What Is Casual Conversion and What Does It Mean for Your Business?

Casual employment has become increasingly popular amongst both employers and employees due to its flexible nature and the ability to avoid what can be significant employment entitlements, due to the 25% casual loading that is paid to casual employees. However, a recent decision by the Fair Work Commission with regards to “casual conversion” may lead to changes within your business should you employ casual staff.

 

What Is Casual Conversion?

As of 1 October 2018, it was a requirement for all modern awards to include a clause allowing for casual conversion. A casual conversion clause means that a casual employee, who has been employed for a period of at least 12 months (or 6 months in some awards), and during those 12 months has worked systematic hours without any significant changes, can request to be converted to a full-time or part-time employee.

If a casual employee works regular hours that are equivalent to that of a full-time or part-time employee and they wish to have their employment converted, they can make the request in writing to their employer.

 

Can You Refuse an Employee’s Request to Be Converted to a Full-Time or Part-Time Employee?

Yes you can.

As long as an employer has reasonable grounds, they are able to refuse the employee’s request to be converted to a full-time or part-time employee. The model term that has been included in most modern awards provides for the following ‘reasonable grounds’ to refuse an employee’s request:

  • It would require a significant adjustment to the casual employee’s hours of work in order for the employee to be engaged as a full-time or part-time employee in accordance with the provisions of this award – that is, the casual employee is not truly a regular casual employee as defined…;
  • It is known or reasonably foreseeable that the regular casual employee’s position will cease to exist within the next 12 months;
  • It is known or reasonably foreseeable that the hours of work which the regular casual employee is required to perform will be significantly reduced in the next 12 months; or
  • It is known or reasonably foreseeable that there will be a significant change in the days and/or times at which the employee’s hours of work are required to be performed in the next 12 months which cannot be accommodated within the days and/or hours during which the employee is available to work.

The model term also states that “for any ground of refusal to be reasonable, it must be based on facts which are known or reasonably foreseeable.”

If an employer does decide to refuse an employee’s request for conversion, they must provide their reason for the refusal to the employee in writing within 21 days of the employee’s request. Further, if an employer does choose to refuse the employee’s request, they are only able to do so after there has been consultation with the employee.

 

What Does This Mean for You and Your Business?

Firstly, you should review the casual conversion clause in any award that is relevant to your business and your employees. Although most awards will contain the model term which is referred to above, some awards have modified versions of this term so it is extremely important that you understand the conversion clause in the award that is relevant to you.

Secondly, and most importantly, it is also a requirement that you provide all casual employees with a copy of the casual conversion clause that is contained within the award they are covered by. You are required to provide new casual employees with a copy of the clause within 12 months of the start of their employment.

Any casual employee who commenced their employment prior to 1 October 2018 was required to be provided a copy of the clause by 1 January 2019. If you have not already provided your casual employees with a copy of the clause, you should do so as a matter of urgency.  

Finally, keep in mind that a casual conversion clause is not an attempt to force employers to convert all of their casual employees to full-time or part-time employees. In some circumstances, a casual employee may want to remain a casual employee, or in some situations, your casual employees may not meet the criteria to be converted to full-time or part-time employment. However, you must remember that employees do have this right, and if there’s no good reason for them not to be, then you may be required to convert them to full-time or part-time employees.  

If one of your employees requests for their employment to be converted to full-time or part-time and you’re not sure whether or not you are able to refuse this request, it is always best to seek legal advice to ensure you are complying with all of your obligations under the relevant award and the Fair Work Act.

 

Need Some More Advice on Casual Conversion?

If you would like further advice on casual conversion or a request that an employee has made, MDL’s Employment Law team can help.

To discuss your situation, contact McCarthy Durie Lawyers on 07 3370 5100 or fill out the contact form below