New Casual Conversion Process

Recent changes have been made to the Fair Work Act 2009 (Cth) (FW Act) which may change your casual employment and management strategy.

A new casual conversion process

Award-covered employers should already be familiar with the concept of ‘casual conversion’. However, the amendments to the FW Act have introduced important changes to this process, and also expanded the process to cover employees that are not covered by a Modern Award, or an enterprise-agreement.

What has changed?

The new casual conversion process forms part of the National Employment Standards, and Modern Awards will soon be amended to reflect the new process, which is set out below.

Currently, under many Modern Awards, the casual conversion process commences when an employee requests conversion. Under the new process, an employer must make an offer to a casual employee if:

  • the employee has been employed for a period of 12 months (starting from the day their employment started); and

  • during at least the last 6 months of that period, the employee has worked a ‘regular pattern of hours on an ongoing basis’ which, without significant adjustment, the employee could continue to work as a full-time or part-time employee.

This new offer process will not apply to small business employers. Small businesses are defined under the FW Act as those that employee fewer than 15 employees. However, employees of small business employers will still have a residual right to request casual conversion at any time if they meet the requirements.

An employer has 21 days after the casual employee’s 12-month employment anniversary to either:

  • make the conversion offer, in writing; or

  • provide a written notice setting out the reasons why a conversion offer is not being made (noting that there are limited grounds for not making a conversion offer).

An employee is required to respond to a conversion offer by accepting or rejecting the offer – if an offer is rejected, no further offers are required to be made by an employer, and an employee does not then have a right to request conversion at a later stage.

An employee can only request conversion in certain limited circumstances.

Disputes about conversion will be dealt with according to an applicable Modern Award or enterprise agreement dispute procedure, or if an employee is Award or Enterprise Agreement-free, then any other written agreement between the employer and employee for dealing with the dispute.

What happens if a casual employee converts?

For casual employees that do convert to permanent employment (during the conversion process, or at some later stage), the FW Act amendments also provide that, for the purposes of assessing ‘continuous service’ for the following termination entitlements, the period of employment as a casual employee does not count towards continuous service:

  • payment in lieu of notice of termination; and

  • redundancy (severance) pay.

What do businesses need to do about these changes?

For current casual employees

Employers have 6 months from 27 March 2021 to implement the new casual conversion process with their current casual employees. That includes the decision on whether to offer casual conversion, or provide a notice explaining why a casual conversion offer is not being made.

For future/prospective casual employees

Businesses will need to ensure they have a process in place to:

  • alert appropriate persons within the business to the 12-month anniversary of a casual employee’s employment;

  • undertake an assessment of whether the casual conversion process eligibility applies; and

  • decide whether a casual conversion offer will be made, and prepare the written conversion offer, or the notice explaining why a casual conversion offer is not being made.

If you are unsure how to best navigate this new conversion process, IR Legal Solutions can provide you with specific legal advice to assist your business to navigate and best implement these changes to assist with Fair Work compliance.

This content is not be a substitute for legal advice and is for information only. Employers should obtain advice that is specific to their circumstances and business operations, and not rely on this publication as legal advice.