Stand up for casual workers: Legislate an objective test to determine when an employee can be classified as casual

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Issues

  • There are around 2.7 million casual employees, accounting for around one quarter of Australia’s employees.1 Casual employment plays an important role in the labour market, meeting the needs of businesses that have short term and unpredictable needs, and enabling workers to have flexibility around when they work, helping to manage other commitments such as study.
  • Under the Fair Work Act as amended by the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021, a person’s employment status as a casual is set at the point of engagement and the definition of casual employee explicitly excludes consideration of any subsequent conduct of the employer or employee. This can result in an employee being classified as casual, even though they work regular, predictable hours. Indeed, almost one in three casual employees have regular and predictable working arrangements.2
  • Casual employees receive a loading in lieu of the paid leave entitlements associated with permanent employment. However, research shows that increased job security has benefits both for individual workers, employers and more broadly across the economy.
  • The Australian Government made an election commitment to legislate a fair, objective test to determine when an employee can be classified as casual, so people have clearer pathway to permanent work.
  • An independent review of the casual provisions in the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 made findings to improve the casual employment framework, including that consideration be given to including post-contractual conduct as part of the statutory definition of casual employee. The findings of the review will be considered in the implementation of the election commitment.

Considerations

  • Reforms should balance certainty and fairness for both employees and employers across different elements of the statutory framework including the statutory definition, the process to convert from casual to permanent employment and resolving disputes.
  • An objective definition would include consideration of the terms of the contract of employment, and also consider the post contractual conduct, this is, the practical reality of the relationship between the employer and employee.
  • The framework should provide employees with choice to convert to permanent employment and provide employers who act in accordance with their legal obligations with certainty of employment status and the associated wages and conditions.

Key questions

  • How should an assessment of post-contractual conduct (that is, the pattern of work and nature of the relationship over time) be incorporated into the definition of casual employee?
  • What, and how should, other elements of the legislative framework, such as the conversion process and dispute resolution, change as a result?

1 ABS, Labour Force, Detailed, November 2022.

2 ABS, Characteristics of Employment, August 2022, unpublished TableBuilder.