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Casual Conversion – 5 Steps to Ensure Compliance

Is your business prepared for the casual conversion changes? Changes to casual conversion rights and obligations will affect the majority of employers
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Casual Conversion – 5 Steps to Ensure Compliance

Casual Conversion – 5 Steps to Ensure Compliance

10 December 2018

From 1 October 2018, casual conversion rights and obligations will affect the majority of employers across Australia.

To help you prepare for the new obligations, we’ve outlined what you need to do and know in order to be compliant. The first step is to notify new and existing casual employees with a copy of the casual conversion clause by 1 January 2019.

Introduction of a ‘regular casual’

The new clause introduces the concept of a "regular casual employee” which is an employee that is award-covered and has a right to request to convert their employment to permanent.

But it’s important to note, not all modern awards contain this requirement so it’s best to check the award that applies to your employees.

Under most modern awards, a "regular casual employee" can request to convert their employment if they have worked:
  • for a period of 12 months or more; and
  • a pattern of hours on an ongoing basis, which the employee could continue to perform as a full-time employee or part-time employee (as applicable), without significant adjustment.

The casual employee must put their request to convert in writing.

How to legally respond to casual conversion requests

Your business must comply with the obligations contained in any casual conversion clause in a modern award, this includes:
  • Providing new and existing casual employees with a copy of the casual conversion clause;
  • Responding to any request to convert within 21 days;
  • If you reject a request, complying with the requirements in the relevant award such as rejecting the request on ‘reasonable grounds’ or ‘not unreasonably refusing’ a request;
  • If you agree to convert a casual to permanent employment, complying with the provisions of any part-time employment clause in the relevant award and providing the employee with set days, hours and patterns of work (and a new contract of employment).

How to legally refuse the request for casual conversion

It’s important to note that the new clause does not mean you have to approve all requests. It’s best to double check the relevant award but generally, the scenarios where you may refuse on reasonable grounds include but not limited to:
  • The conversion would require a significant adjustment to the employee’s hours of work as a full-time or part-time employee;
  • It is known, or reasonably foreseeable that the employee’s position will cease to exist within the next 12 months or the hours of work which the employee is required to perform will be significantly reduced in the next 12 months;
  • The employee’s hours of work will significantly change or be reduced within the next 12 months.

When you must pay your casuals annual leave and other entitlements

A recent case also found that where casual employees have regular work patterns over an extended period of time, those employees may, in fact, be considered permanent, even if:
  • The parties described the relationship as ‘casual’ (often in employment contracts or payslips); and
  • The casuals were paid a casual loading.

This means your casual employees may be entitled to a range of benefits under the National Employment Standards including annual leave, notice of termination and redundancy pay.

Your business may be exposed to claims for back payment from both current and former employees who may have been engaged on a casual basis but worked on a long-term, regular or predictable basis. This could include claims for up to six years of unpaid annual leave as well as payments upon termination of their employment.

Some employers will want to offer casual conversion to employees (whether they are obligated to or not under an award) to minimise the exposure of claims for permanent entitlements being successful.

To help ensure compliance when engaging casuals, here are 5 steps employers should take:

Step 1: Provide new and existing award-covered employees with a copy of the casual conversion clause by 1 January 2019

Ensure you read the award that applies to your employees carefully. If you are not sure about whether your employees are covered by a modern award and whether you have to provide the casual conversion clause to them, you can contact our Workplace Advice Line.

Some awards contain more onerous requirements on employers to notify casual employees of their right to request casual conversion at 6 or 12 months of ‘regular and systematic’ casual employment. This means you will need to be keeping a close eye on any casual employees that are reaching these milestones.

Once you’re familiar with the award that applies to your employees, you can then notify them of the causal conversion clause.

If your casual employees is employed as at 1 October 2018, you’ll need to provide them with a copy of the casual conversion clause by 1 January 2019.

For those employed on or after 1 October, you will need to provide the clause within 12 months of their employment commencing.

Step 2: Respond to any casual conversion requests

Respond to any requests to convert to permanent in writing within 21 days to accept or reject the employee’s request for conversion.

You can only reject a request convert to permanent in accordance with the terms of the relevant award.

Sometimes an award will include the ‘reasonable grounds’ on which you can refuse a request.

Step 3: Review your existing workforce

Review the use of casual employment in your business, particularly where the arrangement involves long-term, regular work patterns.

For those employees, consider offering conversion to permanent employment to protect your business.

Step 4: Update your employment contracts

Ensure your contracts of employments clearly define casual loading provisions and set-off clauses to maximise your ability to recover any payments, should the casual employee later seek to claim unpaid leave entitlements.

If you have any questions about your employment contracts, please call the Workplace Advice Line if you are a Workplace Assured subscriber.

Step 5: Document the casual conversion process

Throughout the causal conversion process, it’s best practice to document the conversations and keep all written responses with their other employment records, such as their contract of employment and hours of work records.

Are you covered? Get advice today

Managing the potential conversion of casual staff to part-time or full-time employees can be a complex process if not managed correctly.

If you need further information on how to manage the causal conversion process, call the Workplace Advice Line - 1300 579 162.

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