How changes to the Fair Work Act will affect casual employment

Some businesses tend to see casual employment as a loophole of sorts, enabling them to effectively ‘hire and fire’ at will without taking on risk – but businesses are cautioned to tread carefully, in light of the upcoming amendments to the Fair Work Act 2009 (Cth) (the Act) which are due to come into force from 26 August 2024.

Antoinette Lattouf v Australian Broadcasting Corporation (C2023/8096)

The high-profile decision of Antoinette Lattouf v Australian Broadcasting Corporation (C2023/8096) of June 2024 demonstrates the risks of taking a hasty approach to ‘hiring and firing’ and serves as a reminder that casual employees may indeed still be found to have been dismissed at the initiative of the employer, if not explicitly by words, then certainly by action.

Ms Lattouf was removed from broadcast by ABC three days into a five-day casual contract in December 2023, after she published a post on social media about Israel’s use of civilian starvation as a weapon of war in Gaza. ABC maintained that her post constituted a breach of editorial policy.

Ms Lattouf filed an unlawful termination application with the Fair Work Commission (FWC) on 22 December 2023, claiming that she had been dismissed in circumstances which were harsh, unfair or unreasonable.

The ABC sought to have the claim struck out on two jurisdictional grounds. The jurisdictional objection of relevance here was its assertion that Ms Lattouf’s employment was not actually terminated within the meaning of section 773(a) of the Act, because she had been paid for the full five days, and the casual employment came to a natural conclusion after that point.

The FWC began its judgment by noting that “it is perhaps trite to acknowledge from the beginning that the fact that [Ms Lattouf] was a casual employee, who was only engaged for five days, does not alter the position that her employment as a matter of fact and law, can be terminated (or brought to an end at the ABC’s initiative). Depending upon the relevant facts and circumstances, any contract of employment, and the employment relationship arising from same (no matter how short or long, permanent or casual) can be prematurely brought to an end”.

The FWC then went on to reject the ABC’s jurisdictional objection that no termination had occurred, stating: “In this case… the employment relationship between the applicant and the ABC, was terminated at the ABC’s initiative”.

In making this finding, the FWC referred to the analogy that termination “does not require the [ABC] to pull the trigger but only load the gun”. The fact remained that Ms Lattouf was advised unilaterally of the decision to take her off-air and she was directed to leave the ABC premises sooner rather than later.

The outcome of the jurisdictional hearing enabled Ms Lattouf to continue the pursuit of her unfair dismissal application against the ABC (although that substantive case is yet to be determined).

Closing Loopholes No.2 Act 2024 – to take effect from 26 August 2024

Is it really casual?

While the Lattouf case pertains to an employment relationship which was openly acknowledged by both parties as being a casual retainer, there are also circumstances where parties may be uncertain as to the true status of the employment relationship. The Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) goes some way to address this uncertainty, and will introduce a new definition of casual employee into the Act, as follows:

(a) the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work; and

(b) the employee would be entitled to a casual loading or a specific rate of pay for casual employees under the terms of a fair work instrument or contract of employment.

The Act will also list the factors to consider when assessing if there is a 'firm advance commitment', including having regard to:

• The 'real substance, practical reality and true nature of the relationship';
• the ability (or inability) of the employer to offer/not offer work;
• the ability (or inability) of the employee to accept/reject work; and
• whether the employee has a regular pattern of work (though this is not, in itself, indicative of permanency – an employee who has a regular pattern of work may still be casual if there is no firm advance commitment to continuing work).

Making it permanent

The Act also revises the casual conversion process, which will be known as the ‘employee choice’ process moving forward.

Employers will no longer take charge of this process. After six months of work (or 12 months in a small business), employees instead can choose to notify their employer in writing if they believe they no longer meet the definition of a casual employee and wish to convert to permanency. Employers then have 21 days to respond to the notification by either converting the employee to a permanent role, or by rejecting the notification and providing its fair and reasonable grounds for the rejection.

While it is not entirely clear yet what those reasonable grounds might look like, the Act provides some broad examples, stating that it would be fair and reasonable to not accept a request if substantial changes would be required to the way in which work in the employer's enterprise is organised, or where conversion would create a significant impact on the enterprise.

Continuing obligation to inform casual employees of their rights

Under the amendments, employers will have an ongoing obligation to inform their casual employees of their rights by providing them with a Casual Employment Information Statement (CEIS) at specific intervals. The Act now requires a CEIS to be provided:

• before, or as soon as practicable upon the employee commencing work;
• again at the six month and 12 month marks; and
• thereafter, every 12 months.

  For small business employers (those with fewer than 15 employees), the timeframes are slightly more relaxed, with the CEIS to be provided:

• before, or as soon as practicable upon the employee commencing work; and
• at the 12 month mark.

What does this mean for agencies, practically?

In light of the above, we recommend that agencies undertake the following:

• Review the employment arrangement as it relates to each casual employee to ensure the categorisation accurately reflects the employment relationship as it truly is, and updating the contract where necessary, to minimise the risk of disputes around permanency down the track (which may include potential claims for unpaid wages, leave entitlements and redundancy pay, subject to any set-off available).
• Review onboarding processes in relation to casual employees to ensure that the CEIS is provided as required, and setting up a reminder system that will prompt the agency to provide casual employees with the CEIS at the appropriate intervals.
• If a casual employee is underperforming or has committed misconduct, the principal should seek legal advice before taking any disciplinary action, such as suspension or dismissal of the employee. As demonstrated in Lattouf, even if an employee has been paid in full for the entirety of their casual retainer, employers may still be exposed to claims for unlawful termination if their actions are deemed to have initiated the end of the relationship on grounds which are unfair, harsh or unreasonable.

Agencies should mark their calendars and ensure these reviews are completed by 26 August 2024, and give careful consideration as to whether their current structures are fit for purpose having regard to the upcoming legislative amendments.

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