Since the 1st October 2018, casual employees now have a greater chance in becoming permanent employees. The Fair Work Commission has amended 98 Modern Awards to allow a mechanism by which casual employees of 12 months can request a transfer to be a permanent employee.
The Model Clause that affected the Modern Awards, is a lengthy one and this article does not attempt to set it out in full. But, in short, the requirements are:
- it applies to a regular casual employee - meaning he/she had to be employed by the employer in the preceding 12 months on an on-going basis without significant adjustments.
- the request for conversion must be consistent with the pattern of hours previously worked. In other words, a casual who worked less than full time hours cannot request full time permanent employment, but is limited to be converted to a position that has a pattern of hours consistent with the casual employment.
- the request must be in writing; and
- the employer may only deny the request on ‘reasonable grounds’.
The Model Clause goes further and sets out what is deemed a refusal on ‘reasonable grounds’ namely:
- the conversion would require a significant adjustment to the casual employee’s hours of work if the permanent engagement is to comply with an Award;
- it is not known or reasonably foreseeable that the casual’s position will cease to exist within the next 12 months;
- it is not known or reasonably foreseeable that the hours of the casual will be reduced or not over the next 12 months;
- it is not known or reasonably foreseeable that there will be significant changes in the days and/or times the casual will be required over the next 12 months.
Any ground of refusal must be based on fact which are known or reasonably foreseeably and the employer must provide reasons for the refusal in writing to the employee. The Model Clause then continues to set out various steps the employer and employee must take to affect the conversion and also other consequential provisions to avoid either party from abusing the process.
It is important to remember that, generally speaking, casual employees earn approximately 25% higher pay (due to casual loadings in most Modern Awards) and as a result, it is likely that many would want to remain employed as a casual. It is therefore difficult to predict what the actual effect of this new provision will have on businesses. Be that as it may, employers who fail to comply with these provisions may be liable for penalties and in some instances, might be liable for claims from casual employees for so-called ‘permanent’ entitlements (such as annual leave, personal (or sick) leave and other notice entitlements).
In our view, Employers must make sure they are familiar with their obligations under these new provisions and in particular, with the provisions of relevant Modern Awards.
Importantly, employers should:
- distribute a copy of the Model Clause to all casual employees at their first engagement; and
- provide all casuals who were employed as of 1st October 2018, with a copy of the relevant conversion clause before 1 January 2019.