Changes to Casual to Permanent Conversion

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27 Apr, 2021

On Friday, 26 March 2021, the Fair Work Act was amended to make significant changes to casual employment.

There are three key areas of change:

  1. A definition of casual employment has been added to the Act.
  2. There is a legal requirement for employers to provide their casual employees with a Casual Employment Information Statement.
  3. There are changes to the process for converting casual employees to permanent status.

Casual Employee Definition

The Fair Work Act now includes a definition of what is a casual employee.

Under the new definition, a team member is a casual employee if:

  • they are offered a job,
  • the offer does not include a firm advance commitment that the work will continue indefinitely with an agreed pattern of work, and
  • they accept the offer knowing that there is no firm advance commitment and become an employee.

To work out if an employer’s offer doesn’t include a firm advance commitment, things taken into account include whether:

  • the employer can choose to offer the employee hours of work, and it’s the employee’s choice to work or not,
  • the employee will be offered hours of work when the employer needs them to work,
  • the employment is described as casual,
  • the employee is paid a casual loading (a higher pay rate for being a casual employee) or a specific pay rate for casual employees.

Once an employee is employed on a casual basis, they continue to be a casual employee until they either:

  • become a permanent employee through:
    • casual conversion, or
    • are offered and accept an offer of full-time or part-time employment, or they
  • stop being employed by the employer.

Casual Employment Information Statement (CEIS)

There is a new statement that must be given to all new casual employees either before or as soon as possible after they start. This statement is the Casual Employment Information Statement and explains the definition of casual employment and the casual to permanent conversion process.

Supply of the CEIS to Existing Casual Employees

If you have a small business (defined for these purposes as less than 15 permanent full or part-time employees), you are required to give your casual employees a copy of the CEIS as soon as possible.

If your business has more than 15 employees, you are required to give all casual employees a copy of the CEIS as soon as possible after 27 September 2021. (You can give your employees a copy earlier if you prefer).

Ways You Can Provide the CEIS

You can give your casual employees a copy of the CEIS:

Casual to Permanent Conversion

Casual to permanent conversion is the area of greatest change and has slightly different processes for small businesses with less than 15 employees and businesses with more than 15 employees.

Businesses who employ more than 15 employees have to offer to convert their casual employee to full-time or part-time (permanent) when the employee:

  • has worked for their employer for 12 months,
  • has worked a regular pattern of hours for at least the last 6 of those months on an ongoing basis,
  • could continue working those hours as a permanent employee without significant changes.

Some exceptions apply, including if an employer has ‘reasonable grounds’ not to make an offer to a casual employee for casual conversion.

If you are a small business that employs less than 15 employees, then you are not obligated to offer to convert your casual employee to permanent employment. However, your employee is still within their rights to request conversion to permanent employment even without your offer.

Transitional Arrangements

If you employ MORE than 15 employees, you need to assess whether to make an offer for casual conversion for each of your existing casual employees before 27 September 2021.  

Within 21 days of completing the assessment, you need to:

  • make a written offer to convert a casual employee to permanent employment, or
  • write to your casual employee explaining why you won’t be making an offer (this needs to be done no later than 27 September 2021).

Reasons for not offering conversion to permanent employment include if:

  • there are reasonable grounds for the employer not to make the offer, or
  • the employee is not eligible.

Each casual employee then has 21 days to respond to your offer in writing. If they don’t respond, the employer can assume that the employee has declined the offer.

Employee Requests for Conversion

Employees can request conversion to permanent employment at any time if:

  • the employer has employed them for at least 12 months,
  • the employee has worked a regular pattern of hours on an ongoing basis for at least the last 6 months,
  • the employee could continue working these hours as a full-time or part-time employee without significant changes,
  • the employee hasn’t refused an offer from the employer to convert to permanent employment in the last 6 months,
  • the employer hasn’t told the employee in the last 6 months that they won’t offer the casual employee conversion because there was a reasonable ground not to make the offer,
  • the employer hasn’t already refused a request from the employee for casual conversion because there was a reasonable ground to refuse the request.

Employers will then assess the request against the eligibility criteria and determine if there are reasonable grounds for refusal.

If you are a small business that employs less than 15 employees, then the employee can apply at any time they become eligible.

If you are a business that employs more than 15 employees, employees can request conversion at any time after 27 September 2021 when they become eligible.

Reasonable Grounds

An employer can refuse a request to convert an eligible employee or refuse to offer conversion to an eligible employee only after first consulting with the employee, and only if there are reasonable grounds.

The reasonable grounds need to be based on facts that are known or reasonably foreseeable.  

Reasonable grounds for deciding not to make an offer can include that, in the next 12 months:

  • the employee’s 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 their available days or times for work.

Reasonable grounds can also include:

  • making the offer would not comply with a recruitment or selection process required by or under a Commonwealth, State or Territory law,
  • 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.

Disputes

If an employee is unhappy with the decision, they have rights under their Industrial Award or Agreement to attempt to resolve the matter using grievance processes.

If they cannot resolve the matter through that process, they can refer the dispute to the Fair Work Commission or the Federal Circuit Court.

For Owners of Our Products

We have updated our Instant HR Policies and Procedures Manual, NDIS Support Worker Agencies HR Manual, NDIS Self Managers Direct Employment HR Manual and our Employee Induction Manual products to reflect these changes.

Any of our members with an existing active subscription are invited to log into their account and download the latest version of their products. Remember, your downloads area will always have the latest version of our products.

Ingrid: Lead Author, Australian Employee Manual

HR Author and Lecturer with over 25 years' experience in human resources and workplace relations in Australia. Lead Author of Instant HR Policies & Procedures, NDIS Direct Employment HR Manual, and Employee Performance Reviews: Tips, Templates and Tactics.

About Us

We are an Australian human resources business specialising in small businesses and not for profits, based in Brisbane, Australia.

 

If you are an Employee and need HR Advice, call Fair Work Australia 13 13 94

 

 

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