The Fair Work Commission (the Commission) has responded to concerns over the casualisation of the workforce by ruling that modern awards must now contain a conversion clause for casual employees, allowing casual staff to request conversion to full-time or part-time employment after 12 months of employment (subject to certain criteria and restrictions).
The changes are yet to be finalised, and therefore, do not presently apply however, employers need to be mindful for the commencement of the clause in the near future.
How will the casual conversion clause operate?
According to the draft model casual conversion clause developed by the Commission, an employee would be able to activate the provision if the person:
- has been employed on a casual basis for 12 calendar months; and
- has worked a pattern of hours on an ongoing basis for 12 calendar months which, without significant adjustment, could continue to be performed on a full-time or part-time basis in accordance with the relevant award.
Notwithstanding the entitlement to request conversion to full-time or part-time employment, an employer may refuse a casual employee’s request for permanency if:
- it would require a significant adjustment to the casual employee’s hours of work to accommodate them in full-time or part-time employment in accordance with the terms of the applicable modern award;
- it is known or reasonably foreseeable that the casual employee’s position will cease to exist;
- the employee’s hours of work will significantly change or be reduced within the next 12 months; or
- on other reasonable grounds based on facts which are known or reasonably foreseeable.
Upon adoption of the casual conversion clause into modern awards, an employer will be required to provide casual employees with a copy of the clause within 12 months of employment.
Why did the Commission make this decision?
While modern awards ‘notionally’ compensate for the financial benefits of NES entitlements which are not applicable to casuals, the Commission found that this fails to adequately take into account further detriments attached to casual employment.
Further concerns identified by the Commission included that the existing Awards system does not account for the negative impacts of long-term casual employment, including ‘the incapacity to properly balance work and attending to personal and caring responsibilities/commitments’ and ‘changes in working hours without notice’.
In addition, it also found that ‘potential for the sudden loss of what had been regular work without any proper notice or adjustment payment’ and ‘whether any absence from work will endanger future employment’.
What are the practical implications of the Commission’s decision?
The decision of the Commission may present significant implications for employers who have appointed staff on a basis which might otherwise be accommodated by part-time or full-time employment.
Employers should consider any employees who may be impacted by the change and update any relevant policies or procedures to ensure compliance.
Transparency with employees and notification of their rights will also help minimise potential issues. Importantly, employers need to ensure they comply with the recently introduced provisions.
Employer’s in breach of modern awards may face significant penalties under the Fair Work Act 2009 (Cth), including fines up to $54,000, while individuals can also be held personally liable for up to $10,800.