Recent FWC Decision: Casual conversion to permanent employment

As part of their 4 yearly review of modern awards, the Fair Work Commission (FWC) has handed down a decision which allows for casual employees to request to convert to full-time or part-time employment, subject to certain criteria and restrictions. The Australian Council of Trade Unions (ACTU) sought the changes in an effort to ensure that the safety net system remains fair and relevant. Importantly, it was argued that long-term casual employment permanently denies casual employees to NES benefits such as sick leave, annual leave as well as stability of employment.

In their decision, the FWC have developed a draft model clause which is to be executed in into 85 of the 88 modern awards which do not already contain a casual conversion clause. This clause will allow casual workers to request to convert to permanent employment when:

  • They have remained engaged with their employer for 12 months and
  • They have worked a pattern of hours on an ongoing basis over the 12 month period which could continue to be worked on a full-time or part-time basis without significant adjustment.

Whilst this decision may appear as a victory for employees, casual workers can only request to convert to permanent employment. However, employers may refuse these requests in certain situations, including:

  • When it would require a significant adjustment to the casual employee’s hours of work to accommodate them in part-time or full-time employment, or;
  • When it is known or reasonably foreseeable that the casual employee’s position will cease to exist; or the employee’s hours of work will significantly change or be reduced within the next 12 months; or
  • On other reasonable grounds based on facts which are known or reasonably foreseeable.

Additionally, employers will become obliged to provide a copy of the conversion clause to all casual employees within the first 12 months of their engagement. At this stage, this is only a draft ruling and no changes are to take affect just yet. The FWC has invited interested parties to respond and prepare further submissions. Having said that, employers who largely employ casuals must be aware of the decision and mindful of when the changes are likely to occur.


Lessons for employers

  • If the proposed conversion model clause is implemented, employers will be obliged to adhere to the changes.
  • Employers should genuinely consider a request made by a long-standing casual employee. Requests should only be refused on legitimate business grounds.
  • Consider how a casual conversion into permanent part/full time will impact your business financially. Employers should remind casual staff that the transition will mean they forgo their casual loading.

Summary: The FWC has handed down a decision which has granted casual workers the right to request to convert to part-time or full-time employment, subject to certain criteria and restrictions. However, currently this only stands as a draft ruling and a final determination is yet to be made.

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