Casual conversion changes affecting all employers

How to avoid potentially unhappy staff

Do you employ casual staff?  Chances are you may have heard of casual conversion.  

Casual conversion occurs when a casual employee is converted to full-time or part-time employment status. In 2021 casual conversion became mandatory for most businesses. It is important to understand when it is required to be offered and how to avoid disputes and potentially unhappy staff.

The amendments to the Fair Work Act 2009 (Cth) (the Act) were introduced into the National Employment Standards whereby employers are required to offer eligible casual employees conversion to full-time or part-time employment (subject to reasonable grounds from employers).  Eligible casual employees are also able to request conversion to full-time or part-time employment.

What classifies an employee as casual?

Amendments to the Act in 2021 have now given a definition of ‘casual’ for the first time. This outlines casual employment as employees who accept a job knowing there is no guarantee of ongoing work.[1] This differs from full-time and part-time staff, who have an advance commitment to ongoing employment with regular hours each week. Permanent staff are also given a variety of entitlements that casual employees cannot receive.

Before the amendments to the Act, casual employees could only become permanent staff if they were offered a full-time or part-time position by their employer.  Now, in certain circumstances, employers must offer casual employees casual conversion.

How casual conversion occurs

Casual conversion applies to employees who have worked for a 12-month period at their employer. The employer will then offer casual conversion to either full-time or part-time employment. Casual employees must have worked consistent ongoing hours for at least 6 months and are able to continue working these hours if they were to be full-time or part-time employees.

Employers must send the employee written notice of the offer within 21 days of their 12-month anniversary. Employers should check relevant awards and the hours worked by other full-time and part-time employees who work in a similar position when checking if an employee’s hours are full-time or part-time. Once an employer has offered casual conversion, the employee must respond in writing within 21 days of receiving the offer.

Small business exception

Small business employers are not required to offer employees casual conversion. Eligible employees are allowed to request conversion, but there are no penalties if an employer does not offer it. A small business is classified as having fewer than 15 employees. This includes employees across all associated entities. Casual employees are not included in the 15-employee limit unless they are engaged on a regular and systematic basis.

Can you refuse an employee’s request to be converted to full-time or part-time?

An employer can refuse to offer or accept a request for casual conversion if they have ‘reasonable grounds’ for doing so. Reasonable grounds for refusal must be based on facts that are known and reasonably foreseeable.

Reasonable grounds may include:

• The employee’s current position will not be available in the next 12 months.

• The employee’s time and days of work will significantly change in the next 12 months, which cannot be accommodated within the employees current availability.

• The employee’s hours of work will significantly change within the next 12 months.

• An offer for casual conversion would not comply with any relevant recruitment or selection process required by Commonwealth or State law.

Implications for business

Considering these changes, employers should check the casual conversion clauses in any relevant awards. Most awards will have a model term regarding reasonable grounds, but this is not always the case.

Importantly, employers must provide casual employees with a copy of the Casual Conversion Clause from the award by which they are covered by. View the Information Statement here.

Employers should also update existing casual contracts to include items such as a definition of ‘casual’ that reflects s15A FWA, clauses identifying casual loading and what permanent entitlements are included in it. This will ensure the process of casual conversion is simpler and more effective.

Employers should remember that casual conversion is not an attempt to force all employees to shift to permanent employment. Some staff may still wish to continue working casually. However, if the employee is eligible, they must at least be offered casual conversion.

If you have needs relating to casual conversion or employment generally, contact our team at Hewlett Legal today.

[1] s15A Fair Work Act 2009 (Cth)