In an important decision by the Fair Work Commission (FWC), the FWC has decided to insert a provision for the conversion of casual employment to full-time part-time employment into all Awards. The decision was part of the FWC’s 4 yearly review of Awards.

Some awards already contain a casual conversion provision. For those Awards that don’t, the FWC will insert a clause that allows casual employees to convert their casual role to the full-time or part-time position. There are about 85 such Awards.

The FWC decided that the conversion to full-time/part-time employment should become an entitlement after a casual employee completes a qualifying period of 12 calendar months of casual employment on an ongoing regular basis. The ACTU had argued for a 6 month qualifying period.

A further qualification is that the work performed by the casual employee can be performed by a full-time or part-time employee without significant adjustment to the pattern of work hours.

An employer can only refuse to convert the casual employment to full-time/part-time employment if:
  1. doing so would require a significant adjustment to the hours of work; or
  2. the employer can foresee that within the next 12 months, the casual employee’s position will either cease to exist, or the hours of work will significantly change or be reduced; or
  3. there is another reasonable ground, based on reasonably foreseeable facts.
 
In addition, the clause will require employers to provide the casual employee with a copy of the casual conversion clause in the Award within the first 12 months of the casual employee’s initial engagement.
 
The FWC decided to include the casual conversion clause in all Awards to remedy what it held to be the detriments associated with long-term casual employment. These detriments, the FWC held, are inconsistent with the objective of all Awards, namely to provide a fair and balanced safety net for employee. The detriments identified by the FWC were:
  1. a lack of career path
  2. diminished access to training
  3. poorer health and safety outcomes
  4. a diminished ability to obtain loans from financial institutions
  5. a tendency to still attend work when sick
  6. an increased reluctance to take recreational leave (due to concerns about ongoing employment if they do)
  7. an incapacity to attend to personal carer responsibilities; and
  8. the potential for a sudden loss of regular work without proper notice or adjustment payment.
 
In a further aspect of the decision, the FWC noted that some Awards do not provide for a minimum engagement period for casual employees. The ACTU proposed a 4 hour minimum engagement period. The FWC decided to include 2-hour minimum engagement period for casual employees into about 34 Awards.

What does this mean for employers?

This decision will have a particular impact on employers who use high degree of casual employment. Employers may do this as a means of regulating work hours, to meet peaks and troughs in customer demand and to minimise employment costs such as notice periods and potential redundancy payments and the costs of possible dismissal claims.
Employers will need to consider the manner in which their long-term casual employee are rostered and whether this pattern of rostering creates a clear and systematic pattern of work for casual employees. They will also have to consider whether the roster pattern could be carried out by full-time or part-time workers.
 
It will also be important to identify which roles cannot be done by full-time/part-time workers without significant adjustment to the hours available for work or if there are other reasonably foreseeable issues make converting casual employment unreasonable in terms of the business’s operational needs.
While the FWC noted that the casual loading is meant to compensate for a range of entitlements such as leave entitlements, casual loading does not, in fact compensate for all of the detriments associated with casual employment.
 
This may result in businesses having to rethink the reasons and objectives behind employing casual workers. It is better to consider and identify these issues now rather than upon an application for conversion to full-time or part-time work.
 
If you have any further questions, please contact us.