Following the recent passing of the Fair Work Amendment (Closing Loopholes No 2) Bill, employers will soon be subject to new laws governing the conversion of casual workers to permanent status – the ‘employee choice’ framework.

These changes, effective from 26 August 2024, will introduce a new definition of casual employment, along with new pathways for casual workers to convert to permanent employment if they wish to.

The new definition of casual employment shifts the focus from the terms of the employment contract to the practical reality of the employment relationship. This means that rejecting a casual worker’s request to become permanent will be more complex, since HR will no longer be able to lean on contracts to establish casual status.

However, these laws will also make it more difficult for casual workers to gain the protections of permanent employment, as the framework is only available if the employee no longer satisfies the definition of a casual employee. There will also still be many instances where an employer has reasonable grounds to refuse a request. 

In preparation for the new legislation to come into effect, here are some key legal considerations to keep in mind when determining whether a casual worker is entitled to convert to permanent status.

Understanding new laws around casual conversion

One of the most significant changes coming from the new legislation is the removal of employers’ obligation to initiate casual conversion.

The process is transitioning from one which is reliant on the employer checking employment status and offering conversion accordingly to one that places the onus on employees to notify the employers that they no longer meet the definition of a casual and therefore should be permanent employees. 

For HR, this shift has the potential to eliminate much of the busywork involved in checking on the length and status of employment and offering conversion to employees who may not wish to become permanent. The changes reflect the reality that many workers, particularly in sectors like retail and hospitality, are casual by choice and do not wish to lose the casual loading or flexibility this status gives them. 

With that said, the upcoming legislation also has measures in place to allow workers who do wish to convert to permanent status to do so and gain protections such as paid leave, notice of termination and redundancy pay. 

This is likely to have most impact in industries such as aged care, community services, childcare and labour hire companies, where work tends to be predictable, but where it has traditionally been challenging for some workers to convert to permanent status.

Particularly for employers in these industries, it’s crucial to understand what will constitute reasonable grounds to refuse a request under the new laws. 

This is especially true in light of the increased anti-avoidance penalties for improperly engaging casual workers, which were introduced in February this year. 

Employers now face significant civil penalties (up to $93,900 for individuals and $469,500 for body corporates) for breaches, such as dismissing or threatening to dismiss an employee with the plan to re-engage them as casual, making false statements to persuade an individual to enter a casual employment contract or misrepresenting employment as casual. 

Read more about new laws for engaging casual workers and how they could impact your business here.

Grounds for refusing a casual conversion request  

Under the new employee choice framework, employers can reject a request if the employee still fits the new definition of a casual employee. Employers will also retain the ability to reject a request based on fair and reasonable operational grounds. 

These grounds are situations such as where converting a casual employee to a permanent status would cause significant disruption to the business operations or substantial changes would be required to the way in which the employer’s work is organised. 

For instance, if the work is highly weather-dependent or heavily influenced by varying customer demand, employers may argue that maintaining a casual, flexible workforce is essential. Industries such as quarrying, where operations can be halted due to weather, or retail, where the volume of work varies greatly, are typical examples of where these grounds might apply. 

“Even if an employee works a regular pattern of hours, this does not necessarily mean they are entitled to permanent employment.”

An employer can also reject a conversion request on the grounds that there is an absence of a firm advance commitment to continuing and indefinite (i.e. they still fall within the new definition of a casual employee).

Currently, the absence of a firm advance commitment is largely determined by the terms of a contract. Under the new legislation, to refuse a request on the basis that they still fit the definition of a casual employee, employers will need to demonstrate that there is no such commitment by assessing how the relationship plays out in reality and not just having regard to the terms of the contract.

This involves considering factors such as the employee’s ability to turn down shifts or the variability of their work hours. If an employee can decline work or if their schedule lacks consistency, that will support the notion that they still meet the casual employee definition. 

Another factor that may be relevant is how far in advance an employee is informed of their shifts and patterns of work. This issue was raised in Workpac vs Skene, a 2018 Federal Court case where a casual worker was found to fit the definition of a permanent employee in part because he was provided with 12-month rosters in advance.

Employers may also assess whether there are full- or part-time employees performing exactly the same work as the casual employee. If this is the case, this can indicate the presence of a firm advance commitment to continuing and definite work, potentially making them eligible for permanent employment.

Importantly, even if an employee works a regular pattern of hours, this does not necessarily mean they are entitled to permanent employment. 

Best practice for rejecting a casual conversion request

If an employer determines that the employee still meets the casual employee definition or they have fair and reasonable operational grounds kto refuse a request, it’s important to communicate this decision to the employee the right way.

When rejecting a request on the basis of fair and reasonable operational grounds, employers must clearly articulate the specific operational reasons for the rejection in writing, this might include outlining the business’s need for flexibility and any negative impact a permanent conversion might have. 

It’s important to thoroughly communicate the context of customer needs or other variables, and why the current casual arrangement is necessary for their operations. 

Providing clear and detailed written responses is crucial not only to avoid disputes, but also to help employees understand the decision, manage their expectations and avoid misunderstandings. 

While employment contracts are no longer the sole factor in determining whether an employee is casual or not, it remains important to include clear contractual terms that align with the new definition of a casual employee, and keep clear records of the casual loading that has been paid to employees based on their employment status. 

While the upcoming legislation aims to reduce the burden on employers whilst still providing a pathway for casual employees to convert to permanent status, employers may still have valid grounds to refuse these requests (such as because the employee still fits the casual definition, or due to fair and reasonable operational grounds). By assessing, documenting and clearly communicating their  reasons for rejection, employers can mitigate legal risk and maintain the necessary flexibility in their workforce.

Will Snow is a Director and Molly Shanahan is an Associate at Snow Legal.

Take your employment law expertise to the next level with AHRI’s new Advanced HR Law short course.

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Last year’s groundbreaking Fair Work Legislation Amendment (Secure Jobs, Better Pay Bill) has ushered in legislation that promises to boost job security, increase flexibility and make  enterprise bargaining agreements accessible to a wider range of employers. 

While these changes promise to transform the employment law landscape for the better, the staggered rollout of the legislation means HR could be forgiven for finding it tricky to keep track of their shifting obligations.

While some of the legislation first came into effect when the bill was passed in December 2022, such as the elimination of pay secrecy clauses, many further changes are due to be enshrined into law mid-way through this year.

Her are some key dates of the most significant industrial relations and employment law changes that HR should be prepared for, which has been summarised in the infographic below.

You can download a printable copy of the checklist here.

Need help brushing up on HR laws and compliance? AHRI’s short course will give you an understanding of the key elements of legislation, regulation and practices HR needs to be across. You can also download a printable version of the checklist here.

This infographic first appeared in the April 2023 edition of HRM magazine.

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Australian laws require employers to do everything they reasonably can to prevent harm arising from work. Supporting these laws are Codes of Practice which give guidance on how specific risks can be managed. Until recently, and in most States and Territories, this guidance has been limited to the physical risks of harm at work, such as working in confined spaces or managing electrical risks. 

Effective from 1 April 2023, a new Code of Practice on managing ‘psychosocial hazards’ has been implemented across Australia. The Code has been published by Safe Work Australia, and the states and territories will likely implement it in each of their jurisdictions over the coming months.  

‘Psychosocial hazards’ refer to aspects of work design, the work itself and the interactions between employees which can impact their mental health and emotional wellbeing.  

Put another way, psychosocial hazards are the things at work which create stress and reduce our abilities to cope. Under stress, we release the hormones adrenaline and cortisol. Over a sustained period, this will degrade our immune systems, leading to physical and mental illnesses arising or being exacerbated.  

What’s in the Code? 

The Code should be closely read by both HR and those with WHS responsibilities since it gives detailed advice on how employers can design work and provide interventions and support to reduce and manage work stress. 

The Code is detailed and written technically and with reference to core legal obligations under safety laws. Helpfully, it identifies the separate components of work which contribute to stress. These include: 

• High job demands/low job control  
• Poor organisational change management 
• Inadequate reward and recognition 
• Traumatic events or material 
• Remote or isolated work  
• Harassment/bullying. 

The Code notes that some workers may be at higher risk due to age, literacy or their previous exposure.

“Psychosocial hazards refer to aspects of work design, the work itself and the interactions between employees which can impact their mental health and emotional wellbeing.”

Preventative measures

Key to an improved and systematic approach to managing stress and its adverse impacts is for HR to understand the lived experience and concerns of the workforce.  

Too often, a reactive or intervention-based approach is taken, which is usually too late when those impacted are already burned out or actively looking for a new job. That approach is also reliant on people raising what can be the most uncomfortable topics – workplace culture, job demands and unspoken expectations in a workplace. These important topics are usually left unsaid.  

However, another approach is to utilise the government’s ‘People at Work’ tool. This survey tool has been designed to assist employers to meet their safety obligations and aligns with the new Code of Practice.  

After employees are surveyed (anonymously), a report is then generated and sent to the contact who initiated the survey. Surveys can be initiated periodically as a way of checking in with how implemented measures are working as intended. 

Stepping outside of the detailed guidance of the Code, many employers meet their legal safety obligations by implementing these steps: 

• Promoting wellbeing and good mental health, so stigma is reduced and employees feel supported to raise issues of concern or disclose mental illness concerns. 
• Providing an employee assistance program (EAP), so that those who may not be able to freely disclose mental health concerns can still be supported to get assistance. 
• Encouraging managers and supervisors to use EAP if team members are symptomatic or there are concerns about someone acting more withdrawn or ‘flatter’ than usual. 
• Providing support, guidance and proactive resolutions in the event that issues are raised or observed in relation to workload, isolation or interpersonal conflict. 

Safety regulators are increasingly willing to investigate the root causes of safety incidents and fatalities when there are allegations or concerns about stress, worker isolation or interpersonal conflict.   

Extent of compliance 

In the event of a serious incident (e.g a suicide which may have arisen from work stress), safety regulators will assess the extent of compliance by an employer against the Code. 

If an employer has implemented key aspects of the Code, then that will be a very good demonstration that it has met its safety obligations owed to employees. In extreme cases, failure to implement the guidance provided by the Code may result in a prosecution under safety laws, with the potential for very large fines and potentially imprisonment for senior staff. 

These new developments and resources make employee expectations of psychologically safe workplaces a concrete reality. This is a key compliance risk and responsibility for HR to manage in 2023.

Will Snow is an Employment and Safety Partner at Finlaysons.

Want to learn more about managing workplace risks to psychological health? Sign up for AHRI’s webinar on 3rd May.

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Managing long-term illness and injury is a difficult balancing act among the various laws and entitlements, including paid leave, disability discrimination laws, the Fair Work Act and safety laws.

To date, many organisations have maintained a clear divide between how workers’ compensation claims are managed compared with injuries or illnesses that are unrelated to work. For some organisations this means exclusively providing ‘suitable duties’ to employees who have a compensable injury (as required under state workers compensation laws).

However, if you slipped a disc playing Frisbee on the weekend, suitable or alternative duties may not be provided. In other situations, employees who have been off sick for an illness or injury unrelated to work might be treated by an employer as automatically ineligible for overtime in that week.

Unless carefully thought through and supported by relevant exceptions under law and sound operational reasons, these practices create risk for your organisation.

Disability discrimination

There is a patchwork of state and federal law in this area. The federal Disability Discrimination Act 1992 (DDA) applies most broadly and sets the higher bar. Employees who are experiencing bad health will almost certainly have a ‘disability’ within the meaning of the DDA and will have rights under that legislation. Since 2009, the DDA requires employers to make ‘reasonable adjustments’ for any employee with a disability — unless that adjustment would cause ‘unjustifiable hardship’ to the employer.

In many situations, ‘reasonable adjustments’ may look quite similar to what an employer might provide under a workers’ compensation return-to-work plan. This means that if an employee is returning from a period of absence and some alteration of their usual tasks may be needed, your organisation needs to consider whether the adjustments can be made so that the employee can meet the inherent requirements of a position. This could include additional breaks, modified tasks for a period, or other changes to the work environment.

Fair Work Act

Under the Fair Work Act’s general protections, disability discrimination is unlawful. ‘Adverse action’ claims give a further protection where an employee has a workplace right and action is taken against the employee because they exercise that right. The previous example of being penalised and excluded from overtime because of sick leave use is a case in point.

In discrimination complaints, general protections applications are growing in popularity because they are quicker to get started than traditional complaints before state and federal EEO bodies and there is a reverse onus on the employer to prove that the alleged action was lawful. In short, you want to be careful about practices which penalise people for taking sick leave or which consider sick leave use in recruitment, redundancy or other employment contexts. You may be exposed otherwise.

Narrowing the gap

Unlike the set requirements of workers’ compensation laws, when it comes to considering the steps you need to take to meet your obligations under the DDA and the Fair Work Act, there is no clearly defined path to take. However, an approach that proactively seeks to return employees to their pre-injury/illness roles along the lines of the steps taken in workers’ compensation claims will mean that the legal risks under the DDA and the Fair Work Act will be far less.

As a starting point, you could consider:

• What are the ‘inherent requirements’ of the person’s job?
• Can the employee perform these requirements safely?
• Do you need to check this with a doctor?
• If the employee will have difficulty in performing the requirements, can you make any adjustments?

If you are on the front foot in trying to reach accommodating solutions for employees who are suffering short or long-term ill health, you will also be demonstrating clearly to the employee and your workforce that their health and wellbeing matters to your organisation. You will also expand your potential workforce as an employer who can get the best person for the job, regardless of any disability they may have.

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The cost of defending claims can be significant in time, energy and money. And this is before you consider potential penalties imposed by a court, damages or harm to your organisation’s reputation.

As an alternative to one-sided dismissal, negotiating with an exiting employee and securing a release agreement can be a useful option for HR professionals to bear in mind.

It will only sometimes be suitable but when you need to do it, here are some steps to consider:

Identifying the right situation

If a good ongoing relationship is important, you may want employment to end on the best possible terms. A negotiated termination can provide this.

Performance issues can be difficult to establish and rely upon in unfair dismissal matters. You can reach a similar point after a misconduct investigation is completed without firm findings that misconduct has occurred. Regardless, you may have a strong indication that ongoing employment is not suitable. When this issue is raised with the person, often the feeling is pretty mutual. Those situations can also be good opportunities for a negotiated termination.

There may be other times where you’ve got no interest in negotiating with exiting employees. If an employee has stolen from the business, the last thing you’d do is offer more money on the way out. In other situations, there may be no benefit in going through an agreed termination process; the risk isn’t there to justify the effort.

Prepare

Understand the entitlements, starting with the contract notice period. Also, judge the potential risk of the termination. What sorts of claims could flow if you decided to simply terminate, without agreement? You should have a handle on what the stakes are for your business and whether the risks indicate that you need to settle at a higher cost (or at any cost). You may reconsider termination entirely.

Lastly, put yourself in their shoes. If no one ever leaves without a redundancy payment, trying to get someone to settle for anything less might be a hard sell.

You should finally arrive at an amount of money to offer an employee in return for their agreement to the termination and for them to sign the release agreement.

Negotiate

When you raise the issue, support your decision with facts, and don’t talk down the reasons for the decision. The offer must be conditional on the employee signing a release agreement.

There are often other things that you can offer. The employee’s mobile phone (or its number), or perhaps a deal about their packaged car. If the car has to remain, can they retain it for a couple more weeks while they sort out another? Outplacement services are a common item on the table. The next step for the employee will be looking for work, so be upfront about what you can and can’t say to recruiters or referees.

Saving face is about maintaining a good self-image. If you can construct a face-saving exit for the employee you can neutralise the ill will that otherwise attaches to termination decisions. For an employee to resign, on better terms than they would have left otherwise, will save them face.

Agree

A release agreement or deed is the critical document that settles current claims and releases the organisation from the prospect of legal action (with the important exception of workers compensation issues, which cannot usually be wrapped up in these matters).

It’s important that you can do everything you say you will do. If your payroll system is creaky, give yourself plenty of time in which to process the payment. You may consider strengthening post-employment obligations on confidential information or even terms on restraints (non-competition).

It does take time and energy and it does cost some money, but it will also give you certainty in an environment of increasing employee legal claims. If done right, everyone can save some face and get on with the next step in their lives.

Source:  HR Monthly, March 2012, p. 10

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