By Charles Watson
The Fair Work Commission has recently determined that casual workers covered by 85 of the approximately 122 federal modern awards will be given the right to request permanent employment status if they have worked regular hours over a 12-month period.
Whether pundits who view this decision as part of a push to avoid the over-casualisation of the workforce by making it less attractive an option to employers are correct remains to be seen, but it will definitely be another level of consideration and process for employers.
As part of the never ending four-year modern award system review currently being undertaken by the Commission, and the opportunity it afforded parties to attempt to significantly alter federal industrial Awards, various unions launched a claim for the mandatory conversion of all casual employees to permanent positions. Those unions sought such conversion occur after six months of regular work with one employer.
Further, the unions also sought to make any erroneous decision made by an employer as to the applicability of such casual conversion a civil penalty breach. This last claim, if it had been successful, would have resulted in making a wrong decision about a casual employee indefensible, inexcusable and with a possible $10,000 fine attached!
The various parties involved in this matter have argued the issues at length since January last year and finally a decision recently hit the deck.
The outcome was somewhere in between the unions application and the employer groups responses. The commission has determined to give employees across a range of industries and occupations the right to request permanent employment status after 12 months of regular and systematic employment.
Further, the commission has also developed relevant criteria for employers so as to assess whether casual employees are eligible to convert to permanent status. Those criteria centre on whether the work performed by the casual employee over the previous 12 months has been of such a pattern and regularity that, without “significant adjustment” to the terms of employment, the work could continue to be performed in accordance with any part-time or full-time provisions contained in a relevant Award.
Therefore, any casual employees engaged to perform work on an occasional, non-systematic and or irregular basis will continue to be exempted from a right to convert to permanent status.
In coming to its decision, the commission rejected the unions claim for a four-hour minimum engagement period for casuals. Rather, the commission decided that for those modern awards not already containing a minimum engagement period for casual employees, a two-hour minimum period will be interleaved.
Numerous federal industrial awards already contain provisions requiring employers to offer casual employees conversion to permanent employment status after six months. Those awards will not have their pre-existing casual conversion clauses varied because of this decision.
So, what does this all mean for employers?
At the time of writing, the commission has created a draft model provision clause for inclusion into those 85 awards. However, the draft clause has not yet been settled and has not yet been interleaved into those awards. In fact, it is not expected those awards will be varied until at least August this year.
When finalised, employers will be responsible for providing their casual employees with a copy of the conversion clause contained within the relevant award before the completion of the first 12 months of their engagement.
Employers will be able to refuse the request on “reasonable grounds”.
Although such a phrase has not been carved in stone, such grounds of refusal will include:
• that permanency would require a “significant adjustment” (another phrase open to interpretation) to a casual employee’s hours of work: or
• the employer can “foresee” the position would no longer exist in the next 12 months.
For a refusal to be deemed reasonable it must be based on facts which are known at the time, or reasonably foreseeable, and not based on speculation or some general lack of certainty about an employee’s future. That being said, if an employer refuses a casual conversion request the employee will be able to use the dispute resolution clauses within the relevant award to access the commission for a ruling on an employer’s decision.
While this issue may cause some employers anxiety, there are some issues that must be remembered and considered. Casual employees who wish to convert to a permanent status should be clearly advised that, because of converting, their casual loading (usually somewhere between 17 per cent to 25 per cent) will no longer be payable upon becoming a permanent employee. If, after considering the economic take-home result of casual conversion, the employee chooses not to become permanent it is recommended that employers capture both the required offer and the non-acceptance in writing for evidential purposes if this issue raises its head later.
If it is inevitable that an employee will be entitled to permanent employment status on either a full-time or part-time basis, employers need to be prepared for responding to any such requests.
For example, if an employee is ultimately going to become part-time, employers should consider utilising an individual flexibility agreement to keep relevant and necessary flexibilities in the workplace. We recommend employers consider whether this issue will be relevant in the workplace in the future, and if it is, consider how you will best respond.
Charles Watson is Senior HR Advisor at Workforce Guardian – Australia’s leading HR and employment relations service for employers. For more go to