Major changes to casual employment laws mean that there are now casual conversion provisions under the National Employment Standards (NES).
What is ‘casual conversion’?
Awards and enterprise agreements have contained casual conversion clauses for many years, but there was no entitlement to casual conversion in the Fair Work Act (FW Act) until 27 March 2021. A casual employee covered by a modern award or an enterprise agreement may already have the ability to convert to full-time or part-time employment, so it is important that employers consider the terms of those instruments.
The introduction of casual conversion into the NES means that any award/agreement provisions that are less generous to employees are overridden by the NES. However, the NES does not override award provisions that are more generous to employees. For example, awards or agreements may contain a right to request to convert after six months of employment, rather than 12 months, which is the timeframe provided in the NES.
Under the NES the obligation to offer casual conversion differs for small business employers and businesses that are not small business employers.
Small business employers
A small business employer is defined as one that employs 14 or fewer employees. Small business employers have no obligation to offer casual conversion, but a casual employee employed by a small business can request to convert to permanent employment which is called a residual right to request conversion (outlined below).
Generally modern award casual conversion provisions apply equally to small and large employers. A modern award casual conversion provision may apply to a casual employee employed by a small business employer, therefore employers should consider the terms of that modern award. Employers that require assistance should contact the Ai Group Workplace Advice Line.
A business other than a small business
A business that has 15 or more employees is not a small business employer. Such businesses have an obligation under the NES to offer casual conversion to eligible casual employees unless there are reasonable grounds not to offer conversion.
What steps does an employer need to take when a casual employee reaches 12 months of employment?
Firstly, the employer needs to determine whether the casual employee is an eligible casual employee for the purposes of casual conversion under the NES.
Eligible casual employees must meet the following criteria:
- they must be employed for at least 12 months; and
- they must have worked a regular pattern of hours in the last 6 months; and
- these hours could be worked on an ongoing basis without significant adjustment.
The employer will also need to determine whether there are reasonable grounds not to offer conversion. These grounds should be based on facts that are known or reasonably foreseeable, at the time of deciding not to make the offer.
If the casual employee meets the above eligibility criteria and there are no reasonable grounds for not offering conversion, the employer must offer conversion to the casual employee within 21 days after they complete 12 months of employment.
If a casual employee does not meet the criteria, or the employer decides that there are reasonable grounds not to make an offer to the employee for conversion, the employer must provide written notice detailing the grounds for not offering conversion within 21 days of the employee reaching 12 months of employment. In these circumstances, a casual employee may be able to come back after 6 months and make a residual right to request conversion, which is outlined in more detail below.
Residual right to request conversion
The same eligibility criteria as outlined above applies for an employee to make a residual right to request conversion.
An employee may make a residual right to request conversion if, in the last 6 months, the employee has not:
- refused an offer of casual conversion from the employer; or
- received noticed from their employer that conversion will not be offered on reasonable grounds; or
- requested casual conversion.
What are reasonable grounds for not making an offer to convert or for refusing a casual conversion request?
Reasonable grounds for an employer in deciding not to make an offer include, but are not limited to, the following:
- the employee’s position will no longer exist in the 12-month period after the time of deciding not to make the offer;
- the hours of work which the employee is required to perform will be significantly reduced in that period;
- there will be a significant change in either or both of the following in that period which cannot be accommodated within the days or times the employee is available to work during that period:
- the days on which the employee’s hours of work are required to be performed;
- the times at which the employee’s hours of work are required to be performed.
Reasonable grounds for refusing a request from an employee to convert include, but are not limited to, the following:
- it would require a significant adjustment to the employee’s hours of work in order for the employee to be employed as a full-time or part-time employee;
- the employee’s position will no longer exist in the period of 12 months after giving the request;
- the hours of work which the employee is required to perform will be significantly reduced in the period of 12 months after giving the request;
- there will be a significant change in either or both of the following in the period of 12 months after giving the request, which cannot be accommodated within the days or times the employee is available to work during that period:
- the days on which the employee’s hours of work are required to be performed;
- the times at which the employee’s hours are required to be performed.
How does an employer accept or refuse a request?
If an employee accepts an employer’s offer to convert, the employer must consult with the employee and confirm the details of the conversion in writing within 21 days.
Full-time employment must be offered to casual employees who have worked full-time hours during the previous 6-month period, and part-time employment should be offered to casuals who have worked part-time hours in the previous 6-month period. The part-time hours must be consistent with the regular pattern of hours that the casual employee worked during the 6-month period.
An employer has 21 days from the date of receiving a casual conversion request from the employee, to give the employee a written response stating whether the employer grants or refuses the request.
The employer must not refuse the request unless they have consulted with the employee and there are reasonable grounds to refuse the request, which are based on facts that are known, or reasonably foreseeable at the time of refusing the request.
Further advice or assistance
For further advice or assistance on this topic, or any workplace relations matter, call the Ai Group Workplace Advice Line.
Call 1300 862 217 8.30 – 5.15pm AEST Mon-Fri