The Fair Work Commission has inserted a casual conversion clause into most modern awards, allowing certain casual employees to request to convert to permanent full-time or part-time employment.
Which awards are affected?
A new clause has been inserted into 85 awards. Most of those 85 awards contain an identical “model” clause. The new casual conversion clauses in those 85 awards took effect on 1 October 2018.
In addition, a number of modern awards already contained casual conversion provisions.
Not all casual conversion clauses are the same, so it is important to check which obligations apply.
Which casual employees are eligible?
Under the model clause, “regular casual employees” are eligible to make a request.
A “regular casual employee” is a casual employee who has, in the preceding 12 months, worked a pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to perform as a full-time employee or part-time employee under the provisions of the relevant award
When can a “regular casual employee” request conversion?
Under the model clause, a “regular casual employee” can request conversion to permanent employment once they have completed 12 months’ service.
A regular casual employee who has worked full-time hours over the preceding 12 months can request to have their employment converted to full-time employment.
A regular casual employee who has worked less than full-time hours over the preceding 12 months can request to have their employment converted to part-time employment.
Any request made by an employee must be in writing.
Can an employer refuse a conversion request?
Under the model clause, an employer can refuse a conversion request, provided that:
- the refusal is on “reasonable grounds”; and
- the employer has consulted with the employee.
The “reasonable grounds” specified in the model clause are as follows:
- it would require a significant adjustment to the casual employee’s hours of work in order for the employee to be engaged as a full-time or part-time employee (that is, the casual employee is not truly a “regular casual employee”);
- it is known or reasonably foreseeable that the regular casual employee’s position will cease to exist within the next 12 months;
- it is known or reasonably foreseeable that the hours of work which the regular casual employee is required to perform will be significantly reduced in the next 12 months; or
- it is known or reasonably foreseeable that there will be a significant change in the days and/or times at which the employee’s hours of work are required to be performed in the next 12 months, which cannot be accommodated within the days and/or hours during which the employee is available to work.
The reasons for a refusal must be provided to the employee in writing, within 21 days of the request being made. If the employee does not accept the refusal by the employer, the dispute will be dealt with in accordance with the relevant dispute resolution procedure contained in the relevant award.
What happens if the request is agreed?
If the employer agrees to a casual employee’s request, a conversion to full-time or part-time employment will take effect from the start of the next pay cycle following the agreement being reached (unless otherwise agreed).
From the date the conversion takes effect, the employee will be a permanent employee for all purposes and will be entitled to all the benefits of permanent employment (including personal/carer’s leave, annual leave, notice of termination and redundancy pay, where applicable).
An employer may be entitled to stop paying any casual loading which is being paid to a casual employee, once the casual employee becomes a permanent employee. Whether an employer is entitled to do this will depend on the terms of the applicable award and any contractual arrangement between the parties (whether written or otherwise). Employers should seek advice prior to making any change to an employee’s rate of pay or conditions.
What do employers need to do?
The model clause requires employers to:
- provide casual employees with a copy of the casual conversion provisions contained in the relevant award within the first 12 months of their engagement (or by 1 January 2019 for employees who are already employed as at 1 October 2018);
- consult with an employee regarding any proposed refusal of a request;
- provide written reasons for any refusal of a request within 21 days (the written reasons should make reference to the reasonable business grounds upon which the request is being refused); and
- not engage, re-engage, refuse to re-engage or reduce/vary the hours of a casual employee, in order to avoid any right or obligation under the casual conversion clause.
In addition, employers should consider:
- obtaining advice about the content and effect of any applicable casual conversion clause;
- reviewing written employment contracts in place with casual employees; and
- seeking to enter into new written contracts, to reflect any conversion to permanent employment.
Penalties for breaches
The maximum penalties for a failure to comply with an obligation under an applicable modern award:
- $12,600 per breach for individuals and $63,000 per breach for corporations; and
- $126,000 per breach for individuals and $630,000 per breach for corporations, for certain serious contraventions.
Employers can also be ordered to pay compensation, back-pay and interest in the event of a breach.