Casual employees convert to permanent, what does it mean for business in Australia
Don’t panic! Casual employees have always had the right to request to become permanent. The only real change is the process; which has become more formal and will now be part of most Modern Awards.
The Fair Work Commission confirmed that as of 1st October 2018 casual conversion clauses will be in the Modern Awards that currently do not have this clause.
It is important to note; this does not have to be a big deal and worry for employers. Many employees prefer to stay on, as casuals because of the higher rate of pay. Further, as an employer you do have the right to decline a request on reasonable grounds.
Interested parties such as the Australian Council for Trade Unions (ACTU) and others, have been arguing for change to the current insecurities of employment. The Fair Work Commission subsequently addressed some of these insecurities. One of the significant changes relates to casual employees. Read on for more detailed information on the key points of the Fair Work Commission Decision.
What does this mean for casual employees to convert to permanent?
It means that casual employees will have the right to request to go permanent. It does not mean that every casual employee becomes a permanent employee. However, it does allow for casual employees who have had continual and regular casual work for a 12-month period (some Modern Awards shorten the period to 6 months) to request permanent employment.
This is not particularly new for business in the sense that for most businesses it is more cash flow positive to have permanent employees rather than casuals with the loading and extra administration required. Furthermore, there is the difficulties employers face when dealing with a permanent employee they can no longer afford.
There are clear processes and procedures in place to follow should that situation occur such as a redundancy. Depending on the size of the employer and the length of relationship it does not have to be painful for either party. Also, if the relationship changes with the employee and employer there is a procedure you need to follow to end the relationship which is on the Fair Work Site.
Can every casual employee convert to permanent, there are some requirements:
So, what are the requirements? Casuals that have been continually employed for 6 – 12 months depending on the Modern Award relevant to them, have the right to request to convert to permanent part-time or permanent full-time employment.
It is not dissimilar to the right to request flexible working hours introduced with the National Employment Standards and has similar requirements for both employees and employers.
Casual employees who have enjoyed continuous work over the last 12-month period who have worked regular hours can request to convert to permanent employment.
If the regular hours they have worked can continue without any significant adjustment they can request to convert to a permanent employee. Depending on the number of hours they have regularly worked in the 12-month period they can request to convert to either permanent part-time or permanent full-time employment.
What employers need to know when they receive a request from their casual employees to convert to permanent?
The casual employee must put the request in writing to the employer for consideration. Then the employer and employee must discuss and document their agreement. This document must detail whether the employee is converting to permanent part-time or full-time. Further, the agreement must document the hours of work, roster and any other items agreed to in accordance with the Modern Award most relevant to them.
The grounds for an employer refusing employees to convert to permanent must:
- Refused claiming it would require significant adjustment to the casual employees’ hours of work to accommodate them in full-time or part-time employment. This must be in accordance with the terms of the relevant Modern Award.
- If it is known or reasonably foreseeable that the casual employees’ position will not exist
- The hours of the Casual employee will be significantly change or reduced within the next 12-months
- On reasonable grounds, based on facts which are either known or foreseeable such as a decline in business, a change in demand, social change or any other arguable and evidence-based matter
If an employer wants to decline to convert a casual employee to permanent they must do so in writing. The grounds for declining the request must be reasonable, discussed with the employee and then documented, This document must be provided to the employee within 21 days of the request.
What Employers need to be aware of and do, with requests from casual employees converting to permanent:
- Provide information to your Casual employees notifying them of their right to request to convert to permanent
- Notify all Casual employees as part of their commencing employment with you of the right to request to convert. This is after 6 or 12 months of regular continuing employment, depending on the Modern Award related to their role and your industry. This should be provided in a document along with the Fair Work Information Statement.
- Discuss any requests to convert with the employees and provide information of a factual nature about the effect it will have on their arrangement with you. Obviously, there will be a change of pay, because casuals receive a 25% loading.
- Give a written response to any request after discussing it with the employee within 21 days
- Act in a reasonable and evidence-based manner towards employees. This will ensure you maintain a positive work environment. Further, it will aid you to avoid a Fair Work Matter
- There are a multitude of FREE resources available to employers and employees in Australia. Hence, claiming ignorance is no form of defence. Just go to the Fair Work site to find answers to most questions you have
How do these provisions interact with the recent changes to the NES?
On 26 March 2021, the Fair Work Act 2009 (Cth) was amended to introduce a new casual conversion entitlement to the National Employment Standards (NES). The new minimum requirement applies in addition to the existing provisions under modern awards. Whilst there is some degree of overlap between the two sets of provisions, the NES entitlement has a few distinct features which are worthy of mention.
In addition to providing employees with the right to request casual conversion, the NES places an onus on employers to offer casual employees a pathway to permanent employee. This cannot be overridden by the terms of an enterprise agreement or award.
A written offer of casual conversion must be made by an employer (other than a small business employer) if:
- a casual employee has completed 12 months of service;
- the casual employee has worked a regular pattern of hours on an ongoing basis for at least the last 6 months; and
- the casual employee could continue these hours as a full-time or part-time employee without significant changes.
All employees in the national workplace relations system are covered by the NES. This means that employees who are not necessarily covered by a modern award of enterprise agreement can still enjoy the right to request casual conversion if eligible.
For further information on casual conversion under the NES, visit this new article which explains NES casual conversion in more detail.
If you are still uncertain of any aspect of this change of casual employees convert to permanent, seek professional assistance. Speak to a qualified practitioner in human resources or employment law in Australia. Remember, every country is different, and each has its own employment law requirements. Therefore, do not rely on knowledge you gained from another country.
Everything is evolving and quite rapidly in many areas. The employment law landscape is constantly evolving due to Case Law Wins and Losses. Consequently, make sure you keep up-to-date with the legislation in the country in which your business operates. Keep safe and if in doubt seek guidance from an accredited professional.
Part of this article originally appeared on the King Consulting HR blog.
King Consulting HR are accredited professionals in Australian Human Resources. Consequently, we are across and familiar with the Law as it relates to employment. Please do not hesitate to contact us with any questions.
Fair Work Commission Decision Summary
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