New Casual Conversion Clause Means Casual Workers Can Now Request to Become Permanent

In one of our previous articles, we discussed the recent decision of the Fair Work Commission (FWC) regarding when a casual employee is considered “casual” in the eyes of the law. You might also be surprised to hear that, as of Monday, all casual workers employed under a modern award may be eligible to request become a permanent staff member.

The law

In 2017, as part of the FWC’s four-year review of modern awards, the Full Bench ruled that casual conversion clauses should be inserted into 84 modern awards not already containing conversion provisions. On 9 August 2018, the model term was finalised and the term officially came into effect on Monday.

Therefore, it is pertinent that all employers who employ casual staff pursuant to a modern award ensure that they are aware of the practical application of the new casual conversion clause.

What are the features of the casual conversion clause?

The casual conversion clause gives causal employees the right to request that their employment be converted to a permanent arrangement if:

  • They have worked a pattern of hours on an ongoing basis for the preceding 12 months; and
  • They could continue to work their usual hours with minimal adjustments as a full time or part time employee.

Can employers refuse to convert casual employees to full or part-time?

Employers can refuse to convert employees to permanent employment, however, this can only be done on reasonable grounds and after consulting with the employee. Examples of reasonable grounds include:

  • The conversion would involve extensive adjustments;
  • It is reasonably foreseeable that the employee’s position will not be available in 12 months;
  • The employee’s hours are likely to change or reduce significantly over the next 12 months.

It is important to note that this list of what could constitute reasonable grounds is non-exhaustive. Thus, other circumstances may arise that sufficiently amount to reasonable grounds for refusing to convert a casual employee to permanent.

Can employers reduce or vary casual employee’s hours to avoid a request to convert?

Employers cannot reduce or vary an employee’s hours, or terminate and subsequently re-engage a casual employee, in a bid to avoid a conversion request.

What do employers need to do?

Employers must give new casual employees a copy of the conversion clause within the first 12 months of their employment. Additionally, existing casual employees must be provided with a copy of the model clause before 1 January 2019.

Many casual employees may elect to remain casual in order to benefit from the 25% loading that comes with a casual arrangement. Regardless, it is important that employers who utilise casual staff prepare themselves for a potential conversion request.

If you have reasonable grounds to refuse a casual employee’s request to be made permanent, you should be prepared to have an honest and frank discussion with the employee about their working arrangements. It is important to be aware that a refusal to convert an employee to a permanent position could foster feelings of disillusionment or dissatisfaction. This may result in casual staff leaving or lead to poor performance. It is important to take a humanist approach to these types of matters and remember that an employee that is secure in their role will almost always perform better.

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