Is your business compliant with the new casual conversion obligations?

Earlier this year, new casual conversion provisions were introduced into the Fair Work Act 2009 (Cth). The amendments imposed a new obligation on employers to offer eligible casuals conversion to permanent employment.

Employers had until 27 September 2021 to assess whether any of their casuals employed before 27 March 2021 were eligible to be offered conversion to permanent employment. For casuals employed after 27 March 2021 their eligibility must be assessed prior to the end of their first anniversary of employment.

As there are penalties for non-compliance it is important that employers understand their obligations and have a procedure in place to ensure compliance.

This article does not address the rights of eligible casual employees to request conversion to permanent employment and relates to the obligations owed by employers who are not ‘small business employers’ within the meaning of the Fair Work Act 2009 (Cth), being those who employ less than 15 employees.

Assess who is eligible for an offer of conversion to permanent employment

Employers need to identify whether any of their existing casual employees are eligible for conversion.

An eligible casual employee is a person who:

• has been employed for at least 12 months;
• has worked a regular pattern of hours on an ongoing basis for at least the last 6 months; and
• could continue working these hours as a full-time or part-time employee without significant changes.

Consider if there are reasonable grounds for not making a conversion offer

Employers do not have to make an offer to eligible casual employees if the employer has reasonable grounds not to make an offer.

Whether an employer’s reason for not making an offer of conversion is reasonable is to be assessed by taking into account all of the circumstances, including the needs of the employer’s business and the nature of the employee’s role.

Reasonable grounds include, but are not limited to, cases where:

• the employee's position will cease to exist in the next 12 months;
• the employee’s hours of work will significantly reduce in the next 12 months; or
• the employee’s days or times of work will significantly change in the next 12 months and cannot be accommodated within the employee’s available days or times for work.

Notify all casuals of outcome of assessment

All eligible casual employees must be notified in writing of the outcome of the assessment.

If an offer is made, it must be in writing and specify whether the offer is for full-time or part-time employment. A casual employee cannot be converted to a fixed-term or maximum-term contract. The offer should explain the entitlements enjoyed by permanent employees and that the employee will no longer be entitled to receive the casual loading upon conversion. Employers should also provide employees with an opportunity to ask questions or give suggestions and explain the process and timeline for accepting or declining the offer and the next steps.

If an employer is not making an offer to convert, the employer must write to the relevant employee advising that the employer has reasonable grounds not to make an offer and explaining what those grounds are.

Employee acceptance

To accept an offer to convert, employees need to respond in writing within 21 days after receiving the offer. If an employee does not respond within 21 days, the employer can assume that they have declined the offer.

If the employee accepts the offer, employers should outline when they will discuss the employee's new permanent employment status, their hours of work once conversion takes effect and the day on which the conversion is to take effect.

Provision of Casual Employment Information Statement

Employers must provide a copy of the Casual Employment Information Statement to all remaining casual employees.

This article provides general commentary only. It is not legal advice. Before acting on the basis of any material contained in this article, seek professional advice.