Casual employees may request conversion to permanent employment from 1 October 2018.
Many SMEs operate their business utilising a casual workforce. Is this still the best approach for your business? It’s a question that business owners need to ask and think about. Particularly, now that casuals may exercise their right to convert their casual employment to permanent. Also, with the Courts finding long term casuals to be ‘permanent’ employees, entitled to annual leave payments, that’s another good reason.
From 1 October 2018, a Casual Conversion Clause will be inserted into another 84 Modern Awards. If you operate your business with a casual workforce be mindful of the Casual Conversion Clause. It will affect your business. This communication provides you with what you need to know about the Casual Conversion Clause to mitigate your business risk.
Background
Several Modern Awards already provide for Casual Conversion after 6 or 12 months, depending upon the Award. Yet many SMEs are unaware of its existence and their obligations as an employer to their casual employees. Many casuals prefer the higher hourly rate of pay and greater flexibility than permanent full-time or part-time employment offers, so the question about converting to permanent employment is seldom raised. Your casuals may also be unaware of their rights.
The Awards listed below provides a ‘sample’ of some of the Awards that already provide for Casual Conversion:
- Building & Construction General On-site Award 2010 (after 6 months’ service)
- Hospitality Industry (General) Award 2010 (after 12 months’ service)
- Registered and Licensed Clubs Award 2010 (after 12 months’ service)
- Timber Industry Award 2010 (after 6 months’ service)
- Quarrying Award 2010 (after 6 months’ service)
- Vehicle Manufacturing, Repair, Services and Retail Award 2010 (after 6 months’ service)
Why more Modern Awards will provide for Casual Conversion
The Fair Work Commission (FWC) has formed the view that a casual’s right to convert their employment status from casual to permanent employment will address concerns relating to the permanency of employment. Particularly, for casual employees who work regular or systematic part-time or full-time hours (regular casuals) on an ongoing basis.
Focus on the Positives
- Converting casual employees to full-time or part-time employment has the potential to save your business money as you no longer have to pay casual loading. Consider utilising the Award flexibility provision of the relevant Award, to agree the best outcome for your business and the employee. This approach may assist you in maintaining a flexible workforce when a casual exercises their right to convert to permanent employment.
- The stability of your workforce may increase as your casuals convert to permanent employment. Your employees continue to work regular hours yet trade casual loading for leave entitlements and job security.
- Importantly, you mitigate your risk of your long term regular casual employees (who have worked the same hours and same shifts on a regular ongoing basis) seeking payment for leave entitlements down the track. In a recent case, WorkPac Pty Ltd v Skene, Mr Skene, a casual employee was found on appeal by the Federal Circuit Court of Australia, to be a permanent employee entitled to annual leave under a 2007 Workplace Agreement, for the period of his employment.
Good reasons to be mindful of the Casual Conversion Clause
Casual employees may exercise their right to convert on more than one occasion. It’s not a ‘one time only’ event.
- You have until 1 January 2019, to notify (preferably in writing) all your casual employees (not just your regular casuals) and provide them with a copy of the relevant Award’s Casual Conversion Clause. For any new casuals employed post 1 October 2018, you have 12 months from the actual date of hire.
- A casual employee exercising their right to request to convert their casual employment to permanent employment, must provide you with their request in writing.
- If a casual employee is a good worker and you want to retain them in your business, it makes good sense to agree to their request to convert.
- You may only reject a casual employee’s request to convert on ‘reasonable business grounds’(in writing) after you have had a discussion with them. The onus is on the business owner to demonstrate to a casual employee that there are ‘reasonable business grounds’ to reject their request.
- You have 21 days upon receipt of a casual employee’s written request to convert, to reject their request and provide your reasons for your decision in writing. If a casual employee does not accept your decision, then the matter must be managed under the dispute resolution procedure in the relevant Modern Award.
- It is critical that you take the time to document (always include dates) on your casual employee’s file:
- you provided them with information about their right to request to convert from casual to permanent employment
- your offer to convert was refused or accepted? Clearly document this on the employee's file.
- you make detailed notes of any conversations and/or meetings had with a casual employee(s).
By documenting this type of information, you will be able to demonstrate (if required) that you complied with your obligations and notified your casual employee(s) of their right to request to convert.
- A casual employee who has passed the service period (6 or 12 months dependent on the relevant Award), maintains their right to request to convert to permanent employment throughout the lifespan of their employment. It’s not a ‘one time only’ event.
- Importantly, the casual employee’s conversion to permanent employment must be on a ‘like for like’ basis. That is, if the casual employee has been working full-time hours you must convert their employment to permanent full-time employment, unless otherwise agreed between yourself and the employee.
Examples of ‘reasonable business grounds’
Reasonable business grounds on which a business owner may reject a request to convert casual employment to permanent include:
- The casual employee works strictly on an ‘ad hoc’ basis (Hours of work fluctuate regularly to meet the needs of the business. Their hours do not form a regular work pattern).
- You would have to make significant adjustments to the casual employee’s hours of work to accommodate them in full-time or part-time employment.
- You know or it is reasonably foreseeable, that the casual employee’s hours of work will significantly change or be reduced within the next 12 months.
- You know that the casual employee’s position will not exist in the reasonably foreseeable future. For example, your Lease will expire in 6 months and you will close the business.
Steps to prepare for Casual Conversion
- Analyse your work force. Consider all options. Particularly, the positives of engaging your regular casuals (the ones you want to retain) on a permanent basis?
- Put in place a system to monitor the hours that your casuals work to clearly identify your ‘regular’ and ‘ad hoc’ casuals. This approach will alert you to any changes that need to be made to your rosters if you elect to maintain your casuals strictly on an ‘ad hoc’ basis.
- Ensure your system alerts you before your new casual hires achieve 6 and/or 12 months of service (whichever period is relevant to the Award) so you can notify them of their right to request to convert to permanent employment.
- Implement a notification procedure to ensure your compliance before 1 January 2019.
‘Casuals’ are in the Spotlight. Now is the time to analyse your workforce. Particularly, for your long term casuals who continue to work regular and systematic hours (regular casuals).
Ulton provides HR advice and consulting services to SMEs throughout Queensland. Contact Christine Guy on (07) 4154 0413 or cguy@ulton.net for advice. Christine is happy to talk with you about meeting your Casual Conversion obligations under a Modern Award(s).
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