Modern award changes: Casual employees can now request to become permanent

Employers must act now to ensure compliance with a decision by the Fair Work Commission (FWC) to insert a model casual conversion clause from 1 October 2018 into more than 80 affected modern awards. This follows the FWC’s landmark ruling in July 2017 in which it determined to provide certain casuals with a right to request conversion to permanent employment (see our earlier article here).

When does the casual conversion clause take effect?

The casual conversion clauses in affected modern awards operates from the start of the first full pay cycle on or after 1 October 2018, upon which eligible casual employees will be able to make a request to convert to permanent employment. 

What must employers do?

Employers must notify casual employees of their right to request to convert by providing a copy of the applicable casual conversion clause to all casual employees (not just regular casuals employees) covered by a modern award containing the model casual conversion clause: 

• by 1 January 2019, if the employee is already employed as at 1 October 2018; or 
• within the first 12 months of the employee’s first engagement to perform work, if the employee is first engaged any time after 1 October 2018.

Which modern awards are affected?

A full list of affected modern awards is accessible here.

Notably, the list includes the following modern awards which have widespread coverage:

• Banking, Finance and Insurance Award 2010
• Cleaning Services Award 2010 
• Clerks – Private Sector Award 2010 
• Fast Food Industry Award 2010 
• General Retail Industry Award 2010
• Professional Employees Award 2010 
• Restaurant Industry Award 2010
• Security Services Industry Award 2010
• Storage Services and Wholesale Award 2010.

Employers should carefully review the casual conversion clause for each modern award that applies to their business and their casual employees, as some modern awards include variations to the model clause. It should be noted that some modern awards already contain a casual conversion clause and a full list of those awards can be found on the Fair Work Ombudsman's website.

What is the actual entitlement?

The casual conversion clause provides eligible casual employees with the right to request that their employment is converted to full-time or part-time employment (Conversion Request). This is not a strict right to convert to permanent employment. However, an employer’s grounds for refusing the request are limited and can be subject to challenge (see below).

Which casual employees are eligible to make a request?

Casuals will be eligible to make a Conversion Request if, in the preceding 12 months, the casual employee has worked a pattern of hours on an ongoing basis that, without significant adjustment, the casual employee could continue to perform as a full-time or part-time employee.

What are an employer’s responsibilities when a request is made?

If an eligible casual makes a Conversion Request, and the employer agrees to the request, the employee converts to permanent employment. The model clause does not expressly address whether the employee’s service while a casual is to be counted as continuous with permanent employment upon conversion. Employer obligations in this regard are therefore unclear, particularly in light of recent cases on similar issues involving casual employment which have resulted in different outcomes. 

Employers can refuse a Conversion Request, however, such refusal must only occur:

• after the employer has consulted with the employee
• on the basis of ‘reasonable grounds’. A non-exhaustive list of reasonable grounds for refusal are set out in the model term, and include circumstances where conversion to permanent employment would require a significant adjustment of the employee’s hours of work or where it is known or foreseeable that in the next 12 months there will be changes to the hours of work, days and/ or times an employee works or where the employee’s position will cease to exist in 12 months.

Employers must provide the employee with the employer’s reasons for refusal in writing and within 21 days of the request being made.  

Employers should be aware that if an employee disagrees with the decision to refuse the request, the employee may make an application for the dispute to be heard by the FWC.

What should employers do?

Employers should:

• carefully review the full list of affected modern awards to determine whether their business will be impacted and, if so, take steps to ensure compliance with the notification requirements outlined above
• ensure that any Conversion Request is considered carefully noting the requirements which apply to any refusal
• given the unclear position on whether service as a casual employee counts as service once an employee converts to permanent employment, employers may need to obtain specific advice by reference to the employee’s individual circumstances.

Authors: Louise Rumble, Natasha Jones & Samuel Lane

Contacts:

Melbourne

Charles Power, Partner
T: +61 3 9321 9942
E: charles.power@holdingredlich.com

Benjamin Marshall, Partner
T: +61 3 9321 9864
E: ben.marshall@holdingredlich.com

Sydney

Stephen Trew, Managing Partner, Sydney
T: +61 2 8083 0439
E: stephen.trew@holdingredlich.com

Michael Selinger, Partner
T: +61 2 8083 0430
E: michael.selinger@holdingredlich.com

Brisbane

Rachel Drew, Partner
T: +61 7 3135 0617
E: rachel.drew@holdingredlich.com

Disclaimer

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.

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