Casual employment is a favoured type of employment across many different industries due to the flexibility it provides both organisations and employees. However, casual employees are not granted the same job security as their permanent counterparts and lack entitlements such as (but not limited to) sick leave and annual leave. In response to this, the Australian Government introduced a number of changes to the Fair Work Act 2009 (Cth) relating to casual employment. The key amendment introduced provisions related to the conversion of casual employees to permanent employees, requiring non-small business employers to assess and offer permanent employment to any eligible casuals by the 27th of September 2021.
Employers (except small business employers) now have an ongoing obligation to ensure they are keeping up with casual conversion and ensuring they are regularly assessing and making offers of casual conversion to eligible employees.
What is casual conversion?
Casual conversion is the process by which a casual employee can become a permanent employee. This provides casuals with a clear path to obtaining job security and entitlements such as (but not limited to) annual leave and sick leave. Casual conversion acts as a method to prevent employers from exploiting casual workers and avoiding providing job security.
Casual conversion not only benefits the employee as they are provided with a chance to gain job security, but also the employer as it can provide a more stable and reliable workforce and in turn, reduce costs associated with high staff turnover.
The Fair work Act 2009 (Cth) provides casual employees the right to request casual conversion after a prescribed length of time. This period is usually 12 months of regular and systematic casual employment with the same employer.
What do you need to do as a business?
At a casual employee’s 12-month anniversary, an assessment should be performed to determine if they are eligible for casual conversion. In order to be offered casual conversion casuals must meet the following criteria as part of the assessment:
- The employee must have been employed by the same employer for at least 12 months.
- The casual employee must have worked a regular pattern of hours on an ongoing basis for at least the last 6 months.
And the casual employee could continue to work these hours as a full-time or part-time employee, without significant changes
What if one of my employees is eligible?
If your assessment has deemed an employee is eligible for casual conversion, you as an employer are obliged to follow the below process:
- Employers are required to make a written offer to the casual employee to convert their employment to permanent employment within 21 days of the employee’s 12-month anniversary. Whether part-time or full-time employment is offered will depend on the average number of hours the employee has worked for the past 6 months.
- To accept an offer to convert their employment, the casual employee is required to respond in writing within 21 days of receiving the offer. If an employee does not respond within this time frame, it can be assumed the employee has declined the offer.
- If the employee rejects the offer at the time, or has had their request to convert rejected, the employee may not make a request to convert their employment for another 6 months. If the employee does make a request after 6 months, a new assessment must be conducted.
- A response to an employee’s request to convert, or acceptance of an offer to convert to permanent employment must be provided within 21 days of the receipt of the request or acceptance.
Not making an offer of conversion
If an employer decides not to offer casual conversion to an employee, the employer must write to the employee again within 21 days after the employee’s 12-month anniversary detailing:
- that the organisation is not making an offer of casual conversion
- the reasons for not making an offer.
As an employer, the only reasons for not making an offer of casual conversion are as follows:
- The employee has not worked a regular pattern of hours on an ongoing basis for at least the last 6 months which they could continue to work as a full or par-time employee without significant changes, or
- The business has reasonable grounds for not making an offer such as:
- The employees’ position won’t exist in the next 12 months
- The employees’ hours of work will significantly reduce in the next 12 months
- The employees’ days or times of work will significantly change and can’t be accommodated within the employee’s availability
- Making an offer would not comply with a recruitment or selection process required by or under a Commonwealth, State or Territory Law
- The employer would have to make significant adjustments to the employee’s hours for them to be employed on either a full or part-time basis.
We have produced a free guide on the conversion process, which includes a flowchart of the steps to take when dealing with casual conversion. Employment Innovations’ clients with HR Connect or HR Partner subscriptions also have access to template casual conversion letters as part of their subscription.
As an employer, it is crucial to be aware of your obligations when it comes to casual conversion. The process is an onerous task that requires you to be keeping track of your workforce’s anniversary dates and pattern of hours required for the assessment. While casual conversion may be seen as a burden to some, casual conversion can provide a more stable and reliable workforce and in turn, reduce costs associated with high staff turnover.
Small business obligations
Small businesses (those with less than 15 employees) do not have an obligation to proactively offer casual conversion at the 12 month mark, however they have to consider any requests for casual conversion after an employee has been employed for this long. They can only reject such a request on the grounds set out above.
About Employment Innovations
Employment Innovations is one of Australia’s leading providers of employment services designed to increase productivity and ensure compliance. Its services and solutions include all the tools that every Australian small to medium sized employer needs – including workplace advice, legal services, payroll solutions, migration, human resource management and HR software.
The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.