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Perspective

Omnibus Bill departs the station in significantly stripped back form

The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2021 (Omnibus Bill) has passed Parliament this week, albeit, in a significantly pared back form. Oddly in a Senate Estimates Committee hearing, the Government promises to try again.

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Earlier this year (read our previous article here), we anticipated a significant number of the changes proposed by the Omnibus Bill would be contentious to key stakeholders and unlikely to pass. We also predicted that several changes would be non-contentious and would pass including, for example, the provisions criminalising wage theft.

After a tumultuous period of negotiation with Senators on the crossbench, the Government was unable to obtain support for a vast majority of the provisions of the Omnibus Bill.

Unexpectedly, the Government also jettisoned several provisions that were expected to obtain bi-partisan support, such as the provisions criminalising wage theft.

Ultimately, only the changes to casual employment were passed, but these have the potential to create significant impacts for casual employees and their employers (see especially further below on the casual loading clause). We have tabled these changes below:

Change Details Effect on employers
Casual employment definition A person will be deemed a casual employee if:

  • an offer of employment was made on the basis of no firm advance commitment to continuing and indefinite work
  • the employee accepts the offer; and
  • the employee becomes employed.

Factors for no firm advance commitment to continuing and indefinite work include:

  • whether both parties have the freedom to offer and reject work shifts;
  • whether the employee works as required;
  • whether it is described as casual employment;
  • whether a casual loading is paid.

Note: regular pattern of hours does not equate to a firm commitment.

Employers will be provided with some certainty around casual employment, which had not previously been defined in legislation.

For employees who were engaged as casual employees but do not fall within this definition (i.e. they are in fact a permanent part-time or full-time employee), any casual loading paid to them can be used to offset any claim they make for unpaid entitlements (e.g. annual leave or personal leave), so long as the employer properly attributes the casual loading as being paid for that purpose.

Casual conversion Replicating the Modern Awards, a casual conversion clause has been inserted, requiring employers to make offers to convert casuals to permanent employment after 12 months of employment (provided they have regularly worked for at least 12 months).

All employers will be required to do so unless there are reasonable grounds not to make an offer. Reasonable grounds include:

  • the employee’s position will cease in the next 12 months
  • the employee’s hours of work will be reduced
  • there will be, within 12 months of an employee making a request, significant changes to the days and/or times on which work is required to be performed that cannot be accommodated within the days or times the employee is available to work during that period
  • making the offer would not comply with the recruitment or selection process required by law of the Commonwealth, State or Territory
  • the employer is a small business.

Likewise, employees can make requests for casual conversion.

While this pathway to permanent employment has been available to casual employees covered by Modern Awards, this change will now extend the pathway to Award-free casual employees. For example, this would largely impact casual employees in management positions in accounting, finance, marketing, legal, human resources, public relations and information technology fields, who are for the most part, award-free.

Employers will have a 6-month transition period to make casual conversion offers unless reasonable grounds apply.

 

Casual Information Statements Similar to Fair Work Information Statements, the Fair Work Ombudsman will publish a Casual Information Statement outlining casual rights which must be provided to all casuals at the start of their employment. Employers will need to provide casual employees with a copy of the Casual Information Statement (once published) before or as soon as practicable after they commence employment.

Of the changes that have been passed, the casual loading offset clause remains the most contentious and significant. The clause was inserted as a response to the matters that are currently in dispute in the High Court cases involving Rossato and Workpac.

The clause is intended to address the concept of “double-dipping”, where an employee described as a casual employee is paid a casual loading (which is paid in lieu of entitlements for permanent employees such as annual leave) throughout their employment but then makes a claim for the payment of entitlements as if they were a permanent employee.

The clause, as passed, has been drafted to be retrospective in effect. The intention behind this is for employers to be able to rely on the clause to defend against claims for entitlements by casual employees, even where those claims are made regarding periods of employment that occurred before the clause came into effect. This would have a significant impact on class actions that have been commenced.

Such retrospectivity is problematic because it exposes the clause to challenge in accordance with the common law. While retrospective legislation is not unlawful per se, legislation that changes legal rights and obligations retrospectively can fall foul of common law principles of certainty and reliability.

We expect that the retrospective nature of the clause is likely to face challenge sooner rather than later and employers should be cautious in seeking to rely on the clause at this stage.

In addition, the Government has indicated it intends to continue to pursue the jettisoned elements of the Omnibus Bill including contentious and non-contentious aspects of the Omnibus Bill including the introduction of “Additional Hours Agreements” for part-time employees and the introduction of time limits for enterprise agreement approval applications. Reminiscent of a knocked-out boxer who just won’t lie down after being counted out!

We will continue to keep you updated as further changes are announced.

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