There’s a new definition of ‘casual employee’. Here’s what employers must know
A new definition of casual employment has taken effect, underpinning how employers big and small engage with their workforce.
A new definition of ‘casual employment’ has taken effect today, August 26, underpinning how employers big and small engage with their workforce.
The change is one of the most significant overhauls caused by the Closing Loopholes package, and one of several that kick in from today.
Here’s what employers must know.
What is the new definition of casual employment?
In its simplest form, the new definition of casual employment, contained within the Fair Work Act 2009, says a worker is casually employed if:
- They don’t have a firm advance commitment to “continuing and ongoing work”, and
- They are entitled to casual loading under their award or employment contract.
What is ‘firm advance commitment’?
Here’s where things get interesting.
The most significant change to the new definition of casual employment revolves around what counts as “firm advance commitment” to work.
The prior definition of casual employment was spelled out in 2021, when the High Court found a mine worker was a casual because his contract defined him as one, despite arguments over the day-to-day realities of his work.
In some ways, the new definition of casual work codifies a pre-2021 understanding of casual employment, which considers a broader range of factors than the contract alone.
When assessing if there is a “firm advance commitment” to work — which would exclude an employee from casual employment — the following factors should be assessed:
- The contract itself,
- The “mutual understanding” between worker and employer over the kind of work being done,
- Whether the worker can choose to offer, not offer, accept, or reject work,
- The likelihood of future work being offered,
- If permanent employees perform the same kind of work, and
- Whether the employee engages in a regular pattern of work.
Fair Work stresses this list is not exhaustive, and other factors may apply.
In addition, a regular pattern of work alone will not determine if there is a “firm advance commitment” to work; the FWC maintains there is a whole constellation of factors that apply.
What about existing casual employees?
The Fair Work Commission has this to say:
Employees classified as casual who were with their employer before 26 August 2024 will stay casual under the new definition unless they move to permanent employment.
However, the new definition applies to casuals engaged by their employer from today onwards.
What are the penalties for deliberately misleading workers?
These changes came about as part of the Albanese government’s landmark Closing Loopholes industrial relations package, which it said was designed to protect workers from exploitation.
The casual work provisions sprung from fears that some employers are obtaining full-time labour under the pretense of casual employment, without honouring the entitlements owed to full-time employees.
From August 26, there are new penalties for conning a full- or part-time worker into casual work, or dismissing (or threatening to dismiss) an employee and then engaging them as a casual for the same work.
Individuals can face fines of $93,900, with businesses on the hook for $469,500.
What is the new casual conversion pathway?
On top of all that, a new casual-to-permanent conversion pathway is coming for workers.
The Fair Work Commission says that on or after February 26, 2025 — and August 26, 2025, for small businesses — workers will be free to notify their employer if they believe they’re no longer a casual worker, and should be offered permanent employment.
Workers can only give notice if they have served at least six months with their employer after August 26 this year, or twelve months for employees at small businesses.
Employers will be free to refuse those requests if the employee still meets the definition of a casual, as described above, or if the permanent conversion would significantly change how the employer conducts business.
We’ll have more on this pathway as the dates draw closer.
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