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Casual conversion – what is it and are you prepared for the new changes?

The Fair Work Commission (FWC) has inserted a modern conversion clause from 1 October 2018 to more than 85 modern awards. This follows the FWC’s landmark ruling in July 2017 to provide certain casual employees with the right to request a conversion from casual employment to permanent employment.[1]

What does this mean?

The inclusion of a casual conversion clause will allow casual employees who satisfies the criteria of being a regular casual employee to request for part time or full time employment.

These new casual conversion clause will affect the rights and obligations of employers who employs causal employees who work on a regular and systematic basis for a period of 12 month. Awards that already contain a casual conversion clause may have a shorter conversion period (6 months).

What are your obligations?

Existing casual employees will need to be provided with the casual conversion clause included in their modern award by 1 January 2019 and for new casual employees engaged on or after 1 October 2018 they will need to be provided with the clause within 12 months of their employment commencing.

What are the major issues for casual conversions?

These include but are not limited to:

  • If your employee is hired on a casual basis but satisfies the criteria for being a regular casual employee, this will not prevent the Courts from considering their true relationship;
  • The employer will need to ensure that they are away of any casual loadings, overtime and or penalties for the employee;
  • Employers will need to ensure that they are closely monitoring the ‘regular and systematic’ threshold or employees will transition to a long term casual employee; and
  • The right to request for a full time or part time position is on a continuous basis and is not a once off right if the criteria for a regular casual employee is met.

What are the requirements for requesting a conversion?

The employee will need to make the request in writing. If a conversion is agreed, the employee and employee must discuss and record in writing, the following:

  • Whether the employee will be converted to a full time or part time basis; and
  • If the employee is to be part time, the number of hours they will be rostered and other matters to be agreed upon as set out in the award.

However, it is important to note that a casual conversion clause does not require the employer to increase an employee’s hour as a result of a conversion. If a conversion is agreed, the conversion will start on the next pay cycle, unless agreed otherwise.

Do you have to convert the employee?

No, the employer can refuse to convert, provided that:

  • They have consulted with the employee;
  • The employer has reasonable grounds to do so; and
  • The refusal is put in writing within 21 days of the request being made.

However, this may vary across the modern awards. Employees can challenge the refusal under the dispute resolution provisions.

The grounds for refusal may include:

  • That the conversion will require a significant adjustment to the casual employee’s hours to accommodate them being in a full time or part time position;
  • It is known or foreseeable that within the next 12 months:
  • The employee’s position will cease to exist; or
  • The employee’s hours will be significantly reduced or changed; or
  • There will be a significant change to the days or times that the casual employee is required to work which cannot be accommodated by the employee’s availabilities; and
  • On reasonable grounds based on facts that are known or reasonable foreseeable.

Employers should be aware that they are unable to terminate, reduce or vary a casual employee’s hours to avoid their obligations under the casual conversion clause.

Take away – A casual conversion clause will have major impacts on how business owners will employ, manage and roster casual employees. Employers will need to ensure that they are up to date with the modern awards that affect their casual employees.

If you want more information casual conversions please do not hesitate to contact Morrissey Law & Advisory.

[1] [2017] FWCFB 3541 https://www.fwc.gov.au/documents/documents/summaries/2017fwcfb3541-summary.pdf

Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.

2018-12-20T13:21:03+10:00 December 20th, 2018|Commercial & Corporate Advisory|