Our workforce has become increasingly “casualised” in recent years. In fact, over two million people are now employed casually in Australia.
Casual workers are entitled to some, but not all of the benefits given to part-time and full-time workers. The trade off for a higher rate of pay (casual loading) is that they forgo paid holiday and sick leave.
One of the main drawbacks for casual workers can be the lack of certainty in their ongoing employment. Something many long-term casual employees in Australia have sought is security in their employment.
A casual conversion clause in an award specifies that a casual employee can request full-time or part-time employment from their employer if they have worked certain, regular hours over a period of time, normally 6 or 12 months.
Historically, not all casual workers have been provided with the right to request casual conversion. In order to provide uniformity across all industries, The Fair Work Commission has ruled that casual conversion clauses must be provided for in every modern award as of 1 October 2018.
Previously, only 28 awards included a casual conversion clause and these awards will remain unchanged. The changes do affect 84 awards which now have casual conversion model terms inserted. A modified version of the model term has been inserted into an additional 14 awards.
Casual employees in the hospitality, retail, manufacturing and agriculture industries are just some of the casual workers affected by these changes.
What’s included in the new casual conversion clause?
Please note - the following is a summary of the model term. It’s important for you to check your modern award/s for the exact wording of the casual conversion clause as there may be differences from the model term.
The new model term does not require you to automatically offer permanent employment to a “regular casual employee”. However, it does require you to provide a copy of the new clause to all your casual employees employed as of 1 October 2018, by no later than 1 January 2019.
Additionally, you must now also provide a copy of the new clause to all of your casual employees employed on or after 1 October 2018 within 12 months of their employment commencing.
Once an employee has received a copy of the new clause, they are entitled to formally request that their employment status is changed from casual to permanent, subject to certain criteria. A casual employee will need at least 12 months’ service (6 months in some awards) and a regular work pattern to be eligible. This request must be provided to you in writing.
As an employer, you have the responsibility of responding to this written request within 21 days of receiving it.
The new clause does not require you to agree to such a request, provided you have reasonable grounds for doing so.
What are reasonable grounds for refusing casual conversion?
You are entitled to refuse a request on reasonable grounds. Accepted reasonable grounds include:
- If the conversion would require a significant adjustment to the employee’s hours of work in order for the employee to be engaged as a full-time or part-time employee in compliance with the modern award.
- It is known, or reasonably foreseeable, that:
- The employee’s position will cease to exist within the next 12 months; or
- The hours of work which the employee is required to perform will be significantly reduced in the next 12 months; or
- 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 hours during which the employee is available to work.
What are the next steps for my business?
As an employer, you are required to understand your obligations under employment law and always stay on top of any changes. In the face of these recent changes to casual conversion, you should:
- Immediately review the modern awards which apply to employees in your business and familiarise yourself with the applicable casual conversion clauses and the particular requirements.
- Establish new processes to ensure compliance with casual conversion clauses (e.g. diarise 12 month anniversaries) in order to avoid penalties for non-compliance.
- Ensure payroll systems are equipped to manage casual conversion requests (e.g. recognition of continuous service, change in pay rates).
- Review your casual workforce every 12 months to determine whether any long term casuals should otherwise be converted to permanent employment (i.e. to mitigate the risks associated with the incorrect classification of long term casual employees).
- Provide your casual employees with a copy of the new clause, notifying them of their right to request casual conversion. You can use our free casual conversion clause notification letter template by clicking the image below.
It’s important to remember that these changes are not about forcing either employers or employees into contracts they don’t want or aren’t right for the business.
Not all casual employees actually want to become permanent employees and would prefer to forgo permanent status in favour of a higher hourly rate.
These changes are about providing more options to a section of our workforce who have historically had limited options in regard to their job security.
Need more advice on casual conversion changes for your business? Talk to Harrison Human Resources
With our HR Consulting service, we can provide practical advice and guidance for effectively managing casual conversions in your business.
Simply click here to request an obligation-free 15 minute phone consult to get some initial advice on your HR needs.