A recent case has highlighted the importance of getting the casual conversion process right in order to ensure compliance. Despite the wide publication of the changes made to the casual conversion process in October 2021 many businesses are still utilising old conversion processes that are no longer compliant, this case is a reminder to all operators to review their processes now to avoid non compliances.
The case
The case hinges around the need for businesses to either make an offer of employment or send a letter explaining why the offer is not being made. In this case, the business utilised an old system of sending a letter outlining that an employee could ASK to be made permanent. While this letter would have been appropriate pre-2021 it no longer meets the requirement and resulted in non-compliances that have serious penalties attached.
Background
As ACAPMA covered at the time ( https://acapmag.com.au/2021/03/casuals-steps-for-business-now/ and https://acapmag.com.au/2021/09/casual-changes-deadline-looms/ ) the changes to the Fair Work Act in March 2021 resulted in the implementation of a formal definition for a casual employee, a long awaited and much needed definition, along with addressing the concept of entitlement double dipping if a casual employee is deemed to be a permanent employee by a court.
The changes to the Act also created the Casual Employment Information Statement (CEIS) which must be provided to all casual staff on commencement and moved the casual conversion for most Awards from the Award to the Act, standardising the process of casual conversion effective from 27/9/2021. Most, not all. Some of the Awards (like those that apply to fuel retail and wholesale) had casual conversion clauses that were different to the model clause, because they had been in operation for longer. This meant that the Fair Work Commission had to review each of these Awards and make a Decision as to whether the Award clause or the Act would apply.
In considering the matter the Commission noted that while the Awards had difference from the Act that could be argued to be in the employee’s favour, there were other elements that could give rise to confusion and the benefit of a national standard outweighed the argument to leave the Award unchanged.
As a result, the Commission determined that the casual conversion clauses in the Awards would be removed and the casual conversion that was inserted into the Fair Work Act in March 2021 would apply.
The Decision to alter the fuel retail Award (Vehicle Repair, Service and Retail Award 2020) and the fuel transport Award (Road Transport and Distribution Award 2020) was made on 27/9/2021 and flowed through to the Awards later 30/9/2021.
The Award clauses, previously so detailed and specific, now simply note the requirement to comply with the Fair Work Act National Employment Standards (NES);
11.5 Offers and requests for casual conversion
Offers and requests for conversion from casual employment to full-time or part-time employment are provided for in the NES.
NOTE: Disputes about offers and requests for casual conversion under the NES are to be dealt with under clause 37—Dispute resolution.
Casual conversion requirements
Small Business has different requirements, see the Small Business section below.
A business (other than a Small Business) is required to make an offer of permanent employment, in writing, within 21 days of a 12-month employment anniversary, to a casual employee if the employee has been employed for 12 months, and the employee has been employed in a pattern for the last six months that could be worked as either permanent full time or permanent part time.
The offer to convert to permanent employment must be for full time employment if the employee has worked full time hours for the last six months and must be for part time employment (in line with the employee’s current pattern of hours) if the employee has worked less than full time hours.
A business is not required to make an offer of permanent employment if there are reasonable grounds not to make the offer but is still required to provide written notice to the employee, within 21 days of the 12-month employment anniversary, and outline the grounds for not making the offer. The notice must specifically outline that the employer is not making an offer under section 66b of the Fair Work Act and outline the reasons why the offer is not being made.
So, the business is required to assess the pattern of the casual employee’s employment determine if the employee’s pattern could be worked, without significant adjustment, as either permanent full time or permanent part time,
- If there is a pattern that can be worked then to consider if there are any other reasonable grounds to refusing to offer employment;
- If there are reasonable grounds to refuse then to issue a Notice in writing to the employee that the business will not be making an offer of permanent employment and list the reasonable grounds as to why it will not be making the offer.
- If there are not reasonable grounds to refuse then to issue a Notice offering permanent employment and detailing how that will work, hours, start date, wage rates etc.
- If there is not pattern then to then the employee is not eligible and the business should issue a Notice in writing to the employee outlining that an offer of permanent employment will not be made because the employee is not eligible due to a pattern of work that cannot, without significant adjustment, be worked as either permanent full time or permanent part time.
If the business does make an offer of permanent employment the employee must accept or reject the offer in writing. If the employee does not correspond in writing then they are taken to have rejected the offer. Where an employee actively (in writing) or passively (through no response) rejects an offer of permanent employee the employee will remain a casual employee.
If the employee wants to stay a casual they can. Nothing in the casual conversion process forces a casual to become a permanent employee.
The employee is able to request in writing that the business to convert them to permanent at a later date, as long as;
- The employee has not rejected an offer in the last six months, and
- The business has not issued a notice as to why an offer has not been given in the last six months, and
- The employee has worked a pattern of hours in the last six months that could, without significant adjustment, be converted to part time or full time, and
- The request is not coming in the 21-day window from the 12-month anniversary.
This is called a ‘later date’ request.
So, if Jim has been employed as a casual for one year and one day, he cannot request conversion to permanent, as it is in the 21-day window that the business needs to assess his work pattern and their needs and either offer him permanent employment or explain why they are not offering him permanent employment.
If the business has reasonable grounds for providing Jim a notice that they will not be offering conversion to permanent, then Jim can ask again at a later date, as long as that date is at least six months from now.
If an employee makes a ‘later date’ request for conversion, the business must consider the request and must not unreasonably refuse, but may refuse on reasonable business grounds, but only after the business consults with the employee on options. Any acceptance or rejection of the request must be issued in writing by the business to the employee within 21 days of the request, outline the consultation that occurred prior to the refusal (if applicable) and the grounds for refusal (if applicable).
So, if Jim has been employed for two years and he believes his pattern of work has been stable and can readily convert to permanent full time or part time, he can request, in writing, that the business offer him permanent employment. He can make this ‘later date’ request because it has been more than six months since he was notified by the business that they had reasonable grounds not to offer him permanent employment. The business will need to consider Jim’s request, consult with Jim on options (typically a meeting) and then respond in writing. In the event that the reasonable business grounds that were outlined initially as the reason for not offering Jim a permanent position remain, the business can reject Jim’s request and outline those reasons.
Casual Conversion Requirements – small business
A small business is not required to make an offer of conversion to a casual employee.
An employee of a small business is able to request in writing, that the small business to convert them to permanent at a later date, as long as;
- The employee has been employed for 12 months, and
- The employee has not rejected an offer in the last six months, and
- The business has not issued a notice as to why an offer has not been given in the last six months, and
- The employee has worked a pattern of hours in the last six months that could, without significant adjustment, be converted to part time or full time.
If an employee makes a written request for conversion, the small business must consider the request and must not unreasonably refuse, but may refuse on reasonable business grounds, but only after the small business consults with the employee on options. Any acceptance or rejection of the request must be issued in writing by the small business to the employee within 21 days of the request, outline the consultation that occurred prior to the refusal (if applicable) and the grounds for refusal (if applicable).
Reasonable grounds for refusal
The business (including small business) may rely on reasonable grounds for refusing to offer, or for rejecting a request to convert to permanent employment.
There is no definitive list of reasonable grounds, rather there is some indications in guidance and case law.
Reasonable grounds for refusal to offer or rejection of a request can include, but is not limited to;
- There would need to be a significant adjustment to the employee’s work hours for them to be employed full time or part time.
- The business knows that the employee’s position is unlikely to exist into the future.
- The employee’s hours will significantly reduce.
- The employee’s days or times of work will significantly change, and that can’t be accommodated within the employee’s availability.
- There would be unreasonable cost or system modification required to accommodate the conversion.
There are likely to be other reasonable reasons that depend on the business and employee’s circumstances.
Disputes about conversion
It is important to note that if there is a dispute about if a refusal to offer or rejection of request to convert the dispute can be taken to the Fair Work Commission and a Decision will be made and applied to the business (much like the unfair dismissal process.
Crossover between specific Award Clause and the Act
The provisions in the Act apply to all employees employed before 27 March 2021 and applied from 27 September 2021.
This means that;
- All staff who pass their 12-month anniversary and were provided with the casual conversion letter as per the Award are eligible to request conversion once six months has past since that letter was issued.
- All staff that have not yet reached their 12-month anniversary will be covered entirely by the Act requirements (those explored above).
For those Award that had a six-month casual conversion qualifying period (including fuel retail – Vehicle Repair, Service and Retail Award 2020, and fuel wholesale – Road Transport and Distribution Award 2020) there is some cross over. There will be staff that have been employed and have been provided with their casual conversion letters at six months as required by the law. The question is; Does the business have to do it again at 12 months? The answer is no. An offer to convert has been made within six months so;
- A staff member who has received their casual conversion letter at six months as required by the Award can (provided they meet the pattern of employment requirement) do a ‘later date’ request, once they reach 13 months (more than six months after the last letter).
- All staff that have not yet reached their six-month anniversary and thus have not received their casual conversion letter as required by the Award will now wait until 12 months and be covered entirely by the Act (as outlined above).
All businesses (except small businesses) should note that any staff that have reached their 12-month anniversary that have not been given the casual conversion letter as per the Award should be provided with Notice in line with the Act requirements as above.
Casual Employment Information Statement
As noted previously ( https://acapmag.com.au/2021/04/employer-alert-casual-employment-information-statement-to-be-provided-to-your-casuals-now/ ) all casual staff must be provided with the Casual Employment Information Statement (CEIS).
The CEIS outlines the employee’s rights and outlines how Casual Conversion works from an employee’s perspective.
The CEIS needs to be provided along with the Fair Work Information Statement (FWIS) on commencement.
If current staff have not been provided with the CEIS or the FWIS, both should be provided urgently.
Casual Conversion Q&A
Casual employees who have been employed regularly for 12 months are subject to Casual Conversion. Failure of the business to comply with this National Employment Standard comes with a fine of more than $66,000 per offence.
Q: What does “regularly” mean?
For the fuel industry and the casual conversion operation “regularly” means; consistently employed. To put it another way…a casual employee is said to be a regular employee in this industry if they have been employed by the business for 12 months and have not had a break in employment (where they didn’t work) of three months or more.
Q: What does the business have to do if they have a regularly employed Casual?
If the business has a regularly employed casual who has been engaged for 12 months, the business has to;
-
- Assess the last six months of employment.
- Determine if the pattern of work could, without reasonable adjustment, be converted to permanent (either full time or part time) work.
- If the determination is that yes the pattern could be converted, offer that permanent work to the employee in writing.
- If the determination is no, that the pattern could not be converted, outline in writing to the employee that they are ineligible for conversion due to the pattern of work not being appropriate for conversion.
Q: What if the pattern of work could convert but the business has other reasons for not offering the conversion?
The business can elect to outline in writing to the employee that they are eligible, and the pattern could be converted, but that they are not being offered conversion due to particular reasons. What reasons would depend on the situation. For example, if the business knew the work would be no longer available (project work) or significantly changed after a particular date (seasonal work) or there are other reasonable business grounds for refusing to offer conversion.
Q: So, after 12 months of employment all casuals need to be given a letter about conversion?
Yes, all casuals will receive a letter either;
-
- A letter explaining that they are not eligible because they do not meet the definition of regular (usually due to breaks in employment), or
- A letter explaining that they are eligible for conversion, that their pattern can be converted and that they are being offered conversion to permanent, or
- A letter explaining that they are eligible for conversion, that their pattern can be converted but that they are not being offered conversion because of [reasons], or
- A letter explaining that they are eligible for conversion, but that their pattern can not be converted and so they are not being offered conversion.
Q: Does this apply to all businesses?
No. Small businesses are not required to make the offer, though they are required to consider any requests from staff to convert and to not unreasonably refuse any request.
The contents, timing and nature of the letters and the casual conversion process is extremely detailed and must be clearly understood.
ACAPMA Casual Conversion Guidance
ACAPMA members can access the ACAPMA Employing Casuals Guide that includes extensive detailing of the casual conversion process, along with template letters and worked examples. The ACAPMA Employing Casuals Guide is being updated to reflect the Award changes now and will be distributed to Members with the full Employment Guide Pack. ACAPMA Members can request early access to the guide by emailing employment@acapma.com.au.
More information
- Fuel Retail – Vehicle Repair, Service and Retail Award 2020 –https://awardviewer.fwo.gov.au/award/show/MA000089
- Fuel Transport – Road Transport and Distribution Award 2020 –https://awardviewer.fwo.gov.au/award/show/ma000038
- Fuel Admin – Clerks Private Sector Award 2020 –https://awardviewer.fwo.gov.au/award/show/MA000002
- Casual Employment Information Statement (and Fair Work Information Statement) information – https://acapmag.com.au/2021/04/employer-alert-casual-employment-information-statement-to-be-provided-to-your-casuals-now/
- Fair Work Ombudsman – Casual Conversion General Information –https://www.fairwork.gov.au/starting-employment/types-of-employees/casual-employees#changing-to-ft-or-pt-employment.
Elisha Radwanowski BCom (HRM & IR)
ACAPMA
Source: https://acapmag.com.au/2023/04/casual-conversion-process-vital-for-compliance/.
