ASF TAKEAWAYS: Before 27 September 2021, employers (other than small businesses with less than 15 employees) need to assess whether their existing casuals are eligible to be offered permanent employment. This means that non-small businesses must offer casual's permanent employment in writing.
On 27 March 2021, sections of the Fair Work Act relating to casual employees were amended. This change impacts all businesses that use casual employees, with the Fair Work Ombudsman requiring that casual employees have the opportunity to convert to permanent employment. This is known as casual conversion.
The obligations differ based on whether or not the employer is considered to be a "small business employer". This is defined as a business with less than 15 employees. The headcount includes;
- full-time and part-time employees;
- casual employees if they are employed on a regular and systematic basis and it is reasonably expected that they will continue to have ongoing employment;
- employees in associated entities of the business (i.e. related companies).
Note that this is not an assessment based on FTE - if a casual is employed for 1 hour per week on an ongoing basis, he/she/they are counted as 1 in the headcount.
Businesses need to assess every casual employed as at 27 March 2021 and determine if;
- they had been employed for 12 months;
- is there a regular pattern of hours in the 6-month period before assessment time and can they continue to work as a PT/FT employee:
If both criteria's are YES, and there are no 'reasonable grounds' justification, an offer to convert from casual to PT/FT permanent position must be made before 27 September 2021.
This flowchart from Employment Innovations depicts the changes.
WHAT NEEDS TO BE DONE BY SMALL BUSINESS EMPLOYERS?
Small businesses (with less than 15 employees) do not have to pro-actively offer conversion to permanent employment, but they have to consider requests from casual employees to convert. The right for employees (who meet the relevant criteria discussed above) to request conversion is now law. This applies from 27 September 2021.
WHAT NEEDS TO BE DONE BY NON-SMALL BUSINESS EMPLOYERS?
For businesses with 15 employees or more, the obligations have increased, and will require continual assessment;
- Until 26th September 2021, non-small business employers must assess any casual employee employed as at 27 March 2021 and notify them whether or not they are entitled to convert to permanent employment (regardless of how long they have been employed). This must be done in writing. That is, if a casual employee has been part of the business for 10 months, you must write to them to notify them why they did not qualify for casual conversion.
- From 27 September 2021 onwards, non-small business employers will have to offer casual conversion to any casual employee who satisfies the criteria listed above (12 months of employment/6 months of regular consistent hours)
WHAT ARE REASONABLE GROUNDS NOT TO OFFER CONVERSION?
The Act allows employers not to make an offer, or refuse to accept a request for casual conversion, on limited grounds. Refusals will have to be based on facts that are known or reasonably foreseeable.
Reasonable grounds for deciding not to make an offer can include that, in the next 12 months:
the employee’s position won’t exist - for example, it's a maternity leave cover contract.
the employee’s hours of work will significantly reduce.
the employee’s days or times of work will significantly change, and that can’t be accommodated within the employee’s available days or times for work.
Reasonable grounds can also include:
making the 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 a significant adjustment to the employee’s work hours for them to be employed full-time or part-time.
An employer cannot reduce or change an employee's hours of work, or terminate their employment, to avoid having to offer or accept a request for casual conversion. The right for casual conversion is protected under the Act and needs to be adhered to.
If you need more details on the above, please call the ASF team to discuss.