Casual Conversion Clause to be Introduced Into Modern Awards

As part of the Fair Work Commission’s (‘FWC’) modern award review, the FWC Full Bench (‘FWCFB’) has handed down its decision on the union movement’s “Casual and Part-time Employment Case” and in doing so, it has put forward a draft model casual conversion clause (‘Casual Conversion Clause’). The decision to include a Casual Conversion Clause into modern awards will have significant implications for employers who engage modern award covered casual employees.

The Casual Conversion Clause will provide casual employees with the right to request, subject to specific rules and restrictions, their employer to convert their employment status to part-time or full-time. These employees will have the option to apply for more permanent employment after 12 months of regular employment, subject to the qualifier that the employee has worked a pattern of hours on an ongoing basis that could continue to be performed as a permanent employee.

Employers will possess the right to refuse requests on “reasonable grounds”, but they will be unable to avoid the Casual Conversion Clause, with the FWCFB requiring employers to provide casual employees with a copy of the Casual Conversion Clause within the first 12 months of employment.

The Casual Conversion Clause has been labelled as an important “safeguard” for casual employees in the modern workforce who miss out on many of the protections contained in the National Employment Standards (‘NES’) in exchange for payment of a casual loading. The FWCFB justified the need for the change by highlighting several “detriments [of] casual employment” to include:

  • Potential sudden loss of employment without payment/notice;
  • Lack of career path;
  • Poorer health and safety outcomes; and
  • Employee concerns that an absence from work will endanger their ongoing employment.

The FWCFB determined the casual conversion clause to be necessary as unrestricted use of casual employment has the potential to undermine the fairness and protection offered by the safety net of modern awards and the NES.

In reaching its decision, the FWCFB had regard to statistics from the “Household, Income and Labour Dynamics in Australia Survey”. The data for casual employees indicated that: 29% of casual employees work full time equivalent hours, 60% had worked regular shifts for six or more consecutive months, and 28% had worked for their employer for at least three years.

Despite evidence generally indicating that employers have not exploited their power to indefinitely engage casual workers, the FWCFB also referred to evidence that some employers deny worker requests to be employed on a more permanent basis.

The restrictions contained in the Casual Conversion Clause provide welcome relief to nervous employers, with provision for an employer to reasonably refuse an employee’s request on the following proposed grounds:

  • the casual employee is not truly a regular casual, so the conversion would require a significant adjustment to the casual employee’s hours of work;
  • The casual employee’s position will (or it is reasonably foreseeable) cease to exist within the next 12 months;
  • the hours of work will (or it is reasonably foreseeable) be significantly reduced in the next 12 months; or
  • the required work pattern over the next 12 months will (or it is reasonably foreseeable) significantly change to a pattern that will not fit with the employee’s availability to work.

The FWCFB has invited interested parties to make further submissions on the terms of the Casual Conversion Clause. We anticipate that casual conversion clauses will be implemented in modern awards in Australia in the near future.

If you would like to make a submission to the FWC or have any queries regarding the potential impact of the Casual Conversion Clause on your business, please contact Nick Stevens, Megan Cant or Jane Murray.

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