A full bench of the Fair Work Commission has made orders opening the door for “casual conversion” clauses to be inserted into 85 Modern Awards which do not currently have a similar provision.

What does this mean?

Relevant Modern Awards will allow casual employees to elect to convert to permanent full-time or part-time employment, subject to various criteria and restrictions.

Will it potentially have a significant impact on employers?

In our view, “yes”.

The Commission has determined that the new provisions will likely include the following features:

  1. a qualifying period of 12 months;
  2. a requirement that the casual employee has worked a pattern of hours on an ongoing basis which, without significant adjustment, could continue to be performed in accordance with the full-time and part-time provisions of the relevant Modern Award;
  3. the employer being required to provide all casual employees (whether they are eligible for conversion or not) with a copy of the casual conversion clause within the first 12 months of their initial engagement;   and
  4. that a conversion may be refused by an employer because:
    1. a significant adjustment would be required to the employee’s hours of work to place them in full-time or part-time employment in accordance with the terms of the relevant Modern Award;
    2. it is known or reasonably foreseeable that the employee’s position will cease to exist;
    3. the employee’s hours of work will significantly change or be reduced within the next 12 months; or
    4. “other reasonable grounds” exist based on facts which are known or reasonably foreseeable.

As to what these “other reasonable grounds” might be remains to be seen, but one would assume that matters such as an assessment of the size and needs of the employer’s business would be considered.

In justifying its decision, the Commission noted that a casual loading compensates casuals for the benefits that they would otherwise receive under the National Employment Standards (such as paid annual leave), but it did not take into account other forms of detriment experienced by casual employees. This included not just matters such as casual employees being forced to work while sick, but also their inability to obtain loans from financial institutions.

The relevant clause is yet to be finalised and the Commission has invited interested parties to make submissions in relation to it.

Comment

The Commission’s decision is likely to have a significant impact particularly on those employers who have substantially casualised workforces.

It is envisaged that there will be much debate about the grounds upon which an employer can reject an application for conversion, and this will particularly become an issue where it is difficult for an employer to show any immediate financial detriment as a result.

Where the shifts of casual employees are reduced, or where such employees are not offered shifts, in order for an employer to avoid an application for conversion arising, claims may arise which could have consequences for employers.

Although the final shape the conversion clause is to take, and its commencement date, are yet to be announced, it is a matter of which all employers should be cognisant.

This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.

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