If your business has employed casual employees since October 1, 2018, chances are you’ve heard about the ‘Casual Conversion’ clause that has come into place across Australia. These updates to the Fair Work Act 2009 give casual employees the right to request a full-time or part-time position after working with a company for 12 months.
So, what does that mean for your business? How should your business respond to such requests? Does your casual employee have these prerequisites to fall under the casual conversion regulations? What’s in it for your casual employee?
We’ve put together a general overview and compliance note to help you navigate these new changes. Before we jump into those questions, let’s summarise the obligations of the casual conversion clause.
DISCLAIMER: Please note, this blog post does not outline all legal obligations of the casual conversion clause, and is to be used as an informational starting point and guide only. We encourage you to seek legal advice to ensure your company is up-to-date and compliant with the casual conversion law outlined for your particular Award(s).
Casual Conversion obligations:
Who is eligible for casual conversion?
Casual employees who have worked for the employer for at least 12 months, under these 85 Awards. They may request casual conversion at any time prior to, during or after this period.
Over those last 12 months, the casual employee must have worked a pattern of regular hours on an ongoing basis. Converting to a permanent staff member should not require a significant adjustment to their current hours.
Eligible employees must request casual conversion in writing.
Employers do not need to voluntarily offer permanent employment and cannot force eligible employees to convert to permanent staff. But, employers must make casual employees aware that this is a right they are allowed to request. We’ll get to this in a minute.
Employers can reject a request, but they must consult with the employee beforehand and have reasonable grounds to refuse based on known or reasonably foreseeable facts/events. This could include a drastic change in hours, not enough work for the employee long-term, etc.
Casual conversion refusals must be in writing and include clear reasoning for the decision.
If the employee chooses to challenge an employer’s casual conversion refusal, it will be resolved through the dispute resolution provisions of the Award.
For a request to be granted, it must:
Be discussed and recorded in writing, and
Begin at the start of the next pay cycle.
Now that we have the obligations laid out, let’s jump right into it.
What’s in it for your casual employee?
When your casual employee first comes into your company, their pay can be broken down into their rate plus casual loading. What this means is that they’re being paid an additional percentage of their salary to account for annual leave, sick leave or termination notice that they otherwise would not be receiving as a casual employee.
Casual loading is why most casual employees will still prefer to be employed casually and will likely opt to not convert to full- or part-time employment.
However, in the off chance they do choose to convert to permanent staff, they will lose the aforementioned 25 per cent casual loading, and gain job security, annual leave, sick leave, any benefits your company offers, and the right to a termination package, if applicable.
What does this mean for your business?
The most obvious would be that some of your casual employees may put forward a request to become permanent staff. You will have to reply to and honour this request, as long as there are no reasonable reasons for that employee to not be a full- or part-time member — we’ll get to this in a minute.
It also means that there are new legal obligations your business needs to be aware of to avoid heavy fines.
What does your company need to do?
Thankfully, the new legal obligations are fairly simple to implement. It mostly comes down to making your casual employees aware within the first 12 months of their engagement that they have the right to request casual conversion.
You will need to:
Provide casual employees with a copy of the conversion clause within the first 12 months of their engagement. Including this into their employment contract is an easy way to do so. Please have your legal team advise what needs to be included, based on the Award’s casual conversion requirements.
Respond to their request in writing within 21 days, if applicable.
That’s it. Voila!
To make this easy for you, here is a copy of the non-Award-specific conversion clause you must provide to casual staff within the first 12 months of their employment. Again, please double check with your legal team to ensure your particular Award(s) do not require additional information:
Right to request casual conversion
Fair Work Amendment (Right to Request Casual Conversion) Bill 2019
66B Employee may make a request:
1. An employee engaged by a particular employer and covered by subsection (3) may request:
a) If the employee has worked the equivalent of full‑time hours in the period of 12 months before giving the request to the employer—that the employee’s employment be converted to full‑time employment; or
b) If the employee has worked less than the equivalent of full‑time hours in the period of 12 months before giving the request to the employer—that the employee’s employment be converted to part‑time employment consistent with the regular pattern of hours worked during that period.
NOTE: If a request is granted, the conversion to full‑time employment or part‑time employment has effect for all purposes (see subsection 66E(4)).
2. The request must:
a) Be in writing; and
b) Be given to the employer.
3. An employee is covered by this subsection if:
a) The employee is designated as a casual employee by the employer for the purposes of:
i) Any fair work instrument that applies to the employee; or
ii) The employee’s contract of employment; and
b) The employee has, in the period of 12 months before giving the request to the employer, worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full‑time employee or a part‑time employee (as the case may be).
4. For the purposes of paragraph (1)(a) or (b), in determining whether an award/agreement free employee has worked the equivalent of full‑time hours, regard may be had to the hours of work of any other full‑time employees of the employer employed in the same position as (or in a position that is comparable to) the position of the employee.
66C Employer must give a response
The employer must give the employee a written response to the request within 21 days after the request is given to the employer, stating whether the employer grants or refuses the request.
66D Refusals of requests
1. The employer must not refuse the request unless:
a) The employer has consulted the employee; and
b) There are reasonable grounds to refuse the request; and
c) The reasonable grounds are based on facts that are known, or reasonably foreseeable, at the time of refusing the request.
2. Without limiting paragraph (1)(b), reasonable grounds for refusing the request include the following:
a) It would require a significant adjustment to the employee’s hours of work in order for the employee to be engaged as a full‑time employee or part‑time employee;
b) The employee’s position will cease to exist in the period of 12 months after giving the request;
c) The hours of work which the employee is required to perform will be significantly reduced in the period of 12 months after giving the request;
d) There will be a significant change in either or both of the following in the period of 12 months after giving the request:
i) The days on which the employee’s hours of work are required to be performed;
ii) The times at which the employee’s hours of work are required to be performed;
iii) Which cannot be accommodated within the days or times the employee is available to work during that period;
e) Granting the request would not comply with a recruitment or selection process required by or under a law of the Commonwealth or a State or a Territory.
NOTE: Certain State and Territory laws do not apply to an employee or an employer (see Division 2 of Part 1‑3).
3. If the employer refuses the request, the written response under section 66C must include details of the reasons for the refusal.
66E Grants of requests
1. If the employer grants the request, the employer must, within a reasonable period after the request is given to the employer, give written notice to the employee of the following:
a) Whether the employee is converting to full‑time employment or part‑time employment;
b) The employee’s hours of work after the conversion takes effect;
c) The day the employee’s conversion to full‑time employment or part‑time employment takes effect.
2. However, the employer must discuss with the employee the matters the employer intends to specify for the purposes of paragraphs (1)(a), (b) and (c) before giving the notice.
3. The day specified for the purposes of paragraph (1)(c) must be the first day of the employee’s first full pay period that starts after the day the notice is given, unless the employee and employer agree to another day.
4. The employee is taken, on and after the day specified in the notice for the purposes of paragraph (1)(c), to be a full‑time employee or part‑time employee of the employer for the purposes of the following:
a) This Act and any other law of the Commonwealth;
b) A law of a State or Territory (other than a law of a State or Territory prescribed by the regulations);
c) Any fair work instrument that applies to the employee;
d) The employee’s contract of employment.
5. To avoid doubt, the notice may be included in the written response under section 66C.
66F Other rights and obligations
1. Nothing in this Division prevents an employee who converts to full‑time employment or part‑time employment, as a result of a request made in accordance with this Division, from reverting to casual employment.
2. However, such an employee may revert to casual employment only with the written agreement of the employer.
3. An employee must not be engaged and be re‑engaged (or not be re‑engaged), or have their hours of work reduced or varied, in order to avoid any right or obligation under this Division.
4. Nothing in this Division:
a) Requires an employee to convert to full‑time employment or part‑time employment; or
b) Permits an employer to require an employee to convert to full‑time employment or part‑time employment; or
c) Requires an employer to increase the hours of work of an employee who requests conversion to full‑time employment or part‑time employment under this Division.
66G Disputes about the operation of this Division
Application of this section
1. This section applies to a dispute between an employer and employee about the operation of this Division.
2. However, this section does not apply in relation to the dispute if any of the following includes a term that provides a procedure for dealing with the dispute:
a) A fair work instrument that applies to the employee;
b) The employee’s contract of employment;
c) Another written agreement between the employer and employee.
NOTE: Modern awards and enterprise agreements must include a term that provides a procedure for settling disputes in relation to the National Employment Standards (see paragraph 146(b) and subsection 186(6)).
3. In the first instance, the parties to the dispute must attempt to resolve the dispute at the workplace level, by discussions between the parties.
NOTE: This subsection is a civil remedy provision (see Part 4‑1).
FWC may deal with disputes
4. If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the dispute to the FWC.
5. If a dispute is referred under subsection (4):
a) The FWC must deal with the dispute; and
b) If the parties notify the FWC that they agree to the FWC arbitrating the dispute—the FWC may deal with the dispute by arbitration.
NOTE: For the purposes of paragraph (a), the FWC may deal with the dispute as it considers appropriate, including by mediation, conciliation, making a recommendation or expressing an opinion (see subsection 595(2)).
6. The employer or employee to the dispute may appoint a person or industrial association to provide the employer or employee (as the case may be) with support or representation for the purposes of resolving, or the FWC dealing with, the dispute.
NOTE: A person may be represented by a lawyer or paid agent in a matter before the FWC only with the permission of the FWC (see section 596).
For more information about casual conversion, please visit the Federal Register of Legislation on the Australian Government website and consult your legal team.
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