Casual employees convert to permanent, what does it mean for business in Australia

Don’t panic! Casual employees have always had the right to request to become permanent. The only real change is the process has become more formal and will now be part of most Modern Awards.

The Fair Work Commission confirmed that as of 1st October 2018 casual conversion clauses will be in Modern Awards that do not already have one.

It is important to note; this does not have to be a big deal and worry for employers. Many employees prefer to stay on as casuals because of the higher rate of pay. Further, as an employer you do have the right to decline a request on reasonable grounds.

Interested parties such as the Australian Council for Trade Unions (ACTU) and others, argued and subsequently had addressed by the Commission the insecurities caused by casual employment which had an impact on this decision and its implications for both employers and employees. Read on for more detailed information on the key points of the Fair Work Commission Decision.

What does this mean for casual employees?

It means that casual employees will have the right to request to go permanent. It does not mean that every casual employee becomes a permanent employee. However, it does allow for casual employees who have had continual and regular casual work for a 12-month period (some Modern Awards shorten the period to 6 months) to request permanent employment.

This is not particularly new for business in the sense that for most businesses it is more cash flow positive to have permanent employees rather than casuals with the loading and extra administration required. However, some employers are concerned with difficulties they face with Fair Work when dealing with a permanent employee they can no longer afford.

There are clear processes and procedures in place to follow should that situation occur such as, making a role redundant. Depending on the size of the employer and the length of relationship it does not have to be painful for either party. Also, if the relationship changes with the employee and employer there is a procedure you need to follow to end the relationship which is on the Fair Work Site.

Not every casual is eligible just the ones that meet the requirements:

So, what are the requirements? Casuals that have been continually employed for 6 – 12 months depending on the Modern Award relevant to them, have the right to request to convert to permanent part-time or permanent full-time employment.

It is not dissimilar to the right to request flexible working hours introduced with the National Employment Standards and has similar requirements for both employees and employers.

Casual employees who have enjoyed continuous work over the last 12-month period who have worked regular hours can request to convert to permanent employment.

If the regular hours they have worked can continue without any significant adjustment they can request to convert to a permanent employee. Depending on the number of hours they have regularly worked in the 12-month period they can request to convert to either permanent part-time or permanent full-time employment.

Do employers have to convert their casuals to permanent?

No is the short answer. The casual employee must put the request in writing to the employer for consideration. Then the employer and employee must discuss and document their agreement.  This document must detail whether the employee is converting to permanent part-time or full-time. Further, the agreement must document the hours of work, roster and any other items agreed to in accordance with the Modern Award most relevant to them.

The grounds for refusal to convert must:

  • Refused claiming it would require significant adjustment to the casual employees’ hours of work to accommodate them in full-time or part-time employment. This must be in accordance with the terms of the relevant Modern Award.
  • If it is known or reasonably foreseeable that the casual employees’ position will not exist
  • The hours of the Casual employee will be significantly change or reduced within the next 12-months
  • On reasonable grounds, based on facts which are either known or foreseeable such as a decline in business, a change in demand, social change or any other arguable and evidence-based matter

If an employer wants to decline to convert a casual employee to permanent they must do so in writing. The grounds for declining the request must be reasonable, discussed with the employee and then documented and provided to the employee within 21 days of the request.

What Employers need to be aware of and do:

  • Provide information to your Casual employees notifying them of their right to request to convert to permanent
  • Notify all Casual employees as part of their commencing employment with you of the right to request to convert after 6 or 12 months of regular continuing employment depending on the Modern Award related to their role and your industry. This should be provided in a document along with the Fair Work Information Statement.
  • Discuss any requests to convert with the employees and provide information of a factual nature about the effect it will have on their arrangement with you including the change in pay
  • Give a written response to any request after discussing it with the employee within 21 days
  • Act in a reasonable and evidence-based manner towards employees to maintain a positive work environment and avoid a Fair Work Matter
  • There are a multitude of FREE resources available to employers and employees so claiming ignorance is no form of defense in Australia. Just go to the Fair Work site to find answers to most questions you have

In Conclusion:

If you are still uncertain of any aspect of this change seek professional assistance from a qualified practitioner in human resources or employment law in Australia. Remember, every country is different, and each has its own employment law requirements. Do not rely on knowledge from your country of origin or old knowledge keep up to date with the legislation in the country in which your business operates.

Everything is evolving and quite rapidly in many areas the employment law landscape is constantly evolving due to Case Law Wins and Losses. Keep safe and if in doubt seek guidance from an accredited professional.

King Consulting HR are accredited professional in Australian Human Resources which involves being across and familiar with the Law as it relates to employment please do not hesitate to contact Sonia with any questions.

√  Fair Work Commission Decisions 

√  Do Not Dismiss

√  Australian Council of Trade Unions

To book your FREE 15 minute consultation