Thursday, 29 July 2021

The Fair Work Commission provides important clarity on casual employment and the inconsistency between the Fair Work Act 2009 (Cth) and modern awards

While the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth) (Amending Act) made some significant changes to the Fair Work Act 2009 (Cth) (FW Act) in relation to casual employment, it also resulted in some confusion and inconsistency around some of these terms and how they interact with modern awards.  This inconsistency particularly arises regarding:

  • the definition of a ‘casual employee’;
  • the entitlement to casual conversion; and
  • what entitlements casual loading compensates for.

(Please see our earlier article that provides further detail about the changes to casual employment detailed in the Amending Act).

Modern Award Review Process

Given the majority of employees in Australia are covered by a modern award, it is important that this inconsistency is addressed. To do so, the Fair Work Commission (FWC) established a five-member Full Bench to review the casual employment provisions in the modern awards. This review will be conducted in two stages, with the first stage reviewing the following six modern awards:

  1. General Retail Industry Award 2020;
  2. Hospitality Industry (General) Award 2020;
  3. Manufacturing and Associated Industries and Occupations Award 2020 (Manufacturing Award);
  4. Educational Services (Teachers) Award 2020;
  5. Pastoral Award 2020; and
  6. Fire Fighting Industry Award 2020 (Fire Fighting Award).

The second stage will involve reviewing the remaining 150 modern awards, using the stage one review as a template.

The FWC’s Full Bench recently issued its decision regarding the first six awards (i.e. the first stage), and what changes were required in these awards to comply with the FW Act’s changes to casual employment.

Key Takeaways for Employers

In this decision, relevant for employers, the Full Bench confirmed:

  • modern awards that define a casual employee as:
    • being engaged and paid as such;
    • being paid by the hour; or
    • being engaged day by day,

    are inconsistent with the new definition of casual employment in s 15A of the FW Act. Therefore, modern awards will adopt the definition in s 15A of the FW Act;

  • modern awards requiring employers to specify hours or likely hours for casual employees (i.e. the Manufacturing Award) are inconsistent with s 15A of the FW Act and this requirement will be removed from these awards;
  • references and definitions relating to long-term casuals in awards will be removed;
  • modern award clauses specifying minimum casual payments, casual pay periods, minimum and maximum casual engagement periods will remain in awards, as this is not affected by the Amending Act; and
  • casual conversion award clauses that are less beneficial or operate differently to the new FW Act casual conversion provisions will be replaced by the casual conversion provisions in the FW Act.

Given the Fire Fighting Award does not provide for casual employment, it was held that it did not fall within the scope of the review and there will be no changes to this award.

Although the changes to modern awards will formally come into effect from 27 September 2021, employers are still required, under the transitional provisions of the FW Act, to make assessments as to whether they need to offer casual conversion under the FW Act to casuals who were employed prior to 27 March 2021.

What do employers need to do?

Moving forward, we recommend employers:

  1. ensure casual employment contracts:
    • accurately reflect the amended definition of casual employment and the new casual employment provisions;
    • include a well-drafted set-off clause to offset an employee’s casual loading, (which we have discussed in previous articles); and
  2. determine whether any employees are entitled to be offered casual conversion in accordance with the new provisions in the FW Act.

Please contact us if you would like to discuss your obligations to your casual employees under the Amending Act, or a modern award, including in the transitional period which ends on 27 September 2021.

We will keep you informed with further updates when the FWC issues additional determinations.


This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.