Don't be too casual about casuals!

We are now 12 months on from the transition period for employer compliance with last year's casual employment conversion reforms introduced under the Fair Work Act 2009 (Cth) (the Act). These reforms obliged many employers of casual employees to extend offers to convert to permanent employment. To refresh your memory, last year's casual conversion reforms are below.

Importantly, these reforms are ongoing and employer obligations will continue to arise (apart from small business employers) each time a new casual employee reaches the 12 months of service milestone.

This means that if your business has hired casual employees in the past year, you should consider whether to extend them an offer of conversion to permanent employment (if you haven’t already). In addition, if your business has casual employees who have been employed for over 12 months without being considered for conversion, you need to either (a) offer permanent conversion or (b) communicate with your employee your decision to not offer conversion.

1. Employer obligation to offer permanent employment

An employer (except for a small business employer) must offer to convert a casual employee to permanent employment within 21 days after the employee’s 12-month anniversary, if the employee:

1. has been employed by the employer for 12 months;

2. has worked a regular pattern of hours on an ongoing basis for at least the last 6 months; and

3. could continue working those hours as a full-time or part-time employee without significant changes.

Any such offer should be made in writing, for the employee to convert to either full-time or part-time employment (depending on and consistent with the employee's hours for at least the prior 6 months).

Employees do not need to accept an offer to convert to permanent employment (and many will not wish to), but should respond to an employer's offer to convert to permanent employment within 21 days of receiving the offer. If a response is not received within this timeframe, an employer can assume that the offer is declined. However if the employer's offer of conversion is accepted, the employer must discuss with the employee whether they are converting to full or part time employment, what their hours of work will be post-conversion, and the day that the conversion will take effect. Following that discussion and within 21 days of the conversion offer being accepted, the employer must give written notice to the employee to confirm the new arrangement.

Importantly, employers who are small business employers are exempt from the obligation to make a conversion offer to eligible casual employees. An employer will be considered to be a small business employer if they have less than 15 employees at a particular time (including employees of associated entities of the employer, but only including casual employees if they are engaged on a regular and systematic basis).

2. Employers not making a conversion offer
If an employer (other than a small business employer) decides not to make a conversion offer to a casual employee, the employer needs to advise the employee, in writing, of the reasons for not making a conversion offer. This must take place within 21 days after the employee’s 12-month anniversary. The only reasons for an employer to not extend a conversion offer are:

1. that the employee hasn’t worked a regular pattern of hours on an ongoing basis for at least the last 6 months which they could continue working as a full-time or part-time employee without significant change; or

2. that there are reasonable grounds for not making an offer.

Section 66C of the Act states that any 'reasonable grounds' must be based on facts that are known or reasonably foreseeable at the time. Such grounds may include that the employee’s position will cease to exist within 12 months, that the employee's hours of work will be significantly reduced within 12 months, or that there will be a significant change to the days on which the employee’s hours of work fall, or the times at which the employee is required (or both), which cannot be accommodated within the days or times the employee is able to work.

3. Employee's right to request permanent employment

A casual employee (including an employee of a small business employer) may make a request to their employer to convert to permanent employment at any time 21 days after their 12 month anniversary (or, if they work for a small business employer, at any time after that anniversary).
To be eligible to request conversion, the casual employee:

• needs to have been employed by the employer for at least 12 months;

• needs to have worked a regular pattern of hours on an ongoing basis for at least the last 6 months; and

• must be able to continue working their hours as a full-time or part-time employee without significant changes.

However, a casual employee cannot generally make a request if, in the last 6 months:

• they have refused a conversion offer from their employer;

• their employer has told them in writing that they won’t be making an offer of casual conversion because there was a reasonable ground not to make the offer; or

• their employer has refused another request for casual conversion because there was a reasonable ground to refuse the request.

An employer must respond to any employee’s request to convert to permanent employment in writing and within 21 days of the request being made. If the request is to be refused, the employer must consult with the employee and communicate reasons for the refusal in their written response. However, if the employee's request is to be accepted, the employer must discuss with the employee whether they are converting to full or part time employment, what their hours of work will be post-conversion, and the day that the conversion will take effect. Following that discussion and within 21 days of the conversion request being made, the employer must give written notice to the employee to confirm the new arrangement.

4. Managing your casual conversion obligations

Penalties for non-compliance with the casual conversion provisions of the Act may apply (up to $13,320 per contravention for individuals and $66,600 per contravention for companies).

Employers with casual employees should take proactive steps to manage their casual conversion obligations. For employers with 15 employees or more, this means monitoring for the 12-month employment anniversary of all casual employees and, once it is reached, determining whether a casual conversion offer ought to be made. Employers should consider diarising each casual employee's 12-month employment anniversary upon commencement to ensure it is not overlooked or forgotten. In addition, all employers - including small business employers - should monitor any employee requests for conversion and ensure they are responded to appropriately within 21 days of receipt.

Please let us know if you require further information in relation to the casual conversion obligations of employers under the Act, or if you require assistance to determine whether your casual employees should be offered or granted permanent employment.