Fair Work Commission decision to give casual workers the right to request permanent employment

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By Samantha Wood, Law Graduate

Fair Work Commission decision

On 5 July 2017, the Full Bench of the Fair Work Commission (Commission) decided in its 4 yearly review of modern awards, that casual employees can qualify for the right to request permanent employment after 12 months of work if they meet certain criteria (the decision). This article provides an overview of the decision.

In its decision, the Commission considered submissions from the Australian Council of Trade Unions and developed a draft model casual conversion clause. Once the decision enters into operation by way of an order, it will affect 85 modern awards including the social, community, disability services, aged-care, retail, banking, agriculture and restaurant industries amongst others.

The primary reason for the decision was that without this casual conversion clause, these awards did not achieve the modern awards objective, which:

“…together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions…”.

Currently, under most awards, the applicability of most National Employment Standards (NES) entitlements depends on whether the employer chooses to engage and pay an employee as a casual or as a permanent employee. Therefore, the employer has the capacity to deny NES entitlements to casuals who otherwise might readily be engaged as permanent full-time or part-time employees. The Commission found that while this practice is not widespread, some employers do engage indefinitely casual persons who may be employed permanently, thereby circumventing the application of the NES safety net for these employees. A casual conversion clause can remedy this practice to better achieve the modern awards objective.

How many casual workers are in the NFP sector?

According to the Australian Charities Report 2015 which surveyed 39,756 charities, the number of employees in 2014 totalled 1,050,295. In 2015, this number grew to 1,057,663. While the number of employees overall has grown modestly from 2014-2015, charities gained 5,140 part-time employees, and 7,396 casual employees, and lost 5,876 full time employees. In 2015, casual employees constituted 25.8% of the total number of employees in the charity sector.

This means that the not-for-profit sector is seeing an increase in the number of casual workers who may, after the Commission’s decision, be eligible to be considered for permanent employment. Not-for-profit organisations and charities in all states and territories (except for Western Australia) are affected by this decision and should therefore be aware of its implications.

What are the employer’s obligations?

Under the new model casual conversion clause, an employer must provide all casual employees (whether they become eligible for conversion or not) with a copy of the casual conversion clause within the first 12 months after their initial engagement.

What can the employee request?

The regular casual employee can request to convert to:

  1. full-time employment, if they have worked an average of 38 hours or more in the preceding 12 months; or
  2. part-time employment if they have worked less than an average of 38 hours per week, in the 12 months before the request is made.

How can the employee qualify to request permanent employment?

To qualify, the employee must be a “regular casual employee”. This is someone who, over 12 months, has:

“…worked a pattern of hours on an ongoing basis which, without significant adjustment, could continue to be performed in accordance with the full time or part-time employment provisions of the relevant award.”

This means that qualifying for permanent employment contemplates some, but not significant, adjustment to the employee’s working patterns. Additionally, the more flexible the hours of work provisions for full-time and part-time employees, the greater the opportunity there will be for casual conversion to occur.

When can an employer refuse the employee’s request for permanence?

According to the decision, if an employee elects to become permanent, the employer may refuse this request on the grounds that:

  1. it would require a significant adjustment to the casual employee’s hours of work to accommodate them in full-time or part-time employment in accordance with the terms of the applicable modern award;
  2. it is known or reasonably foreseeable that the casual employee’s position will cease to exist in the next 12 months;
  3. the employee’s hours of work will significantly change or be reduced within the next 12 months; or
  4. it is known or reasonably foreseeable that there will be a significant change in the days and/or times at which the employee’s hours of work are required to be performed in the next 12 months which cannot be accommodated in the current circumstances.

The Commission notes that these considerations must be based on facts which are known or reasonably foreseeable, and not be based on speculation or lack of certainty about the employee’s future employment.

Additionally, a conversion request should only be refused after consultation with the employee.

What does the employer have to do if the request for permanence is refused?

The employer must provide the casual employee with the employer’s reasons for refusal in writing within 21 days of the request being made. If the employee does not accept the employer’s refusal, this will constitute a dispute that will be dealt with under the relevant award’s dispute resolution procedure.

Under many dispute resolution procedures, the employee or the employer may refer the matter to the Commission if the dispute cannot be resolved at the workplace level.

Long-term regular casuals benefit

In the decision, the Commission relied on expert evidence that showed 29% of casual workers work full-time hours, however the average weekly hours worked by part-time casual employees was 16.1. While the length and regularity of casual employment varies, a significant proportion of casual employees exist who:

  1. have worked for their current employer for long periods of time as a casual;
  2. have a regular working pattern, which in some cases may consist of full-time hours; and
  3. are dissatisfied with their casual status and would prefer permanent to casual employment.

Further, the evidence demonstrated that for adult longterm casuals who are financially dependent on their casual employment, the absence of benefits that come with permanent employment can be particularly detrimental.

For many, long-term casual employment means:

  1. working while sick;
  2. not taking recreational leave because of concerns about whether any absence from work will endanger future employment;
  3. the incapacity to properly balance working hours without notice; and
  4. potential for the sudden loss of what had been regular work without any proper notice or adjustment payout.

How does the decision immediately affect employers?

The decision means that employers must, as soon as possible:

  1. review their labour engagement practices to determine the extent to which their operations will be impacted by the change;
  2. develop systems to identify casuals engaged on regular and systematic work patterns and to monitor their period of engagement;
  3. develop systems to notify casuals of their rights especially as evidence indicates that casual employees are less likely to have access to workplace information than permanent employees;
  4. consider and respond to any request by a casual employee to convert to permanent employment; and
  5. consider implementing an audit system to ensure compliance with the clause.
For further information, please do not hesitate to contact us.

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