16 Sep 2021

Deadline for casual conversion fast approaching – have you satisfied your obligations?

By Cilla Robinson, Oshie Fagir, Sophie Orton and Danielle Crowe

Employers have until 27 September 2021 to take four steps to comply with the new casual conversion laws.

Earlier this year, new casual conversion provisions were introduced into the Fair Work Act 2009 (Cth). The amendments created a new obligation of employers to proactively offer eligible casuals conversion to permanent employment, while also allowing eligible casual employees to request conversion. Employers were given a six month grace period to get organised.

As the six month transition period comes to a close, employers should consider whether they have satisfied their obligations to their casual employees prior to the 27 September 2021 deadline.

Which casuals are eligible for conversion?

This flowchart explains which casuals are eligible for conversion:

Flowchart casuals eligible for conversion

 

"Reasonable grounds" to refuse conversion

Employers are not required to make an offer if there are "reasonable grounds" not to do so. Those grounds must be based on facts that are known, or reasonably foreseeable, at the time of deciding not to make the offer.

Reasonable grounds include (but are not limited to) cases where, within 12 months:

  • the employee’s position will cease to exist;
  • the employee's required hours of work will be significantly reduced; or
  • there will be a significant change in the days or times the employee is required to work, and those changes cannot be accommodated within the employee's available days or times.

Special rule: casuals employed before 27 March 2021

Casuals employed before 27 March 2021 must have their eligibility assessed by 27 September 2021. By that date you must write to the employee either:

  • offering conversion; or
  • if you have decided not to offer the employee conversion – explaining that you are not offering conversion and the reasons for that decision.

12 month anniversary: offer to convert or reasons for refusal

For each casual employee you must on the first anniversary of their employment write to them either:

  • offering conversion;
  • explaining that conversion will not be offered because they have not worked a regular pattern of hours for six months; or
  • explaining that conversion will not be offered because there are reasonable grounds to refuse conversion.
  • Where an employee is offered conversion, they must respond within 21 days accepting or refusing conversion. If they do not respond, they are taken to have declined conversion.

    Ongoing right to request

    You are only required to assess an employee's eligibility for conversion and make a conversion decision on the employee's first anniversary. However the employee retains a right to request conversion at any time after their 12 month anniversary.

    If the employee makes the request, you must respond within 21 days. You can refuse conversion either on the grounds that the employee has not worked the required pattern of hours for six months, or on other reasonable grounds (but only if you have first consulted with the employee).

    Generally the employee can only make a request once every six months. The exception is the case where the employer had previously refused conversion on the grounds the employee had not worked the required pattern for six months, but the employee has since then reached the six month threshold.

    What employers should be doing

    Revisit casual conversion clauses in enterprise agreements or modern awards (if relevant) to determine how these provisions interact with the NES casual conversion provisions.

    Set up a process for accepting and declining requests for conversion that come from employees outside of the organisation's offering process.

    Update casual contracts to insert

    • a definition of casual that aligns with section 15A of the Act;
    • a clause separately identifying casual loading from any base rate; 
    • a clause identifying what permanent entitlements are included in the casual loading; and
    • a clause giving the employer the ability to recover any casual loading paid in error as a debt (if it is later claimed that the employee was in fact permanent).

    Create a suite of documents to ensure compliance with the casual conversion process including letters:

    • offering casual conversion;
    • notifying an employee who has accepted conversion of their proposed employment status, hours of work and the day the change takes effect;
    • explaining why no offer of casual conversion is being made;
    • outlining that the organisation is considering a casual conversion request; and
    • accepting or rejecting an employee's casual conversion request.

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    Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.