New casual employment conversion obligations and entitlements

The Federal Government recently passed legislative changes to the Fair Work Act 2009 (Cth) which have significant consequences for casual employment.

These changes took effect from 27 March 2021. The intent is to take the confusion out of defining what is and what is not casual employment with an arbitrary statutory definition. This is balanced by enhanced obligations and entitlements to convert to permanent employment.

The Legal Services Award 2020 (the award) currently provides casual employees with the ability to request conversion to permanent employment after 12 months’ work on certain conditions (see clause 11 of the award). These conditions have been explored in a previous article.

The legislative changes create a new National Employment Standard (NES) with new minimum obligations for employers and entitlements for employees and effectively supersede the award provisions. There is some overlap between the new NES and the award, and the Fair Work Commission will be undertaking a review of award provisions in coming months to ensure awards are consistent with the NES. This may lead to deletion of the award-based conversion provisions.

Major changes

The major changes made to the Fair Work Act are:

Casual employment information statement

Small business employers (those with less than 15 employees) have to give their existing casual employees a casual employment information statement (CEIS) as soon as practicable after 27 March 2021. The CEIS can be downloaded from the Fair Work Ombudsman website. For all other employers (that is, those with 15 or more employees), the applicable date is 27 September 2021.

All new casual employees have to be given a CEIS before, or as soon as practicable after, they start work. This is in addition to the requirement to give all new employees a Fair Work Information Statement (FWIS).

Who is a casual employee?

The Fair Work Act now specifies that a person is a casual employee if they accept an offer of employment on the basis the employer makes “no firm advance commitment to continuing and indefinite work according to an agreed pattern of work”.The Fair Work Act specifies the only relevant factors are:

(a)         whether the employer can elect to offer work and whether the person can elect to accept or reject work

(b)         whether the person will work as required according to the needs of the employer

(c)         whether the employment is described as casual employment

(d)         whether the person will be entitled to a casual loading or specific casual pay rate.

A regular pattern of work hours is not a relevant factor and the time for assessment is when the offer is made and accepted, without account of the subsequent actions of the parties.

Casual conversion obligations and entitlements

The trade-off for this increased certainty is an increased capacity for conversion to permanent employment through a new NES. The effect is that employers (other than small business employers) must offer a casual employee the opportunity to convert to full-time or part-time employment when the employee:

  • has worked for their employer for 12 months, and
  • has worked a regular pattern of hours for at least the last 6 months on an ongoing basis, and
  • could continue working those hours as a permanent employee without significant changes.

Small business employers are not subject to this obligation and an employer does not have to make the offer if it has “reasonable grounds”. The Fair Work Act inclusively defines what might be reasonable grounds. Employers must give written notification to employees if they are not offering conversion.

Separate to this employer obligation, employees have a right to request to convert to permanent employment:

(a)         if they work for a small business – at any time if they meet the requirements

(b)         otherwise, after their employer has decided not to make an offer for casual conversion.

These requests must be in writing and employers must give a written response within 21 days setting out reasonable grounds for any refusal.

Under transitional arrangements, employers have until 27 September 2021 to assess whether any existing employees are eligible to be offered conversion.

Casual conversion disputes

The Fair Work Commission has been given broad powers to deal with disputes about casual conversion. However, the parties are required to attempt to resolve any dispute by direct discussions first. The Federal Circuit Court has also been given new powers to deal with conversion disputes commenced through the small claims procedure.

Failure to comply with the NES requirements is a breach of the Fair Work Act for which civil penalties can be imposed.

Practical points

It’s clear that the presence of a written offer of employment is more important than ever in satisfying the statutory criteria for casual employment. Employers need to:

(a)         ensure offers of employment are in writing and comply with the legal requirements

(b)         provide a CEIS to existing and new casual employees, in addition to the existing FWIS

(c)         if not a small business, assess the eligibility of existing employees by 27 September 2021, carefully diarise 12-month anniversaries of other casual employees, and keep documents to enable consideration of conversion

(d)         respond promptly and thoughtfully to conversion requests

(e)         be ready to deal with disputes about conversion, particularly through the Fair Work Commission and Federal Circuit Court.

Employees also need to be alert to their rights and obligations and not assume that employers will always comply with the above requirements. Employees should also be conscious that conversion may result in a lower hourly rate of pay as a trade-off for permanent entitlements to leave. These are of course matters for negotiation between the parties and are subject to applicable award minimum rates of pay.

More details are available on the Fair Work Ombudsman website.

Rob Stevenson is the Principal of Australian Workplace Lawyers and a QLS Senior Counsellor, rob.stevenson@workplace-lawyers.com.au.

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