On 26 August 2024, amended workplace regulations around casual employment will come into force for all Australian employers. 

The Fair Work Legislation Amendment (Closing Loopholes) Act 2023 introduces a new statutory definition and conversion pathways for casual roles, along with measures to prevent misuse of casual engagements. 

With penalties for non-compliance, it’s essential that employers understand these incoming changes. In this article, we look at what’s changing and what the new laws mean for you.  

Changes to the classification of casual work

Beginning on 26 August, new laws will redefine how to classify casual employment. These changes will provide more security for casuals while requiring more rigorous expectations of employers. 

Right now, a worker is considered casual if:  

  • the employer has made an offer of employment with no firm advance commitment to continuing work and  
  • the employee accepts the offer.  

The new legislation looks beyond the contractual definitions. It takes a broader view, focusing on the “real substance, practical reality, and true nature” of the employment relationship. This means employers need to consider factors like:  

  • the practical realities of the job and working arrangements 
  • roster patterns and business demand fluctuations 
  • mutual expectations between employers and employees.  

An employee who works regular hours can still potentially meet the revised casual definition, provided no firm ongoing commitment of future work exists and the classification accurately reflects the nature of the work.   

The legislation also mandates casual loading (a pay premium for casual workers) for all casual employees. 

Changes to the casual to permanent conversion process

The legislative changes also streamline the path to converting a casual role to a permanent one.  

Casual workers can now request conversion to permanent employment—full-time or part-time—after 6 months of consistent employment. For small businesses with fewer than 15 employees, this period extends to 12 months. This move aims to provide casual workers with greater job security, reflecting their ongoing contributions to your business. 

When a casual worker asks to go permanent, you’ll have 21 days to respond. And if you decline their request, transparency is critical – you’ll need to provide a detailed reason for your refusal in writing that:  

  • demonstrates how the role still meets the casual definition 
  • explains how the conversion would require significant impractical changes 
  • explains any conflicts with other recruitment or selection processes required by or under the law of the Commonwealth or a state or territory. 

The risk of misclassifying employees

If your employees are misclassified, you risk underpayment, overpayment, or incorrect attribution of entitlements and benefits. You may also expose your business to financial penalties and other compliance issues.   

Get ready for the 26 August deadline

Get ahead of the changes by looking at current casual arrangements in your business and checking they still align with upcoming laws. Most importantly, engage with your team and be ready for more conversion discussions initiated by employees.  

How Davidsons can help

While our expertise lies in accounting and business advice rather than legal and HR guidance, we can help you understand how these legislative changes apply to your unique situation.  

For more detailed advice that aligns with legal standards or complex HR queries, you should connect with a specialised professional, and we’re more than happy to guide you to the right support.  

If you have any questions or need assistance navigating these updates, don’t hesitate to contact us at info@davidsons.com.au or (03) 5221 6399. Together, we can ensure your business remains compliant, competitive and confident in handling these changes. 

Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.