In brief - Clause will allow casual employees to convert to permanent employment under certain pre-conditions

On 5 July 2017, as part of its four year review of modern awards, the Full Bench of the Fair Work Commission decided that a model casual conversion clause should be inserted into 85 modern awards that do not currently contain casual conversion provisions under the Fair Work Act 2009 (Cth). Although these changes have yet to be confirmed, employers should prepare for their potential impact. 

What is the casual conversion entitlement? 

The proposed clause drafted by the Full Bench would permit a regular casual employee to convert to full-time or part-time employment if the following pre-conditions apply: 
  • the employee must have worked a pattern of hours on an ongoing basis over at least 12 months
  • the pattern of hours must have been without significant adjustment
  • the employee must have worked largely regular and systematic shifts
  • the employee must be able to continue to perform the pattern of hours as a full-time employee or part-time employee
  • the conversion is not automatic. The employee must make the request in writing to the employer
  • the employee must be covered by a modern award 
The entitlement will not require an employer to increase the hours of a casual employee seeking conversion to full-time or part-time employment. Genuine casual employees who work irregularly will not be affected. 

Can an employer refuse a request for casual conversion? 

The request for casual conversion can be refused by employers on "reasonable grounds" but only after there has been consultation with the employee. The "reasonable grounds" on which the request may be refused include where:
  • the request 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
  • 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
  • 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

What are the steps involved in refusing a request for casual conversion? 

Following consultation with the employee, employers will be required to provide reasons for refusal in writing to employees within 21 days. If the employee does not accept the employer’s refusal, employees will be able to invoke the dispute resolution provisions of the modern award. Under that procedure, the employee or the employer may refer the matter to the Fair Work Commission for arbitration, if not resolved. 

Minimum engagement and overtime extended as additional benefits to casual employees

In the same decision, the Full Bench also determined that the following additional benefits should be extended to casual employees:
  • two hour daily minimum engagement period for casual employees in the 34 modern awards that currently do not have any minimum engagement period
  • three hour minimum engagement in certain manufacturing awards
  • overtime payments for casual employees employed under the General Retail Industry Award, Fast Food Industry Award, Hair & Beauty Award, Hospitality Award and Registered & Licenced Clubs Award

Employers should prepare for confirmation of casual conversion decision

The casual conversion decision does not take immediate effect, but is subject to further submissions from interested parties. This means that employers are not yet required to introduce these changes. Final determinations are likely to be made by the Full Bench later this month. 
In the meantime, employers should prepare for the potential impact of the casual conversion decision and consider the following in readiness for confirmation of the decision: 
  • audit the working arrangements of current casual employees to determine who is likely to be deemed "regular and systematic" and therefore qualify for the conversion entitlement
  • consider what process will be used to assess and respond to requests from casual employees to convert to permanent employment
  • seek early advice so employers are prepared for the potential legal consequences of refusing conversion requests, such as whether employees may invoke dispute settlement provisions in awards to contest the decision, or whether they may have an entitlement to bring a general protections claim under the Fair Work Act

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2024.

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