A Full Bench of the Fair Work Commission (FWC) has today announced its long awaited Decision in the Casual and Part-Time Employment Common Issues case which is set to dramatically affect casual work arrangements across the Australian workforce.

The Decision:

The decision of the Full Bench has the effect of inserting model casual conversion provisions across all 85 modern awards which do not currently contain casual conversion provisions.

The effect of the model clause includes:

  • employers must provide casual employees with written notice of their casual conversion rights within 12 months of their commencement of employment;
  • casual employees, other than an irregular casual employee, have the right to elect to convert to part-time or full-time employment after 12 months of service;
  • an employer must consider any such request and can only refuse a request upon reasonable business grounds;
  • casual employees employed under the General Retail Industry Award, Fast Food Industry Award, Hair & Beauty Award, Hospitality Award and Registered & Licenced Clubs Award will now receive overtime payments where they work in excess of 38 hours in any given week; and
  • casual employees will now also receive overtime payments as follows:

- Retail Award: where hours exceed 9 hours on any day except that a casual employee can be required to work 11 hours on any one day in a week without attracting overtime;

- Fast Food Award: where hours exceed 11 hours on any day;

- Hair & Beauty Award: where hours exceed 10.5 hours on any day; and

- Hospitality and Registered & Licenced Clubs Awards: where hours exceed 12 hours on any day.

Background:

The Australian Council of Trade Unions (ACTU) made an application which sought greater protections for casual employees as part of its insecure work campaign alleging that the casualisation of the Australian workforce, and the manner in which employers engage casuals more generally, has undermined security of employment for a substantial proportion of employees.

In doing so the ACTU sought a range of measures including increasing the minimum engagement period for casual employees and automatic conversion provisions (as distinct from the right to elect as contained within the FWC’s decision).

FCB Group represented a number of employer groups through this process and strongly opposed the changes sought by the ACTU noting, amongst other things, that:

  • in many cases employees elect casual employment given the associated higher remuneration and flexibility;
  • casual employees are compensated for the loss of permanent employment rights through the casual loading paid;
  • a large proportion of eligible casual employees will not elect to convert to permanent employment in any event given the reduction in base rates of pay;
  • casual employees were already protected by suitable provisions within the Fair Work Act; and
  • the high number of casual employees within the retail, recruitment and hospitality sectors places and unreasonably high administrative and cost burden upon the sector.

Impact:

The first thing to note is that this decision only impacts regular and systematic casuals who are covered by a Modern Award.

This decision will have a significant impact upon the operations of any business which engages casual employees, which will have a disproportionately high impact upon the recruitment, retail and hospitality sectors given the large numbers of casuals engaged within the industry.

As a result employers will need to:

  • closely monitor the hours worked by casual employees and ensure appropriate overtime payments are made where necessary;
  • review and alter engagement models to ensure compliance;
  • review and update engagement documentation particularly letters of offer and contracts of employment;
  • develop adequate systems which identifies regular and systematic casuals and determines their length of service;
  • implement notification protocols to ensure compliance with the model provisions; and
  • reasonably consider and respond to any request by an employee to convert to permanent employment.

Next Steps

No Determination has been issued giving effect to the decision. The Full Bench has called for further submissions and will give interests parties the opportunity to respond to draft determinations. It is therefore likely that the changes will not come into effect until the end of August.

About FCB Group:

FCB Group represented a number of employer groups in this matter and has a detailed understanding of the full effects of the decision and its impact upon the retail/recruitment and on-hire industry.

Failure to comply with these obligations is considered a breach of a modern award and may result in significant penalties and so we encourage all businesses to seek timely advice to ensure that you are best placed to address the required changes in an efficient and compliant fashion.