Fair Work Commission grants casual employees right to become permanent: Employment Law Update

Earlier this month, the Fair Work Commission granted casual employees the right to request permanent employment if they work regular hours over 12 months. The decision is set to affect millions of casual employees and covers those under 85 modern awards, including retail, banking, aged care, agriculture and restaurant industries. The selected modern awards will contain a provision by which casual employees may elect to convert to full time or part time employment, subject to specified criteria and restrictions, to meet the modern awards’ objective of providing a fair and relevant minimum safety net.

Impact on Casual Employees

Casuals generally do not have guaranteed hours of work, can be terminated without notice and receive about a 20 per cent loading on their base rate in place of paid sick and annual leave and other conditions in the National Employment Standards (NES).

Australian Council of Trade Unions (ACTU) secretary Sally McManus told ABC that the ruling was a step towards addressing an “epidemic of insecure work” and the “casualisation” of the country’s workforce. The landmark decision means that employees that are effectively permanent but labelled as casual employees should no longer miss out on entitlements such as sick leave, annual leave and other benefits greater job security.

However, employers can refuse an employee’s request on reasonable grounds. This includes:

  • That the conversion would require a significant adjustment to the casual’s hours of work to accommodate them in permanent employment in accordance with the terms of the applicable modern award;
  • That they foresee the casual position would cease to exist, or the employee’s hours of work will significantly change or be reduced within the next 12 months; or
  • On other reasonable grounds based on facts which are known or reasonably foreseeable.

Who does this decision affect?

Approximately 21% of Australia’s workforce is made up of casual employees. The industries with the highest proportion of casuals are accommodation and food services, arts and recreation services, administrative and support services, agriculture, forestry and fishing, and retail. However, any employer with long term or regular casual employees is likely to be impacted by this decision once the relevant modern award is varied to include the casual conversion clause.

Minimum two-hour work for casuals

ACTU also sought to impose a minimum four-hour shift for casual and part time staff and to ban employers from taking on extra part time or casual workers unless existing employees had been offered more hours.

The Fair Work Commission rejected these claims across the board, due to its potential to reduce workforce participation and inhibit flexible work practices. However, it reached the view that there should be a two-hour minimum engagement period for casuals in 34 modern awards to avoid the exploitation of workers.

What should employers do now?

Employers who employ casual staff should revisit their workforce planning. This may include reviewing your current use of casual labour, not just how many casual employees are engaged, but why and how you engage them. If you have casual employees working regular, or fairly regular, hours it is important to consider:

  • Do you know how many of your existing casual employees would like permanent employment?
  • What are the consequences for your business if even a small proportion of your casual employees have the right to convert to permanent employment?
  • Do you have ‘reasonable grounds’ to refuse a casual employee’s conversion request?
  • If you’re unsure, we recommend that you speak to a solicitor experienced in employment law.

Want to know more about employment law? Please don’t hesitate to contact our experienced Newcastle commercial lawyers at Butlers Business and Law on (02) 4929 7002 or fill out an enquiry form on our website.

Image: ‘Meeting’ available at Flickr under a Creative Commons Attribution 2.0.