FAQ on new casual conversion clauses operative from today – 1 October 2018

Casual conversion rights and obligations for award-covered employees will be streamlined across all industries from today – 1 October 2018.[1]

We have addressed the ‘Frequently Asked Questions’ on casual conversion below:

1. What is casual conversion?

Casual conversion is the transfer of an employee’s employment status from casual to permanent.

2. What is being inserted into the Modern Awards and where?

A model casual conversion clause will be inserted into 84 Modern Awards (Model Term).

A modified version of the Model Term will be inserted into 14 other Modern Awards.

The 28 Modern Awards which already contain a casual conversion clause, will remain unchanged. Please note, the requirements in these Awards must be reviewed individually, as the eligibility and requirements differ to the Model Term.

3. When is an employee entitled to casual conversion?

Under the Model Term, to be eligible to request casual conversion, a casual employee must be a “regular casual employee“.

A regular casual employee must have worked:

• for a period of 12 months or more; and

• a pattern of hours on an ongoing basis, which the employee could continue to perform as a full-time employee or part-time employee (as applicable), without significant adjustment.

For example, a casual employee who has worked an average of 38 or more hours a week, over a period of 12 months, may request to have their employment converted to full-time employment.

This right becomes available on a continuous basis while the employee meets the above criteria (i.e. it is not a once off right).

In some Modern Awards, casual conversion can be requested from 6 months’ of regular and systematic employment.

4. Is the right automatic?

Not for Modern Awards which contain the Model Term.

Employers must, however, review the Modern Award which applies to their workplace (or seek our advice) to determine how a request for casual conversion must be managed in their individual circumstances.

For example, clause 14.4 of the Manufacturing and Associated Industries and Occupations Award 2010 requires an employer to give notice in writing of the casual conversion clause within four weeks of an employee working 6 months on a regular and systematic basis.

5. Can an employer refuse to convert a casual employee to permanent employment?

Yes, under the Model Term employers can refuse a request for casual conversion provided that:

• they have consulted with the employee;
• there are reasonable grounds to do so; and
• the refusal is put in writing within 21 days of the request being made.

The requirements and grounds for refusal vary across Modern Awards and should be reviewed in the applicable award.

6. Can an employee challenge a refusal to grant casual conversion?

Under the Model Term, an employee has the right to challenge any refusal using the dispute resolution provision in the relevant Modern Award.

7. What records must be kept?

Under the Model Term, a casual conversion request must be made in writing.

If a request is granted, following a discussion with the employee, the employer must record the conversion in writing.

8. When will a request for casual conversion under the Model Term take effect?

If granted, conversion will take effect from the next pay cycle (unless otherwise agreed).

9. What should employers do now?

We recommend that employers immediately review the Modern Awards which apply to employees in their business, to familiarise themselves with the applicable casual conversion clauses and the particular requirements.

For example, under the Model Term, employers must:

• provide new casual employees with a copy of the casual conversion clause, within the first 12 months of their first engagement to perform work; and

• provide existing casual employees with a copy of the casual conversion clause by 1 January 2019.

Additionally, we recommend that employers:

• establish new processes to ensure compliance with casual conversion clauses (e.g. diarise 12 month anniversaries) in order to avoid penalties for non-compliance;

• ensure their payroll systems are equipped to manage casual conversion requests (e.g. recognition of continuous service, change in pay rates); and

• review their casual workforce every 12 months to determine whether any long term casuals should otherwise be converted to permanent employment (i.e. to mitigate the risks associated with the incorrect classification of long term casual employees). We recently reported on the landmark decision in WorkPac Pty Ltd v Skene [2018] FCAFC 131, where the Full Court of the Federal Court found that a casual employee was a permanent employee entitled to annual leave payments (click here to access our article). For employers with a substantial casual workforce, casual conversion may prove a useful tool in mitigating the risks associated with the incorrect classification of long term casual employees (like in WorkPac Pty Ltd v Skene).

Please contact our Employment Advisory Team for tailored advice on casual conversion compliance.

[1] See 4 yearly review of modern awards – Part-time employment and Casual employment [2018] FWCFB 4695 (9 August 2018)

Authored by: 
Natasha Horvat, Senior Associate