The Department of Employment and Workplace Relations (DEWR) has conducted an impact analysis on the effect of the proposed Closing Loopholes Part Two Bill Casual Conversion Provisions.

These provisions will introduce a new definition of casual employment and a new pathway for casual conversion. Broadly speaking, casual employment will now be defined as where there is an absence of a firm advance commitment to continuing and indefinite work, and the employee is entitled to a casual loading or a specific rate of pay for casual employees.

The pathway to casual conversion will now be based on a ‘employee choice’ model. The onus will be on the casual employee to make a request to change their employment status. The grounds on which an employer can refuse such request has been broadened to include ‘fair and reasonable operational grounds’. Employers will no longer be required to offer casual conversion once the employee is eligible.

The analysis conducted by DEWR, provides a comprehensive overview of the anticipated impact of these provisions on casual employment in Australia. The 8 key takeaways from the impact analysis include:

1. Expected Conversion to Permanency: DEWR anticipates that around 85,000 “regular casual” workers will seek conversion to permanent positions each year for the first five years after the bill’s casual employment provisions come into effect. Beyond that, the number is expected to halve. It is expected that 10% of the 852,100 eligible casual employees might seek conversion in the first five years, dropping to 5% in the following years.
2. Reason for Reduction in Conversions: The analysis assumes that as understanding of the new definition of casual work increases, the incidence of workers being misclassified as casuals will decrease.
3. Dispute Expectations: Although disputes might increase, they are expected to remain low overall. Only 86 disputes were lodged with the Fair Work Commission (FWC) in the two years leading up to March of the previous year.
4. Groups More Likely to Seek Conversion: Female, migrant, and older workers are more likely to seek conversion.
5. Purpose of the Measure: The aim is not to achieve a specific rate of casual conversion but to increase fairness and remove barriers to permanent status for those whose work arrangement is akin to permanent employment.
6. Casual Employment Definition and Pathways for Conversion: The new legislation redefines casual employment based on the reality of the work relationship rather than just contractual terms and creates a new pathway for casual conversion.
7. Agreement with the AHA: Despite the new definition, an agreement with the Australian Hotels Association (AHA) allows for the continuation of casual employment even with a regular pattern of work and no firm advance commitment to ongoing, indefinite work.
8. Non-Regular Casuals: The impact analysis notes that nearly 1.5 million casual employees do not fit the category of regular casuals.

The provisions appear to be a significant step in reshaping employment relationships in Australia, particularly in addressing the casualisation of the workforce and promoting fairer work arrangements.

Lessons for Employers:

• The Closing the Loopholes Provisions are making significant reform to Australia’s employment laws and employers should inform themselves of these changes;
• Employers will no longer be required to offer casual conversion once an employee becomes eligible;
• Employers should anticipate that requests for casual conversion will be made under these provisions and prepare by:
  • Conducting an analysis of their casual employees in light of the new definition and identify those employees that are eligible for conversion under the new provisions;
  • Assessing whether they have any fair and reasonable operational grounds to refuse a request for casual conversion should an employee request it.

If you would like to discuss these or other workplace issues, please contact Andrew Bland or call 02 9412 3077.