By Michael Fetter

16 August 2017

The Fair Work Commission (Commission) will introduce a “casual conversion” clause into modern awards following a recent Full Bench decision. This clause may allow casual, award covered employees to request permanent employment. This change will have significant impact on employers as their ability to refuse a request for permanent employment may be limited.

In summary, the Commission decision means:

  • Casual employees may request conversion to an equivalent full-time or part-time position;
  • The casual employees must satisfy a qualifying period of twelve (12) months employment prior to making the request; and
  • The casual employee must satisfy criteria by maintaining a pattern of hours which, without significant adjustment, could continue under permanent full-time or part-time employment.

 

To refuse a request, the employer must establish:

  • That a significant adjustment to working hours would have to be made to accommodate the conversion;
  • The casual position is likely to end within twelve (12) months;
  • The hours of work for the casual position will significantly change or be reduced within twelve (12) months; and
  • Any other reasonable grounds (based on the facts) which are known or reasonably foreseeable.

 

Employers must provide casual employees with a copy of the casual conversion requirement within 12 months of employment. A casual employee whose request is refused may apply to the dispute resolution procedure of a modern award.

Note that casual employees typically receive a casual loading of approximately 20-25%. This loading is designed to compensate employees for leave entitlements that casual employees do not receive. Casual employees that elect to convert to a permanent employment arrangement will receive a reduced hourly wage in recognition of the abolition of the casual loading.

The Commission has not yet determined when the casual conversion clause will be adopted.

How will this impact Employers?

Casual conversion means that employers will have to:

  • Ensure that all casual employees are notified of their rights under the casual conversion provision;
  • Make provision and set policy to accommodate requests made by casual employees for permanent employment;
  • Determine the number of employees impacted by the change and who;
  • Update applicable policies and procedures to ensure compliance;
  • Consider if employers can refuse a request and why (see above); and
  • Comply with the casual conversion as non-compliance may constitute a breach of the Fair Work Act and/or the applicable award.

 

At this point, the changes only relate to modern award employees – who constitute only around 15% of the workforce.

If you are an employer and would like more information regarding these changes, please contact a member of our Employment Law team.

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