On 5 July 2017, the Fair Work Commission (FWC) ruled that casual employees can convert to permanent employment if they satisfy certain criteria. Casual employees make up a large amount of the labour market and typically do not receive the same standards as permanent employees. This decision essentially affords more rights to casual employees, so what does it mean for employers? We take a look at the decision and explore the impact on employers. 

What’s the difference between casual, part-time and full-time employees?

Casual employees differ from permanent full-time or part-time employment in various ways. The most significant differences between the two are the hours and work and entitlements under the National Employment Standards (NES).

Casual employees do not have a set number of hours and may work within the 0-38 range or more per week. Casuals also receive a loading (extra pay) to compensate for the absence of entitlements that permanent employees enjoy. 

As casual employees also have different termination requirements to permanent employees, they can be terminated or resign with limited notice. This often gives employers flexibility with their staffing requirements as they can increase hours in busy periods and decrease hours during slower periods.

What was the issue?

The FWC recently received submissions for its 4 Yearly Review of Modern Awards. These publicly available submissions proposed that casual employees who worked regular hours and shifts missed out on the NES. Further, the submissions suggested that casual loading is not adequate compensation for their lack of entitlements.

Consequently, the Australian Council of Trade Unions (ACTU) sought to make amendments to 88 current Modern Awards and insert specific provisions for the conversion of casual employees to obtain similar entitlements to permanent employees.

What did the FWC decide?

The FWC agreed to give regular casual employees under 85 modern awards the right to request permanent status (full-time or part-time) after a qualifying period of 12 months of continuous service of the employer. In its decision, the FWC provided a draft model clause for the modern awards.

The draft model clause states that a regular casual employee (someone who has worked an average of 38 or more hours a week) may request a conversion to permanent full-time or part-time if they meet the following required criteria:

  1. The employer has employed the employee for the qualifying period of 12 calendar months; and
  2. Over the 12 months, the employee has worked a pattern of hours on an ongoing basis without significant change, which the employee could continue to perform under either full-time or part provisions of the award; and
  3. The employee could continue to perform as a full-time employee or part-time employee under the provisions of the applicable award; and
  4. The employer must provide every casual employee with the conversion clause within 12 months of initial engagement regardless of whether they become eligible or not; and
  5. The employer may refuse the request on reasonable grounds.

However, an employer may refuse an employees request for conversion.

What are reasonable grounds for refusal?

If an employee request for conversion to a permanent employee, an employer may refuse the request on the following (non-exhaustive) list of reasonable grounds:

  • if the conversion would require significant adjustment to the employee’s hours of work (that is the employee is not truly a regular casual); or
  • it is known, or reasonably foreseeable the regular casual position will cease to exist in the next 12 months; or
  • it is reasonably foreseeable that the hours of work that are regularly required to be performed by the regular casual will be significantly reduced in the next 12 months; or
  • 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 times which the employee is available to work.

An employer must provide the refusal to the employee in writing (with reasons) within 21 days of the request.

How does this affect employers?

Upon the implementation of this decision in the 85 modern awards, regular casual employees will have the right to request permanency. However, this decision does not mean that those same employees will be entitled to a permanent position.

The decision clarifies that only regular casual employees can undergo a conversion to a full time or part time role upon request. If casual employees are working in an ad hoc manner, with varying shifts and hours, they are not regular employees and cannot request conversion to permanent employment.  

The Manufacturing Award 2010 includes these provisions, and there has not necessarily been a greater influx of permanent positions since the amendments.

How can employers comply with this decision?

Employers should seek advice to ascertain whether the modern award that covers its employees includes the casual conversion. Further, they should be conscious of employees that maybe regular casuals (as defined in the decision) or casuals who work irregular shifts and hours.

Accordingly, it is vital for employers to classify its employees adequately. Their particular classification will help determine how employees pay under the appropriate Modern Award, and who can request causal conversion to permanent employment. Failure to correctly classify an employee and failure to pay the correct entitlements may result in a penalty from the FWC.

Once Modern Awards include the decision, employers must notify all of their casual employees of their ability to request permanency after 12 months, regardless of whether the particular casual employees are eligible to request a permanent position.

Key Takeaways

Once the FWC decision is implemented into Modern Awards, casuals have the right to request permanent status (full-time or part-time). However, they can only do so if they are a regular casual employee, after a qualifying period of 12 months of continuous service of the employer. Employers should ensure that they appropriately classify their employees and notify them of the ability for casuals to request to convert to a permanent position.

If you are an employer and have any questions or would like advice about how this decision affects you, get in touch with one of LegalVision’s employment lawyers on 1300 544 755.

 

Talia Admiraal
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