In this article, we break down the essentials of casual conversion, shedding light on the associated risks and crucial factors to consider when evaluating casual employment within your organisation.
What is the risk?
- In March 2021, amendments to the Fair Work Act 2009 (Cth) introduced casual conversion requirements for employers with over 15 employees. This pertains to employers with 15 or more employees, including associated entities both in Australia and overseas, as defined by section 50AAA of the Corporations Act.
- Employers with fewer than 15 employees are not obligated to initiate conversion but must engage in a consultation process with an employee upon their conversion request.
- The amendments also brought clarity to the definition of a "casual employee" and mandated the provision of a Casual Employment Information Statement.
Non-compliance with the Fair Work Act could trigger investigations by Fair Work and potentially lead to Unfair Dismissal or General Protections claims by employees.
How can you identify and assess the risk?
For employers with more than 15 employees and a casual workforce, comprehending casual conversion obligations is essential. You are required, under the National Employment Standards (NES) and/or the relevant modern award or industrial instrument, to assess casual conversion within 21 days of a casual employee's 12-month anniversary or conversion request. This assessment must be repeated every 12 months, regardless of the previous year's outcome.
Your assessment, on whether casual conversion is applicable, should include determining if the employee:
- Has been with your organisation for 12 months.
- Has consistently worked a regular schedule for at least the last six months.Could maintain these hours as a full-time or part-time employee without significant changes.
If you decide to offer permanent employment, it must be either:
- Full-time if the employee has worked full-time hours for a minimum of six months.
- Part-time if the employee has worked fewer than full-time hours for a minimum of six months.
Casual employees in organisations with over 15 employees have the right to request casual conversion after six months from the initial offer or non-offer, and subsequently every six months. In the event of such a request, you must respond in writing within 21 days, either accepting or refusing the request, providing reasons for refusal only after consultation with the employee.
For organisations predominantly employing casuals or managing a substantial casual workforce, it is vital to establish a process to track yearly anniversary dates for casual employees and evaluate their employment status in compliance with the Fair Work Act. This process should be completed within 21 days of a casual employee's 12-month anniversary.
The Albanese Government has recently unveiled the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023, which may see further the introduction of a new definition for casual employees and the establishment of a structured conversion pathway. The proposed definition seeks to draw a clear line between casual and permanent employment, taking into account various factors, such as the:
- absence of a firm advance commitment to ongoing and indefinite work;
- mutual ability to offer and accept work; and
- likelihood of sustained employment, and comparisons with part-time or full-time positions.
These changes are intended to enhance the transparency of casual employment arrangements. Moore Australia will keep you informed of any further changes you may need to take into consideration.
How can a Moore advisor help?
Our expert team can aid in identifying eligible employees for casual conversion, provide you with response templates, and guide you through these critical conversations. We are here to help you navigate the complexities of casual conversion obligations with ease.