In 2017 the Fair Work Commission determined modern awards will contain a casual conversion clause. The Full Bench of the Commission concluded it is fair and reasonable for casual award covered employees to have access to a mechanism for converting their employment to an appropriate form of permanent employment after a period of twelve months regular and systematic casual employment.
After the decision it took the best part of another year for all involved parties to debate what the model clause should look like. Finally, the hubris stopped and a model clause was settled and interleaved into 86 modern Awards, including the Cleaning Services Award 2010, applicable from 1 October 2018. Those awards with pre-existing conversion terms, such as the Building and Construction General On-site Award 2010, will not be affected by this new clause.
The right to convert
Essentially, this new clause gives award covered “regular casual employees” the right to request their employment status be converted to permanent part-time or full-time if that employment pattern could continue without “significant adjustment”.
A “regular casual employee” is defined as one who has worked a pattern of hours on an on-going basis over 12 months. The expression “significant adjustment” is a little grey, but might best be viewed from the perspective that the required adjustment to the casual employee’s hours of work so as to convert their status would in reality mean the employee was an irregular casual employee in the first instance.
Although there is an obligation on employers to advise casual employees about their potential entitlement to permanency, not all casuals will want to become permanent just because they achieve 12 months’ (or more) service. Permanency will mean access to accruing personal and annual leave, but will result in a reduction in take-home pay with the removal of the casual loading.
Further, permanency of employment may result in part-time employment with strict parameters on performing additional hours of work, which would be overtime and attract a penalty rate. This outcome may detract from the earnings potential of a previously happy casual employee. Don’t forget to communicate with your casual employees about both sides of the coin when discussing conversion requests.
Finally, the right to request conversion remains “continually exercisable” throughout employment. Just because the employee turns it down once is not necessarily the end of the story.
To comply with the new provision, employers are required to provide every casual employee (whether likely to meet the definition of a “regular casual employee” or not) with a copy of the clause within the first 12 months of their engagement to perform work.
Employers have until 1 January 2019 to furnish pre-existing casual employees with a copy of the award conversion clause. The onus will then be on the employee to write to their employer at the appropriate time to request conversion if they meet the requirements
Refusing the request
An employer is permitted to refuse a conversion request, after consultation with the employee, on reasonable grounds including:
- that a significant adjustment to the employee’s hours would be required to accommodate the conversion request;
- it is known or reasonably foreseeable that the casual employee’s position will cease to exist within the next 12 months;
- it is known or reasonably foreseeable that the employee’s working hours and days will significantly change or be reduced within the next 12 months; or
- it is known or reasonably foreseeable there will be significant change to the required hours or days of work in the next 12 months and such change cannot be accommodated within the employee’s availability to work.
The reasons for refusal must be given to the employee, in writing, within 21 days of the request being made. Should the employee not accept the employer’s refusal as legitimate may result in an industrial dispute that either party may attempt to resolve under the dispute resolution clauses within the Contract Cleaning Award 2010, or refer the matter straight to the Fair Work Commission directly for resolution.
- Review the conversion clause from the relevant modern award.
- Consider the business implications of this clause and how you wish to approach the issue.
- Fulfil any obligation under the clause as and when required.
- Communicate with your employees.
- Employee requests should be received and responded to in writing.
- Keep records of meetings held with employees where this issue was discussed.
- If in doubt seek advice.
Charles Watson is general manager of Workforce Guardia