This is the second of our two-part series on casual employment. It outlines the new rules for the conversion of casual employment to permanent employment.
The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth) (the Amendment Act) commenced on 27 March 2021. The Amendment Act introduces Division 4A to Part 2-2 of the Fair Work Act 2009 (Cth), which provides a pathway for the conversion of casual employees to permanent employment.
Employer Offers
Under the new rules (subject to the exceptions identified below) employers must offer casual employees permanent employment if:
- the employee has been employed by the same employer for at least 12 months beginning the day the employment started; and
- during the last 6 months of that period, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time or part-time employee (as the case may be).
The offer to the employee must be in writing and be for:
- full-time employment (if the employee has worked the equivalent of full-time hours during the last 6 months of employment); or
- part-time employment (if the employee has worked less than the equivalent full-time hours during the last 6 months of employment).
The offer must be given to the employee within 21 days after the end of the initial 12-month period of employment.
When Employer Offers Not Required
Small business employers are not required to offer their casual employees the right to convert to permanent employment. A small business employer is one that employs fewer than 15 employees (determined on a headcount). Casual employees are not included in the headcount unless they work on a regular and systematic basis, but the employees of any associated entities of the employer must be counted.
An employer is also entitled to decline to offer an eligible casual employee the ability to convert to permanent employment if:
- there are reasonable grounds to not make the offer; and
- these reasonable grounds are based on facts that are known, or reasonably foreseeable, at the time of deciding not to make the offer.
The Amendment Act sets out a non-exhaustive list of reasonable grounds upon which an employer may decide not to make an offer:
- the employee’s position will cease to exist in the period of 12 months after the time of deciding not to make the offer;
- the hours of work the employee is required to perform will be significantly reduced in that period; and
- there will be a significant change in either or both of the following in that period:
- the days on which the employee’s hours of work are required to be performed;
- the times at which the employee’s hours of work are required to be performed;
- which cannot be accommodated within the days or times the employee is available to work during that period.
To rely on this exception, an employer must give its employee a notice advising the employee that the employer is not making the offer and the notice must also include details of the reasons for the employer’s decision. This notice needs to be provided to the employee within 21 days at the end of the initial 12 months that the employee has been employed.
Acceptance of Employer’s Offer
Once the employee is provided with the offer, the employee is required to give a written response within 21 days after the receipt of the offer. The response must state whether the employee accepts or declines the offer. If the employee fails to respond within 21 days, then the employee is taken to have declined the offer.
If the employee accepts the offer, then the employer must discuss with the employee the following:
- whether the employee is converting to full-time or part-time employment;
- the employee’s hours of work once the employee becomes permanent; and
- the day the changes take effect.
After the discussion with the employee, the employer must provide written notice to the employee setting out the above. This all must occur within 21 days after the employee has given notice to the employer of their acceptance of the offer.
Employee Requests for Conversion
A casual employee can also request for conversion to permanent employment provided that the casual employee:
- has been employed by the employer for a period of at least 12 months; and
- the employee has in the 6 months prior to the request given to the employer, worked a regular pattern of hours on an ongoing basis, which the employee can continue to work as a full-time or part-time employee, without significant adjustment.
A casual employee is not able to make a request for casual conversion if the employer has (within the employee’s previous 6 months of employment):
- refused to make an offer of casual conversion to the employee;
- provided the employee with a written notice stipulating the grounds for refusal of an offer of casual employment; and
- refused a request for an employee’s request for casual conversion.
A casual employee must ensure that the request to the employer is in writing and contains a request to convert to:
- full-time employment (if the employee has worked the equivalent of full-time hours during the last 6 months of employment); or
- part-time employment (if the employee has worked less than the equivalent full-time hours during the last 6 months of employment).
The employer is required to respond to the employee’s request within 21 days after the request is given to the employer. The employer must respond by stating whether the employer grants or refuses the request.
The employer must consult with the employee before any refusal is given. The refusal must also be on reasonable grounds, which are based on facts that are known, or reasonably foreseeable, at the time of refusing the request.
The grounds for refusal are the same as those for if the employer refuses to make an offer of permanent employment to a casual employee, which includes (but not limited to):
- the employee’s position will cease to exist in the period of 12 months after the time of deciding not to make the offer;
- the hours of work the employee is required to perform will be significantly reduced in that period; and
- there will be a significant change in either or both of the following in that period:
- the days on which the employee’s hours of work are required to be performed;
- the times at which the employee’s hours of work are required to be performed;
which cannot be accommodated within the days or times the employee is available to work during that period.
If the employer grants the employee’s request, the employer must within 21 days after the request is given, consult with the employee on:
- whether the employee is converting to full or part-time employment;
- the employee’s hours of work after the conversion to permanent employment; and
- the day on which these changes are to take effect.
The employer must then give the employee written notice confirming the above.
What this Means for Employers
It is critical that employers audit their arrangements with current casual employees. This should include an audit of their work patterns and length of service to determine whether there are any casual employees that would qualify for an offer to convert to permanent employment.
There is a transitional period of 6 months from the commencement of the Amendment Act on 27 March 2021. The transitional period means that casual employees cannot bring requests for casual conversion, and employers are not required to offer the conversion, for this 6-month period, which will expire on 27 September 2021.
It is vital that the audit occurs as soon as possible, to ensure that the employer is prepared for when the transitional period ends.
Further information and contact details
For more information contact Leonie Kyriacou on l.kyriacou@pigott.com.au or John Pegg on j.pegg@pigott.com.au.
This article is intended to provide general information in summary form on a legal topic, current at the time of publication. The contents do not constitute legal advice and should not be relied on as such. Formal legal advice should be sought in specific circumstances.
© Pigott Stinson 2021