Australia: Final call for casual conversion

Employers have just one month left to take action to comply with the new casual conversion provisions under the Fair Work Act 2009 (Cth) (FW Act).

In this article, we provide a recap on the changes to casual conversion, key timeframes for employers, and the steps that employers must take before 27 September 2021.

Recap on the changes to casual conversion

As discussed in our previous article, the FW Act was amended in March 2021 to include a variety of changes to casual employment. Those changes included, for the first time, a statutory definition of casual employment, as well as a casual conversion entitlement under the National Employment Standards (NES).

The FW Act introduced a requirement for employers (other than small business employers) to make an offer to casual employees to convert to full-time or part-time employment, as well as a right for casual employees to request to convert to permanent employment, if the following conditions are satisfied:

• the casual employee has been employed by the employer for 12 months; and
• they have worked a regular pattern of hours on an ongoing basis for at least the last 6 months; and
• they could continue working these hours as a full-time or part-time employee without significant adjustment.

Critically, transitional arrangements are currently in place in relation to casual employees who were employed prior to 27 March 2021. These transitional arrangements require employers to conduct assessments for these existing casual employees by 27 September 2021. Where a casual employee satisfies the criteria, employers will be required to make the employee an offer of casual conversion in writing within 21 days of the date of the assessment (but no later than 27 September 2021).

After this initial transition period ends on 27 September 2021, employers have an obligation to assess casual employees within 21 days of the end of their 12 month anniversary and either make an offer of casual conversion or provide written reasons for the refusal to make the offer.

Casual employees can also request to become a full-time or a part-time employee after the transition period, but they cannot make such a request if in the period of 6 months before the request is made:

• the employee has refused an offer of casual conversion from the employer;
• the employer has given the employee notice that casual conversion will not be offered on reasonable grounds; or
• the employer has refused a request for casual conversion by the employee.

The FW Act also recently introduced a requirement for employers to provide each of their casual employees the Casual Employment Information Statement, accessible here.

What is the casual conversion assessment process?

During the initial transition period, employers must assess all existing casual employees employed before 27 March 2021, and provide any offer of casual conversion, or notification of not making an offer, in writing before or on 27 September 2021.

Should a casual employee satisfy the criteria and accept an offer to convert, the employer must discuss the following with the employee, and then notify the employee:

• whether the employee is converting to full-time or part-time employment;
• the employee’s hours of work after the conversion takes effect; and
• the day the employee’s conversion will take effect (which will be the first day of the employee’s first full pay period which starts after the day the notice is given, unless otherwise agreed).

Employers should also take particular note of any modern award or enterprise agreement obligations when engaging part-time employees, such as specifying the number of hours to be worked on each particular day of the week and the times at which the employee will start and finish work on each particular day.

Should a casual employee not satisfy the criteria to convert, employers must notify the casual employee that:

• they are not making an offer of conversion under section 66B the FW Act; and
• details of the reasons for not making the offer (including that the casual employee has not met the 6 months regular and ongoing hours requirement and/or the significant adjustment requirement, or of any “reasonable grounds” on which the employer has decided not to make the offer).

Where a casual employee is otherwise eligible to convert to full-time or part-time employment, an employer will not be required to make an offer if there are reasonable grounds not to and the reasonable grounds are based on facts that are known, or reasonably foreseeable, at the time of deciding not to make the offer. Such a decision must not be based on speculation or some general lack of certainty about the employee’s future employment.

The casual conversion provisions provide some examples of “reasonable grounds”:

• the employee’s position will cease to exist in the period of 12 months after the time of deciding not to make the offer;
• the hours of work which the employee is required to perform will be significantly reduced in that period;
• there will be a significant change in the days on and/or times at which the employee’s hours of work are required to be performed in that period which cannot be accommodated within the days and/or times the employee is available to work during that period; or
• making the offer does not comply with a recruitment or selection process required by or under a law of the Commonwealth or a State or a Territory.

However, these are examples and are not an exhaustive list. There may be other reasonable grounds on which an employer can decide not to make an offer. In assessing this, all circumstances must be taken into account, including the needs of the employer’s business and the nature of the employee’s role.

Important process considerations for employers

Employers will need to consider implementing systems and processes to ensure compliance with the new casual conversion obligations. The implementation of automatic systems (e.g. online / data solutions) will be particularly important for employers with large casual workforces.

Employers may consider taking the following steps:

• implementing automatic systems such as an alert system when a casual employee is nearing 12 months of continuous employment (noting that some employers may already have similar processes in place for any modern award or enterprise agreement conversion triggers);
• determining appropriate “guardrails” or “triggers” that automatically assess whether employees have worked a regular pattern of hours on an ongoing basis in the preceding 6 months. Of course, an employer will need to conduct an individual assessment on a case-by-case basis, however such “guardrails” or “triggers” could include:
  1. a minimum number of weeks the casual employee should work in the preceding 6 months;
  2. whether a casual employee has worked the same or similar days and hours per week (including both particular days of the week and total number of weekly hours);
  3. whether a casual employee has worked the same or similar number of hours on a particular day of the week; and
  4. whether a casual employee has worked the same or similar starting and finishing times on a particular day of the week.
• preparing template notices, in accordance with the requirements under the FW Act, for:
  1. making an offer of casual conversion;
  2. not making an offer of casual conversion; and
  3. granting or refusing an employee request for casual conversion.

What about employees covered by a modern award or enterprise agreement?

The Fair Work Commission (FWC) is currently reviewing all modern awards to ensure that their casual employment provisions remain consistent with the FW Act. This week, the FWC confirmed variations to casual terms in five “stage one” awards, confirming that as of 27 September 2021, casual conversion provisions in the General Retail Industry Award 2020, Hospitality Industry (General) Award 2020, Manufacturing and Associated Industries and Occupations Award 2020, Educational Services (Teachers) Award 2020 and Pastoral Award 2020, will be replaced with a reference to the new FW Act casual conversion provisions.

The FWC has divided the remaining modern awards into four groups as part of its “stage two” review, and has so far published draft determinations for another 30 modern awards including the Aged Care Award 2010, Aircraft Cabin Crew Award 2020, Children’s Services Award 2010, Fast Food Industry Award 2010 and Social, Community, Home Care and Disability Services Industry Award 2010 here. Subject to any comments made by interested parties this week, these modern awards will similarly be amended to include a reference to the new FW Act casual conversion provisions. In addition, on 26 August 2021 the FWC published its provisional view that 35 state reference public sector and enterprise modern awards be amended to include a reference to the new FW Act casual conversion provisions.

This means that as of 27 September 2021, employers covered by certain modern awards will no longer have to comply with both their casual conversion obligations under the modern award and the FW Act. For example, employers under the certain modern awards will no longer have to provide their casual workforce with a copy of the relevant casual conversion clause within their first 12 months of employment.

The FWC’s review of the remaining awards must be finalised by 27 September 2021. Employers should keep an eye out for the modern awards relevant to their casual employee workforce and review any changes made by the FWC on 27 September 2021.

In addition, for employees covered by enterprise agreements which contain their own casual conversion provisions, the new casual conversion provisions under the NES will prevail to the extent that the term of any enterprise agreement is detrimental to the employee in any respect, when compared to the NES provisions. Employers should remain vigilant in checking whether their enterprise agreements contain additional obligations when it comes to casual conversion. This will also be a factor for compliance with the Better Off Overall Test (BOOT) when an employer is seeking the approval of an enterprise agreement.

This article was prepared by Jonathan Stamatelos, Senior Associate, and Jessica Nashed, Graduate.

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