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Do I have to make my casual staff permanent?

Changes to the Modern Awards mean that some casual employees will now be eligible to convert to permanent employment.
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Do I have to make my casual staff permanent?

Do I have to make my casual staff permanent?

27 July 2017

Changes to the Modern Awards mean that some casual employees will now be eligible to convert to permanent employment, but there are upsides for employers.

Businesses which use casuals to fill rosters now have greater clarity around their employment, following the Fair Work Commission’s recent decision to allow eligible casual employees to convert to permanent employment.

The decision means that:

a) All modern awards will now include a casual conversion clause allowing eligible casual employees to convert to permanent employment.

b) Modern Award will no longer permit engaement of casual employees for shorter than 2 hour shifts.

c) Casual employees will now receive new entitlements to overtime in a number of modern award including Horticulture, Hospitality, Registered and Licensesd Clubs and Restaurants.

It followed a claim by the ACTU calling for all casual employees to be eligible to convert to permanent employment after six months, a 4-hour minimum engagement period,  and a ban on employers hiring additional part time or casual employees  before offering existing employees the hours.

A positive change for employers

According to Joe Murphy, a Director at Australian Business Lawyers & Advisors, the firm that represented NSW Business Chamber in the case, the decision is going to affect businesses which employ casuals on the basis that they work regular hours over periods of at least 12 months. These employees will now have the right to apply to be converted to a permanent part-time or full-time employee after 12 months. Amongst those industries most likely to be affected are the labour-hire industry.

“There’s definitely more upsides than downsides to the decision,” he says. "While businesses need to issue a notice of conversion within the first 12 months, we know that for many employers who have these long term casuals, it’s usually an arrangement of mutual convenience. The employee gets their casual loading and the employer doesn’t have to keep accrued annual leave and sick leave on its ledger.

“However we have seen the situation, when a long term casual employee turns around and says ‘I should have always been a permanent employee, I want my sick leave and annual leave’. This decision is going to manage some of that risk to employers.”

With casual employees who convert to permanent employment likely to see a reduction in their hourly rate, Murphy suggests that many casual employees will choose to stay with their current arrangement.

“There’s no doubt there will be an uptake, but I think the uptake is going to be limited,” he says. "Faced with a 20% paycut, most casuals are just not going to be attracted to the offer of full-time or part-time employment."

A fair decision for all

Nigel Ward, CEO of ABLA, has welcomed the Commission’s decision, saying: “While granting some of the ACTU’s claims, the Commission has moderated what was claimed to a point where most if not all employers can effectively manage the outcome without unduly hindering their business operations.”
“Pleasingly the Commission rejected those parts of the ACTU’s claims that were the primary concern for employers; for instance requiring employers to allocate additional hours of work to existing part-time and casual employees regardless of whether this suited the employer, was cost effective or restricted the employer’s right to employ more or different people.”

How can the changes impact you as an employer? Ask a professional workplace relations expert advice for free by calling our Workplace Assured Advice Line on 1300 496 955.

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