On 5 July 2017 the Fair Work Commission (FWC) issued a preliminary determination in relation to the rights for casual employees to convert to permanent employment under 85 modern awards.
Some awards, such as the Food, Beverage and Tobacco Manufacturing Award 2010, already contain rights for certain casual employees to request conversion to permanent employment after a qualifying period, which the employer can only refuse on certain grounds. The FWC’s decision foreshadows that the same right will be extended to workers under a much larger number of awards, including awards applying to retail, hospitality and fast food workers.
Underlying the FWC’s decision was a concern that, in some cases, long-term engagement of casual employees can undermine minimum safety net entitlements, such as rights to sick leave, carer’s leave and notice of termination. While the FWC found that casual pay loadings fairly compensate employees for giving up these entitlements in many circumstances, it also found that the negatives outweighed the positives for some, particularly long-term mature age casuals who are financially dependent on their employment. Specifically, the FWC found that such employees are more likely to attend work while sick, be unable to care for sick family members, not take holidays, and have difficulty obtaining loans.
What the FWC proposes
The FWC has issued a draft casual conversion clause for inclusion in 85 modern awards which do not currently provide for casual conversion. Importantly, the draft clause does not provide an automatic right for eligible casuals to convert to permanent employment, which unions had sought. Rather, it provides a mechanism by which eligible casuals can request conversion, with the employer only entitled to refuse that request on certain (but broad) grounds.
The draft clause has four key features.
- Employees must have worked a 12-month qualifying period.
- To be eligible to request conversion, the casual must have worked a pattern of hours on an ongoing basis which, without significant adjustment, could continue on a permanent basis.
- Employers must provide all casual employees with a copy of the casual conversion clause within 12 months of commencing employment.
- Conversion to permanent employment can be refused on reasonable grounds (including that it would require a significant adjustment to the employee’s hours or it is reasonably foreseeable that the employee’s position will not cease to exist within the next 12 months). Critics of the model clause have suggested that this gives employers too much scope to refuse a request to become a permanent employee.
The FWC has also determined that casuals employed under several awards, including awards applying to hospitality and retail workers, should be paid at overtime rates where their hours of work exceed a defined amount.
What does this mean?
The FWC has given interested parties until 2 August 2017 to respond to its proposals. As such, we need to wait and see exactly what changes occur to each award.
However, at the very least, employers can expect that the FWC’s ultimate decision will make it more difficult to engage casual employees on a long-term basis. Employers also need to prepare themselves to notify casual employees of conversion rights within the first 12 months of employment.
How can we help?
If you have any queries about your obligations to casual employees, please get in touch with us. We can assist you to ensure you are complying with your obligations, to determine whether a casual is eligible to request conversion to permanent employment, and to determine whether you have good grounds to refuse a request.