What are the proposed changes to Casual Employment?


The Federal Government has introduced an ‘omnibus’ Bill that will make significant changes to the Fair Work Act 2009 (Cth) (FW Act), with effect next year.

The changes include the introduction of:
·         a statutory definition of casual employment;
·         the ability to set-off casual loading against claims for leave entitlements; and
·         universal right for casual employees to convert to permanent employment.

We will keep all clients updated on any changes if/when they are passed into legislation.

The below may assist in some workforce planning for 2021.

Casual employment definition

The Bill will introduce a statutory definition of casual employment based on the tests enunciated by the Full Federal Court in the WorkPac decisions. The legislation will define a person as a casual employee if employment is offered and accepted without any firm advance commitment that the work will continue indefinitely and follow an agreed pattern of work.

The meaning of “firm advance commitment” will be guided by specific factors, including whether:

·         the employee can elect to accept or reject work;
·         the employment is described as casual employment; and
·         the employee will be entitled to a casual loading or a specific rate of casual pay.

The new definition will apply to casuals from the date they commence their casual employment

Set-off casual loading against leave entitlement claims

Employers will be able to offset amounts already paid through casual loading against any claims for the employee to be paid for leave entitlements. If an employer is sued for payment of these entitlements, the Court must allow the employer to deduct from the amount claimed any identifiable casual loading paid to compensate the employee for the absence of those entitlements. This will apply to past and future employees.

An attempt to give this protection to employers through a Fair Work Regulation was shown to be defective in the WorkPac v Rossato (2020) decision.

Casual conversion

The legislation would give a universal right for regular casuals to convert to full-time or part-time employment based on the nature of their regular hours. This right is currently provided in modern awards, as well as many enterprise agreements.

An employer must make an offer to a casual employee to convert if the employee has worked for the employer for a period of 12 months and has worked a regular pattern of hours on an on-going basis for the past 6 months (previously 12 months).

The employer must also weigh whether the employee could continue to work full-time or part-time without significant adjustment to hours of work.

An employer may decide not to make an offer or accept an employee request if they have reasonable grounds not to do so.

If an employee declines an initial offer to convert, a further right to request will be available every 6 months, as long as they remain eligible.

Federal Wage Theft Laws

A new criminal offence of wage theft will apply where an employer dishonestly engages in a deliberate and systematic pattern of underpaying one or more of their employees. It will carry a maximum penalty of $1.11 million and imprisonment for up to 4 years (or both) for individuals, and fines of up to $5.55 million for a body corporate. Individuals convicted of the criminal offence would also be automatically disqualified from managing corporations for a period of 5 years under the Corporations Act 2001.

The maximum penalty for ordinary contraventions by employers will increase to $19,980, or $99,900 for body corporate employers.

In the case of underpayments by bigger businesses, maximum penalties will be based on the higher of either “two times the benefit obtained”, or a $99,900 a fine. In case of serious underpayments by bigger businesses, penalties will be based on the higher of either “three times the benefit obtained”, or a $666,600 fine. This linking of the fine to the benefit obtained will not apply to individual employers or small businesses.

Infringement notice fines and maximum penalties for sham contracting and for failing to comply with a FWO compliance notice will all also increase by 50%.

For more information visit the FairWork Ombudsman website on Casual employees.

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