Under recent amendments to the Fair Work Act 2009, all casual employees who have been employed for 12 months may now be eligible to convert to permanent employment.
Previously, only casual employees covered by a Modern Award were entitled to become permanent employees in certain circumstances. Following legislative amendments earlier this year, the National Employment Standards (which apply to all employees) now require an employer to offer eligible casual employees the opportunity to convert to permanent employment in certain circumstances.
Although this requirement to offer permanent employment arises on an eligible casual employee’s 12 month anniversary (in certain circumstances), employers should be aware that under transitional arrangements, by 27 September 2021 they are required to assess whether any existing casual employees are eligible to convert to permanent employment and, where eligible, make such an offer within 21 days.
In addition to the requirement for an employer to offer permanent employment after 12 months, all eligible casual employees also have an ongoing right to request to convert to permanent employment in certain circumstances.
Eligibility for casual conversion
Employers are required to offer a casual employee permanent employment where the casual employee has been employed by the employer for 12 months and meets the following eligibility requirements:
- they have worked a regular pattern of hours on an ongoing basis for at least the last six months; and
- they could continue working these hours as a full-time or part-time employee without significant changes.
Whether an employee has worked a regular pattern of hours will depend on the particular circumstances. An employee may still meet the requirement of having worked a regular pattern of hours where there has been some fluctuation or variation in specific times and days worked, including where the employee took time away from work when ill or on holiday.
Where an employee has worked a regular pattern of hours on an ongoing basis, an employer only has to make an offer where the employee could continue to work these hours as a full-time or part-time employee without significantly adjusting their hours. Although ‘significant’ is not defined, it suggests that some adjustment to a casual employee’s hours in the transition to permanent employment may be permissible.
When offers are not required
An employer is not required to make an offer of permanent employment to a casual employee (even where the two eligibility requirements above have been met) if they have “reasonable business grounds” to not do so. These reasonable business grounds must be based on facts that are known, or reasonably foreseeable, at the time the employer has decided not to make the offer.
Where an employer concludes that it will not offer permanent employment to a casual employee because they have not met the two eligibility requirements listed above, and/or because the employer has reasonable business grounds not to make the offer, there are requirements to give the employee written notice to this effect. The employer must give notice that they will not be making an offer of permanent employment within 21 days of the employee’s first 12 month period of employment.
Requests for casual conversion
An eligible casual employee is also able to request conversion to permanent employment as long as:
- They have not refused an offer of casual conversion during the previous six months;
- Their employer has not already refused a request for casual conversion under the NES during the previous six months;
- Their employer has not notified the employee that there are reasonable grounds not to offer permanent employment during the previous six months; or
- The employee’s request is not within 21 days of the employee’s first 12 month anniversary of employment (which is the time that the employer is required to either offer permanent employment or provide notice that it will not be offering permanent employment).
This right to request also applies to eligible casual employees of small business employers.
Interaction with Modern Award conversion rights
Some Modern Awards do still contain a separate clause allowing employees to request casual conversion. The Fair Work Commission is currently considering whether the casual conversion clauses contained in Modern Awards should be removed, because the award clause may give rise to uncertainty relating to the interaction of casual conversion provisions between awards and the Act. As we “watch this space”, employer should be aware that both the NES provisions regarding casual conversion, and any applicable Modern Award clauses allowing employees to request conversion to permanent employment, are still in force.
Key points for employers
Any employers with existing casual employees should undertake an assessment now regarding whether they are eligible for casual conversion.
Given the new provisions are quite prescriptive, employers should also ensure they have mechanisms in place to both identify when casual employees become eligible for an offer of permanent employment, and respond to ongoing requests to convert to casual employment.
Should you have any questions regarding the new casual conversions rights and obligations, please contact Nicola Martin on firstname.lastname@example.org or Melissa Scadden on email@example.com.
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