Commonwealth agencies who engage a significant number of casual employees were eagerly awaiting the High Court’s decision in Workpac Pty Ltd v Rossato (Rossato).1 That decision, delivered on 4 August 2021, clarified whether an employee in a situation like Mr Rossato’s (with a reasonable expectation of continuing employment on a regular and systematic basis) ought truly be characterised as ‘casual’. However, the amendments to the Fair Work Act 2009 (FW Act) introduced by the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Amendment Act) on 27 March 2021, sometime earlier, drastically reduced the significance of the High Court’s decision.
Who is a ‘casual employee’?
The Amendment Act resolved judicial debate by introducing into the FW Act a definition of ‘casual employee’, along with a scheme for converting eligible casual employees to ongoing employment. Under the FW Act, a casual employee is one who accepts an offer of employment from an employer notwithstanding that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.2 The assessment of whether an employer has made such a commitment must be made at the time the offer is made and only by reference to four factors3:
- whether the employer can elect to offer work and whether the employee can elect to accept or reject that work;
- whether the employee will work as required according to the needs of the employer;
- whether the employment is described as casual employment; and
- whether the employee will be entitled to a casual loading or rate of pay.
The High Court in Rossato independently arrived at a similar conclusion. It held the mere expectation of continuing employment, however reasonable, is not a firm advance commitment to continuing employment. Rather, such a commitment must be a legally enforceable obligation established through binding contractual terms at the commencement of the employment relationship. In short, both the Amendment Act and Rossato elevate the doctrine of freedom of contract.
Implications for the Commonwealth
The attention of Commonwealth agencies must now shift towards ensuring they are identifying, engaging and converting casual employees in accordance with the new minimum standards which the Amendment Act has introduced to the FW Act’s National Employment Standards (NES). Specifically, employers are now required to offer a casual employee ongoing employment where the employee has been engaged for 12 months and, for at least the last six months of that period, has worked a regular pattern of hours on an ongoing basis which the employee could continue to work as a full-time or part-time employee.4
However, casual conversion is not required where making the employment offer would not comply with a recruitment or selection process required by another law.5 The Australian Public Service (APS) Employment Principles, contained within the Public Service Act 1999 (Cth), are such a law. The APS Employment Principles require engagement decisions to be merit-based.6 As a consequence, the new FW Act provisions relating to casual conversion currently have a relatively limited application to Commonwealth agencies.
Notwithstanding this, the Commonwealth, as an employer of a large number of casual employees, is now in an unusual position. While usually leading the way in terms of best practice employment initiatives, it is now the odd one out on the issue of casual conversion. To put this into perspective, the casualisation of the Australian workforce has been a significant industrial issue for some time. For decades, academic literature has analysed the creep of casualisation, with many (especially unions) lamenting the rise and social effects of insecure employment. More recently, since October 2018, most modern awards introduced a model casual conversation clause. In March 2020, as noted above, the Amendment Act completed this ongoing reform process by introducing a casual conversation scheme as part of the NES. The latter reform is significant because the NES, as an irreducible set of minimum entitlements, tends to reflect community expectations regarding the different entitlements they deal with.
The merit principle is, of course, a necessary and important feature of public sector employment. The Commonwealth must now consider how its adherence to the merit principle can withhold this industrial tide in the context of casual employment. The continued push for reform by the union movement will, we predict, continue to be felt at a number of levels.
First, Commonwealth agencies should expect casual conversion to be an issue during the next round of bargaining for their enterprise agreement. For example, one possible claim by unions will be for agencies to establish merit selection processes and merit pools for eligible casual employees, in advance of them being eligible for conversion. This solution, from the perspective of unions, is one action that agencies can take to broaden the application of the FW Act amendments without compromising the merit principle. Agencies will need to be prepared for this type of claim during bargaining, including whether and why it might not be acceptable to them.
Second, relatively simple legislative reform could effectively dispense, in a limited way, with the merit requirement and facilitate casual conversion. The Australian Public Service Commissioner’s Directions 2016 (Cth) contains a number of limited exceptions which are intended to facilitate engagements without a strict application of the merit principle. We expect there to be increasing pressure surrounding why casual APS employees, who are otherwise eligible to convert to ongoing employment in the private sector, ought not be a legitimate cohort to be engaged using more relaxed rules. This is particularly so given that a casual employee, who has been regularly performing duties for 12 months, is likely to have the necessary work-related qualities required to perform the duties and the capacity to achieve outcomes related to those duties.7
In the meantime, Commonwealth agencies need to be aware they still have obligations under the new FW Act casual conversion provisions. The Amendment Act provided for a six month transition period for employers to meet their obligations with respect to casual conversion. This transition period ends on 27 September 2021 and agencies must be prepared.
Please contact us if your agency requires assistance in the lead up to the transition period or with its casual conversion processes more generally.
This article was written by Bede Gahan, Partner and Ira Smith-Roberts, Associate.
1 HCA 23.
2FW Act, s 15A(1).
3FW Act, s 15A(2).
4FW Act, s 66B.
5FW Act, s 66C(1) and (2)(d).
6Public Service Act 1999 (Cth) (PS Act), s 10A.
7PS Act, s 10A(2)(c) and (d).