Published August 2021
As September is fast approaching, this is an important reminder for businesses with 15 or more employees to be aware of their obligations around casual conversion and what actions need to be taken by the 27th of September 2021.
A RECAP ON WHAT CHANGED IN MARCH 2021
On 27th March 2021 new changes were introduced to the Fair Work Act 2009 around casual employment. In summary, these changes included:
a. A New Definition of Casual Employment
An individual will be considered a casual employee when an offer of employment “is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work…”.
b. New Casual Conversion Requirements & Entitlements
That is, converting casuals to permanent employment after 12 months of service, in some circumstances. These entitlements are now included in the National Employment Standards (NES). Further details about the casual conversion process and entitlements are below.
c. Casual Loading Offset (no more double dipping)
Where a court determines that a casual Employee should have been permanent, any back payments or entitlements owing to them (for annual leave, public holidays etc.), may be reduced (offset) by the 25% casual loading already paid to them. Note that this reduction must be requested and relies on the employment contract containing a suitable set-off clause.
d. New Casual Employment Information Statement
Must be provided to all new and existing casual Employees in addition to the Fair Work Information Statement you should already be providing. This is available on the Fair Work website – here.
ACTION TO BE TAKEN BY 27 SEPTEMBER 2021
Assess each casual employees’ circumstances; and
Inform each casual employee whether they will be offered permanent employment or whether the employer is not intending to offer permanent employment.
Offers of permanent employment should be made in most circumstances if:
The employee has been employed for 12 months; and
The employee has worked a regular pattern of hours on an ongoing basis for at least the last 6 months; and
No significant changes need to be made if the employee is to continue working their hours as a full-time or part-time employee.
If you intend to offer permanent employment, the offer must be in writing and should reflect the hours worked by the employee.
For casuals who have not yet reached 12 months of service, refer to the last section of this update.
Reasonable grounds for not offering permanent employment under the casual conversion provisions of the NES include that, in the next 12 months:
The position won’t exist;
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.
Other reasonable grounds include:
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;
Making an offer would not comply with a recruitment or selection process required by or under a Commonwealth, State or Territory law.
If you are not offering permanent employment to a casual employee, you must still put this in writing with the reasons why an offer isn’t being made.
No matter your circumstances, we’ve got the letter templates you need to document everything the right way. Download them from our website here.
Remember, employers must not take any shortcuts to avoid having to offer or accept requests for casual conversion. For example, Employers cannot change hours of work or terminate a casual employee just for the purpose of making them not eligible for casual conversion.
FOR CASUALS WHO HAVE NOT REACHED 12 MONTHS OF SERVICE
For new casuals starting or existing casual employees who commenced after 27 March 2021, written intentions of casual conversion must be made to the employee within 21 days of their 12-month anniversary, in accordance with the steps above.
Make Things Easy! Each time a new casual employee starts, create a calendar reminder for when they are approaching their 12-month anniversary, so you can meet your obligations and assess whether an offer of permanent employment will be made or not.
Be sure to check any Modern Award or Enterprise Agreement that applies to your employees to confirm whether any other provisions apply.
Documenting these offers, requests and associated responses can be tricky, so businesses should seek advice about their specific circumstances. The team at Edwards HR can help with all of your casual employment needs and questions.
Do employees have to accept an offer to change from casual to permanent?
No, they don’t, however, this does not mean an employer is able to ignore their obligations for making a written offer.
Any offer made by the employer and response from an employee should be documented and kept on their personnel/employment file. Our letter templates include everything you need to document everything correctly.
How do we determine employee rights when the NES and the Modern Award or Enterprise Agreement say two different things?
Some Modern Awards and Enterprise Agreements already contain casual conversion provisions which are different to the new NES provisions. If this is the case, then the provision that is more favourable to the employee applies.
Example: The casual conversion clause in the Road Transport & Distribution Award provides employees the right to elect (request) that their employment converts to permanent after 12 months, in some circumstances. However, the new NES provision requires the employer to proactively make such an offer.
As the NES provision is more favourable for the employee, this is the entitlement that applies.
Remember that if more than one Modern Award or Enterprise Agreement applies to your team, different provisions may apply to different employees. You should check the casual conversion provisions of each to be sure you’re getting it right.