top of a casual employee’s fixed hourly wage.

The percentile rate of casual loading (usually 25%) is determined by the relevant award or registered agreement covering that specific job. For award-free or agreement-free employees, the rate of casual loading derives from the National Minimum Wage Order.

The idea behind casual loading is that it makes up for casual employees not being entitled to benefits enjoyed by permanent employees, such as paid sick and annual leave.

For example, if a casual employee is paid the current national minimum wage of $19.84 per hour, and their award or agreement stipulated a casual loading rate of 25%, the calculation would be as follows:

$19.84 (permanent hourly wage)

+ $4.96 (25 per cent of the permanent hourly wage)

= $24.80 (total hourly wage)

For example


Amendments to the Fair Work Act.The amendments to the Australian workplace relations legislation have been made to provide certainty in respect to the engagement of casual workers and, potentially, reduce the risk of having to backpay entitlements to casual employees.

Casual conversion, which will be discussed later on in this guide, is another entitlement that some casuals have that now forms part of the National Employment Standards (NES). In short, if certain conditions are met, an employer has to either offer a casual employee the opportunity to go permanent, or the casual employee has the right to request that their employment type be converted to full-time or part-time. The specific rights depend on the size of the business and will also be impacted by whether or not the relevant employee is covered by an award.

Important amendments to the Fair Work Act that apply from 27 March 2021 include:

1. Casual Employment Information Statement

2. Definition of Casual Employment

3. Casual Conversion entitlement added to NES – ie pathway for casual employees to move to full-time or part-time (permanent) employment

4. No double-dipping


1. Casual Employment Information Statement

Employers have to give every new casual employee a Casual Employment Information Statement (the CEIS) before, or as soon as possible after, they start their new job. This is in addition to the Fair Work Information Statement. Employers must also give existing casual employees a copy of the CEIS.

2. Definition of a Casual Employee

Under the new definition, a person is a casual employee if they accept a job offer from an employer on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.

Whatever is agreed at the time the employee was employed will determine whether the employee is a casual or not even if they have worked a regular pattern of work ever since they started. This means that the job offer and the employment contract should be in writing and clearly state whether the employment is casual or not.

3. Casual Conversion

An employer who has 15 or more employees must make an offer to their casual employee to convert to full-time or part-time permanent employment if the employee:

• has worked for their employer for 12 months, AND

• has worked a regular pattern of hours for at least the last 6 of those months on an ongoing basis, AND

• the employee could continue working those hours as a permanent employee without significant changes

unless the employer has reasonable business grounds not to offer the employee permanent employment that are known or reasonably foreseeable at the time.

An employer with fewer than 15 employees does not have to offer permanent employment, but their casual employees may become entitled to request casual conversion if certain conditions are met. More about Casual Conversion later.

4. No more double-dipping

Employers can ask a court to reduce liability for unpaid permanent employee entitlements by the amount of casual loading already paid to the employee.

If through court proceedings it is determined that an employee described as casual is really permanent, then the court can reduce relevant entitlements owed (e.g. annual leave) by the casual loading the employer has already paid the employee as determined by the NES, an Award or registered agreement or employment contract.

This means it must be clear what amount is paid to off-set what specific (relevant) entitlements. The relevant entitlements are listed in the Fair Work Act. A causal employment contract should clearly state what entitlements are off-set by the casual loading as that will be used to determine what should be off-set.


How do I know if these changes impact me?These changes may impact you if you are a national system employer and engage casual employees. If you do not engage casual employees, then the amendments do not impact you.

If you are a state system employer, these amendments do not apply to you either.

What do I need to do?Review how your casual employees are engaged to ensure that the nature of their engagement is in fact casual, and not permanent. You need to determine what type of employment was offered when the employee was engaged, and what was accepted, and review the contract of employment to ensure that casual employment status and entitlement to casual loading are clearly recorded.

BrightHR and Blip 4.0 allow employees to clock on and off so you can track their time and location. You can create an employee profile and generate and print reports, and then store wage and time records and related documents securely in the cloud to comply with your record-keeping requirements.

https://employsure.com.au/what-we-offer/bright-hr-software/


Casual or Permanent? How to understand the status of your employeeWhen engaging a new employee, a decision needs to be made regarding the new employee’s employment status.

If you require an employee to:

work on an on-going basis and

you intend to provide a firm advance commitment of that ongoing employment including predicting in advance the general hours that the employee will be required to work

you should consider engaging the employee on a permanent basis unless there are further factors which mitigate against this. Permanent basis includes full-time, part-time or fixed-term employment.

As defined in the Fair Work Act, an employee who accepts an offer of employment with no firm advance commitment to continuing and indefinite work according to an agreed pattern.

If you require an employee to:

fill a short-term labour gap or

cannot predict their hours due to fluctuating operational or seasonal requirements

engagement on a casual basis may be more suitable. This will provide greater flexibility throughout the employment, as well as reducing your obligations when the time comes for terminating the employment.


Casual Employment Offer and “firm advance commitment”Essentially the employment offer and its acceptance will now determine whether the employees is casual or not, even if the employee commits to work in advance or to an agreed pattern of work after they started their employment. A casual offer of employment does not include a ‘firm advance commitment’ to ongoing work according to an established pattern. An offer of causal employment should however include one or more of the following:

• The employer can offer or not offer shifts and the employee can accept or reject the shifts

• The employee will work as required according to the needs of the employer

• The employment is described as casual

• The employee is entitled to a casual loading or casual rate of pay

A casual employee remains a casual until either their employment is converted to permanent employment, or the employee accepts an alternative offer of employment.

Engaging employees on a casual basisWhile the increased flexibility of casual employment can be appealing, you should consider some of the potential downsides of casual employment.

As mentioned above, genuine casual employees are not entitled to paid leave entitlements, but they are entitled to casual loading. In addition, casual employees may be entitled to casual conversion (explained below) where they meet the criteria set out in the Fair Work Act or in an applicable industrial instrument or employment contract.

Care must be taken to ensure the employee has properly been classified as a casual at the time the offer of employment was offered and accepted to ensure they are not in fact a permanent employee.

Protecting your business Protect your business by understanding your obligations under the Fair Work Act and any applicable industrial instrument regarding engagement as a casual and casual conversion.

As a starting point, you should consider checking your employee’s employment contract to make sure it describes the employment as casual to determine the nature of the employment, and then, if the employee is casual, you need to look at whether you must offer them conversion to permanent employment or not based on a number of factors, including how long they have been employed in the business and the pattern of hours they have worked over the last 6 months.

Employsure can help you understand whether your employees are causal and help you put measures in place. To help you keep track of what hours your casual employee has worked, BrightHR has a Blip tool which allows employees to clock on and off so you can track their time and location. You can generate a report that will show the number of shifts and hours worked, breaks and their duration and the total number of hours worked excluding those breaks.


You can manage and keep track of employee rosters, timesheets, leave and absenteeism with BrightHR. You can generate and print reports, and then store wage and time records and related documents securely in the cloud to comply with your record-keeping requirements.

BrightHR provides you with

• Cloud-based document storage

• Electronic time keeping

• Absence management

• Roster planning tool

• Employee data storage

• Mobile accessibility

Get More Information

For more information about BrightHR please call 1300 029 198 or visit brighthr.com/au to request a demo.

Manage your staff with BrightHR.

brighthr.com/au

https://www.brighthr.com/au/

https://www.brighthr.com/au/


Casual Conversion Explained.A casual employee can become permanent if they convert to permanent employment or they accept an alternative offer of permanent employment.

What Is Casual Conversion?The casual conversion amendments to the Fair Work Act provide casual employees with an entitlement under the NES to become permanent employees or to request to have their employment ‘converted’ to full-time or part-time work in certain circumstances.

However, there are a few pre-conditions that need to be met. Firstly, a business may be required to make a casual employee an offer of conversion if the business has 15 or more employees, and the employee is required to have been working for at least 12 months with the employer; the employee must have worked to a regular pattern for at least the last 6 months; and the employee could continue to work those hours without any significant changes.

Under the NES, you would be required to offer casual conversion unless you can establish that the employee hasn’t worked a regular pattern of hours over the past 6 months or there are reasonable business grounds (as defined below) preventing you from making an offer.

If you are required to make an offer under the NES, it must be made in writing to the employee within 21 days after they reach 12 months of employment and it should reflect the hours that the employee has worked. Alternatively, if you are not making an offer, you are required to write to the employee within that same timeframe with the reasons why an offer is not being made for conversion.

Reasonable Grounds to Not to Make an OfferAn employer may have reasonable grounds not to make an offer to a casual employee to convert to permanent employment.

These are reasonable business grounds based on facts that are known or reasonably foreseeable at the time which include:

• the employee’s position will cease to exist in the period of 12 months after the time of deciding not to make the offer;

• the hours of work the employee is required to perform will be significantly reduced over those next 12 months;


• there will be a significant change in the days or times the employee will be required to work in the next 12 months, which cannot be accommodated within the days or times the employee is available to work; or

• making the offer would not comply with a requirement or selection process required by or under a law of the Commonwealth or a State or a Territory.

Requests for Casual ConversionCasual employees have a right to request to convert to full-time or part-time (permanent) employment if they work for a business for 12 months in certain circumstances, rather than the employer making an offer for conversion. In any size business, employees can make a request to convert to permanent employment if they have been employed in the business for 12 months. They must also have worked a regular pattern of work on an ongoing basis for at least the last 6 months, and again, the conversion should be able to take place without significant changes to days or hours.

In addition, an employee of a large business can only make a request for causal conversion if their employer hasn’t made them an offer to convert or refused to make them an offer to convert on reasonable grounds over the last 6 months.

Casual employees who believe they’re eligible to become a permanent employee can make a request for conversion every 6 months, but the employer can still refuse the request on reasonable grounds.

Employers need to write to the employee within 21 days to let the employee know whether they have accepted their request to become permanent. If the employer refuses the request, they have to tell the employee their reasons why in their written response. An employer is only able to refuse the request on reasonable grounds after consulting with the employee.


Converting casual to permanent employmentIf a casual employee is eligible to receive an offer for conversion, then if the employee has been working the equivalent of full-time hours for at least the last 6 months, their offer must be for full-time employment. And if they’ve been working a regular pattern on an ongoing basis that is less than the equivalent full-time hours for the at least the last 6 months, then their offer should be for part-time employment.

The employer and employee must discuss whether the employee will become a full-time or part-time employee. Whether the employer makes an offer to the casual employee to convert which the employee accepts, or the employee makes a request to convert which is accepted by the employer, the employer must confirm the offer or granting of the request to the employee in writing within 21 days, and confirm whether the employee’s permanent employment will be full-time or part-time and what hours the employee will work, as well as a start date.

If the employee is to become permanent, then any full-time or part-time employment requirements must be set in accordance with the relevant Industrial Instrument. Particularly in respect of part-time employment, provisions in the applicable award or registered agreement may require that the employer and employee agree in writing to things such as the days the employee will work, the start and finish time on each day and the numbers of hours each week which will be worked.

BrightHR can help you keep track of your employees’ leave entitlements by monitoring absences and shifts schedules, as well as working hours as they clock in and out with Blip. You can generate timesheet reports and store wage and time records securely in the cloud.

The conversion will take effect from the next pay-cycle, unless otherwise agreed.

Once an employee has successful converted, they will remain a permanent employee even if a contract or other agreement entered into when their employment started says they are casual.

Award Casual Conversion ClausesSome Awards have casual conversion provisions.

In October 2018, many modern awards received a new clause that provided casual employees with a pathway to permanent employment they did not have before.

Called ‘casual conversion’, this clause provides, in specific circumstances, casual employees the right to request their employment be made permanent (i.e. part-time or full-time employment). As of January 2020, this casual conversion clause has been inserted into most modern awards.

If an award or registered agreement has a casual conversion provision more favourable to the employee than the provisions in the Fair Work Act, then the award or agreement provision applies.



Next Steps as an EmployerEmploysure recommends that you should get in touch with a workplace relations specialist to help you better understand if your employee is truly a casual employee or not, and if so, whether they meet the conditions to convert to permanent employment. Meanwhile, here are some recommended steps to get you started:

Step 1 - ReviewReview how your casual employees are engaged to ensure that the nature of their engagement is in fact casual, and that this is stated in the employment contract. The contract should not commit the employee to any advance work, ie. fixed days or hours. Make sure the casual loading is explicitly listed as a dollar figure in the contract and the payslip and specifies the entitlements it is meant to off-set.

Step 2 - DecisionIf you have determined that your employees are casual in nature:

Offer eligible casual employees conversion to permanent employment if the necessary criteria have been met, or tell them why you aren’t making them an offer if you have reasonable grounds.

If the criteria are not met, continue to engage the employees as casuals but ensure you keep in mind how long they have been in the business and any circumstances that may require you to make them an offer of permanent employment, for example if they have been there for a year and they have worked a set pattern of hours for the last 6 months, or if there have been any changes to the size of the business.

Give a CEIS to your casual employees who are not entitled to conversion as soon as practicable.

If you believe that your casual employees are in fact permanent:

Assess your options and seek advice prior to taking any action, as you may be required to:

• Determine the employees’ annual leave and personal/carer’s leave accruals based on the time they have been engaged on a permanent basis and determine how many public holidays they should be paid;

• Meet with the employee to explain that their status of employment is permanent;

• Make sure the employee’s contract reflects their permanent employment status. You may need to obtain agreement from the employee to reduce their rate of pay to the permanent rate (i.e. no casual loading);

• Ensure your records of their annual leave and personal/carer’s leave accruals are reflective of their permanent employment and ensure they receive all NES permanent employee entitlements moving forward.


Note: other options may be available to you, depending on your business situation. Please contact Employsure for more information about how we can help.

Step 3 – In FutureMoving forward, should you wish to engage a casual employee:

• Provide the employee with an employment contract which clearly identifies the employee’s employment type as casual;

• Make sure the contract does not include any commitment in advance to work specific days or hours;

• Ensure the casual loading is a separately identifiable amount in the employee’s employment contract and payslip;

• Include a provision that outlines exactly what entitlements are covered by the casual loading, so you can ask a court to off-set any entitlements owed against any casual loading paid in the event that a court or tribunal rules they are in fact a permanent employee.

To round out this guide, below we have an explanation of how to pay casuals for hours worked overtime and some helpful management tips when it comes to casual employees.


Different Awards can have different methods of calculating how Overtime hours worked by casual employees should be paid. What is Overtime will depend on the award, but generally overtime kicks in when an award-covered casual employee has worked more than 38 hours in a week or more than a certain amount of hours in a day, or outside the daily spread of hours listed in the applicable award.

The Fair Work Commission confirmed three different ways casual overtime can be paid, depending on the award, from the first full pay period on or after 20 November 2020.

In the three methods below to illustrate the examples ordinary time or the permanent base rate is 100%, casual loading is 25% and overtime is at time and a half ie.150%:

1. The Substitution Method Overtime is calculated on the permanent base rate and it excludes the casual loading ie base rate x overtime penalty – 100% x 150%

2. The Cumulative Method The overtime entitlement and the casual loading are applied to the permanent base rate ie base rate x overtime penalty and casual loading – 100% x 175%

3. The Compounding MethodThe overtime entitlement is calculated on the casual loaded rate of pay ie casual loaded rate x overtime penalty – 125% x 150%

What Does This Mean For My Business?Business owners should review their award to see how to pay casual overtime. Employsure can provide you with pay rate schedules to help you find the right pay. BrightHR and Blip 4.0 allow employees to clock on and off so you can track time worked and generate a report that will show the number of shifts and hours worked, breaks and their duration and the total number of hours worked excluding those breaks.

So, What Do I Need To Do?You will need to check your award carefully to see which overtime pay calculation method applies to the casuals in your business.

Payment of Casual Overtime



How to Motivate Temporary Staff.The short-term nature of casual work means that casual employees may not always buy-in to the vision, goals and mission of the workplace where they are stationed. Motivation may be a struggle, and the bare minimum can become standard.

Conversely, other temporary workers may be energised and excited to contribute to a new workplace or project, seeing at it an opportunity to showcase their unique skills and add to their experience. Yet, due to the temporary nature of their work, employers may miss an opportunity to maximise the enthusiasm or skills of temporary staff — which can be a deflating and disappointing exercise for everyone involved.

But what if there were ways to capitalise on the full potential of temporary staff, and give them the motivation to perform at their best for your business, whether it’s for one week or one year? Let’s look at some practical ways you can motivate your temporary staff.


Induction and onboardingWhile a company induction and onboarding is common for permanent hires, it can sometimes be an

after-thought for temporary staff. Their short-term presence means that companies don’t often

see the need to induct and onboard temporary staff. Yet this is precisely the kind of initiative that

gets temporary staff excited about the company, its goals and their role in delivering them if they

can see where they fit into the bigger picture.

Often, this means taking extra time to properly introduce them to the business, its objectives and

key people. But making them feel part of things can also be much more simple like buddying them

up with a permanent member of your team, making sure their equipment is available and set-up,

and giving them a heads-up on the best place to get coffee near the office.

Goal and deadline settingDon’t let your temporary staff work in a silo, with no clear idea of how their works contributes to

the broader organisation. Just like anyone else, temporary staff are motivated by clear goals and

deadlines. Giving them something to works towards and how it fits within the overall objectives of

the team, and a timeline in which to achieve it, can be a powerful motivator.

Be inclusiveThis applies to any staff member, but it’s especially true for temporary staff — make them feel part

of the team. Invite them to company events, include them in team activities and ask for their input

in team meetings. Making someone feel valued and that they have an opportunity to participate and

contribute to the team is a simple way to spark motivation and encourage people to perform at their

best, especially for temps who can feel on the outer.

Appreciation and affirmationTemporary staff play a pivotal role in the success of many businesses and are a vital resource.

Yet it’s all too common for this fact to be ignored or overlooked. Interestingly, one study

from Psychometrics found that when asked what business leaders could do to improve staff

engagement, 58% of respondents said that giving recognition would be their top choice. It seems

simple, but validation works.

Taking the time to acknowledge and appreciate the efforts of temporary workers and how

their contributions support your business go a long way to making sure they are motivated and

productive members of your team.

https://www.psychometrics.com/knowledge-centre/research/engagement-study/

https://www.psychometrics.com/knowledge-centre/research/engagement-study/

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Employsure is one of the largest provider of employment relations and workplace health and safety services.

Why Employsure?At Employsure, we believe all Australian employers, no matter the size, deserve access to comprehensive, quality, honest advice and support that is scalable to the needs of their business.

Since the introduction of the Fair Work Act in 2009, workplace obligations have become more complex and difficult to manage, especially for overstretched small business owners.

Employsure was established in response to these challenges. It is our aim to ensure Australian business owners have access to cost-effective, professional advice on a variety of employment relations and work health and safety matters.

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