Michelle Dawson, Partner provides an overview of casual conversion and how it may impact your business.
What is casual conversion?
Casual conversion is the ability for casual employees (subject to certain prerequisites) to seek to convert their employment to full time or part time.
- Casual workers make up approximately 21% of Australia's 12.2 million-strong workforce.
- Approximately 30% of all Modern Awards have long provided for casual conversion.
- Casual conversion is the ability for casual employees (subject to certain prerequisites) to elect to convert their employment to full time or part time.
- Casual conversion has been made topical in recent weeks following an announcement by the Fair Work Commission on 5 July 2017, stating that casual conversion will become a part of all Modern Awards.
- The question on every employer's lips is, "will this affect my business, and how?".
How will casual conversion work?
In terms of those Modern Awards which have not historically contained a conversion clause, the Fair Work Commission has developed a draft model conversion clause which will allow a casual worker to "convert" to part-time or full-time employment, provided that certain criteria have been met.
Employers will be required to provide a casual employee with a copy of the provisions of the conversion clause within the first 12 months of their employment.
The criteria for a request to convert to casual conversion are:
- The employee must have worked for the employer for a period of 12 months or more; and
- The employee must, over 12 months or more, have worked a pattern of hours on an ongoing basis, which they could continue to perform as a full time or part time employee, without significant adjustment.
This means that employees engaged for short periods and/or who work irregular shifts or hours will not meet the criteria to convert.
Eligible employees seeking to convert will be required to make a request to the employer in writing.
Employers will be able to reject a request, provided there are reasonable grounds based on facts which are known or reasonably foreseeable (for instance, where the casual employee's position could cease or the hours could significantly change). A refusal must be put in writing with the reasons set out clearly. If the employee seeks to challenge the employer's refusal, then this will be resolved through the dispute resolution provision of the Award.
If a request is granted, it:
- must be recorded in writing; and
- will begin at the commencement of the next pay cycle, after it has been accepted.
What if I am using an Award which already has a casual conversion clause?
Not all existing casual conversion clauses are the same, and the above may not necessarily reflect what a currently relevant conversion clause requires. It is possible that the provisions of all Modern Awards as to conversion could change to reflect the model clause.
How will it affect existing casuals?
For casual employees employed in sectors which do not currently have conversion, it is presently unclear as to what an employer's obligations to those casuals, in the context of the changes, will be. It is likely, however, that employers will be required to issue some kind of notice to all existing casual employees in relation to the new rights to conversion. If the provisions of all Modern Awards as to casual conversion change to reflect the model clause, it is likely that the same will be the case for casuals employed in sectors currently subject to conversion. Employers should also note that the proposed clause prohibits changes to hours to avoid obligations.
How much of a change is this likely to bring to my business?
Apart from the fact that many employers have been subject to conversion requirements for some time (depending on the Modern Award that applies), it is important for employers to remember that, speaking generally, most casual employees want the higher pay and therefore, they want to be employed as casuals. In those circumstances, they won't request conversion, and the actual impact is probably not going to be as significant as the Australian Council of Trade Unions and/or the media would have people (employers and employees alike) believe.
When will the changes commence?
Changes have not yet taken effect, and it is unlikely that conversion under all Modern Awards will commence before September 2017.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.
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