Easy Guide to Casual Conversion

The National Employment Standards (NES) require an employer to offer conversion to permanent employment to a casual employee who achieves 12 months’ service, providing the employee has worked a regular patter of hours on an ongoing basis in the previous 6 months.

Employers (other than small business employers) will be obligated to make the offer of conversion to the casual employee, in writing, within 21 days of the employee achieving the requisite 12 months’ service. The employee must then respond to the offer in writing, within 21 days, stating whether they accept or decline the offer; failure of an employee to respond within 21 days will be deemed to represent the employee having declined the offer to convert.

In limited circumstances, some casual employees will retain a residual right to request conversion to permanent employment during their service, however, casual employees who refuse their employer’s initial offer of casual conversion relinquish the right to request conversion for a further period of at least 6 months.

Reasonable grounds to not offer conversion

Employers will not be obliged to offer conversion if they have “reasonable grounds” not to do so, with “reasonable grounds” including where it is known or reasonably foreseeable that the casual employee’s role will cease to exist in the next 12 months or, where their hours/days of work may significantly reduce in that period. Employers who regard they have “reasonable grounds” not to offer conversion to permanent status will still be obliged to advise the employee in writing that they will not be extending an offer to convert including the details of the reasons for not making the offer. This written notice must be issued within 21 days of the casual achieving 12 months’ service.

Casuals employed before 27 March 2021

In reference to existing casual employees employed as at 26 March 2021, employers must assess before 27 September 2021, whether they are required to make an offer of conversion to a casual employee in accordance with the new NES provisions. Alternatively, the employer must notify the casual employee in writing of the reasonable grounds on which the employer has decided not to make an offer of conversion. This must occur within 21 days of the employer making the assessment.

Small businesses exempt

The obligation to offer a casual employee conversion to permanent employment does not apply to small business employers (i.e. employers with less than 15 employees, on a head count).

Casual loading offset against future claims

Section 545A of the Act of the Fair Work Act 2009 compels a relevant court to offset any identifiable loading paid to a casual employee during their employment, against any subsequent claim for “related entitlements”, if the worker is found not to have been correctly categorised as a casual employee.

“Related entitlements” are identified as paid annual leave, paid personal/carer’s leave, paid compassionate leave, payment for public holidays not worked, notice of termination and redundancy pay.

Casual Employment Information Statement

In the case of new casuals engaged on or after 27 March 2021, the Casual Employment Information Statement must be issued – along with a copy of the Fair Work Information Statement – on commencement of employment.

Casual employees employed as at 26 March 2021 must also be issued with the Casual Employment Information Statement. Small business employers must issue existing casual employees with a copy of the Casual Employment Information Statement as soon as possible after 27 March 2021; all other employers must do so as soon as possible after 27 September 2021.

The Casual Employment Information Statement is accessible here. An updated version of the Fair Work Information Statement is accessible here.  

Interaction with Modern Awards

Most Modern Awards already contain casual conversion provisions, and some include a specific definition of casual employment. With the passing of these changes, the Fair Work Commission (FWC) will be required to review existing casual conversion clauses and casual employment definitions in Modern Awards before 27 September 2021. Where the FWC determines that an existing Modern Award term creates “uncertainty or difficulty” with respect to its interaction with the amended casual employment provisions discussed above, the FWC will issue a determination varying the Modern Award as appropriate.

Employers, except for small business employers, who have correctly complied with existing casual conversion provisions in their relevant Modern Award/s before 27 March 2021, remain obligated to comply with the new casual conversion provisions, discussed above, from 27 March 2021. In some circumstances, this will result in an employer, other than a small business employer, having to make a written offer of conversion to an eligible casual employee before 27 September 2021, even though the same employee may have been issued the model casual conversion clause (assuming their employment was captured by a Modern Award which contained the model casual conversion clause) at a previous time during their employment.

Questions?

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