In September 2021, changes to the Fair Work Act required certain employers to review and offer casual employees conversion to permanent employment under the National Employment Standards (NES).
Now, reforms introduced by the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act, will remove this requirement and instead create a single pathway for eligible casual workers to choose to convert to permanent employment.
There are 2.5 million casual employees in Australia, making up almost a quarter of the total workforce, so these changes will affect almost every employer.
In this article, we look at the current rules around casual conversion and what will change when the new regulations come into effect on 26 August 2024.
Current casual conversion requirements
Employers with 15 or more employees are required to assess any casual employee who has been employed for 12 months for their eligibility to be offered permanent employment.
To be eligible for casual conversion, the employee must have worked a ‘regular pattern’ of hours for the past 6 months.
Eligible employees must be offered permanent employment in writing within 21 days.
Employees who are not eligible, either because they haven’t worked a regular pattern of hours for the last 6 months or due to ‘reasonable grounds’, must also be advised of their ineligibility in writing within 21 days.
Small business employers (those with fewer than 15 employees) do not have to proactively offer casual conversion, however, employees have the right to request conversion to permanent employment if they’ve been employed for 12 months.
Employers must respond to requests within 21 days, advising the employee whether they have accepted the request. Any refusal needs to be provided to the employee in writing and be based on reasonable grounds.
Reasonable grounds for refusal
Reasonable grounds for refusing a request or not offering conversion include that the conversion would require a significant adjustment to the employee’s hours of work, contrary to what they were already undertaking.
A request can be refused, or conversion not offered, if the employee’s position will no longer exist within 12 months of receiving the request, or if their hours worked will reduce significantly in that same period.
If there is a substantial change to the days or times the employee is required to work, and they can’t be accommodated by the employee, then this would also constitute reasonable grounds.
Reasonable grounds would also occur where granting a request would lead to non-compliance with the legal requirements of a recruitment or selection process.
Note that the reasonable grounds must be based on facts that are known or reasonably foreseeable.
What if an employee refuses an offer?
Employees have 21 days to accept an offer of casual conversion. If an employee refuses to convert to permanent employment, then they remain a casual employee.
However, the employee has a residual right to request conversion.
Where an employee requests conversion under this residual right, the employer must consider the employee’s eligibility and, if they are eligible, offer the employee permanent employment or notify them of reasonable grounds for not offering permanent employment (if they’re not eligible).
Note, this residual right does not apply if, in the past 6 months, the employee:
- Refused an offer of casual conversion.
- Received notice from their employer that conversion will not be offered (on reasonable grounds). Or
- Requested casual conversion, which was not accepted by the employer.
Read our free guide to getting casual conversion right under the NES.
Changes to casual conversion from 26 August 2024
Employee choice
From 26 August 2024, employers will no longer be required to assess and offer eligible casual employees conversion to permanent employment.
Instead, casual employees who believe they no longer meet the definition of a casual employee will have the workplace right to request (in writing) a shift to permanent employment after a period of 6 months, or 12 months if they work for a small business.
The definition of casual employee in the Fair Work Act is also changing, so that an employee will only be considered a casual if:
- There isn’t a firm advance commitment to continuing and indefinite work, factoring in the real substance, practical reality, and true nature of the employment relationship.
- They are entitled to be paid a casual loading or a specific pay rate for casuals.
A range of factors will determine whether there is an absence of a firm advance commitment, including the practical reality and true nature of the employment relationship, and the terms of an employment contract or mutual understanding (or expectation) between the employee and employer.
Responding to employee requests
Employers will have to respond to written notifications from casual employees within 21 days. There is also a requirement to consult with the employee before making a decision.
If the employer accepts, they must engage the casual worker on a permanent full- or part-time basis.
Employers can refuse if:
- The employee meets the definition of a casual employee.
- There are ‘fair and reasonable operational grounds’ for not accepting the request (these grounds are broader than the previous ‘reasonable grounds’), e.g. if substantial changes would be required to the way in which work in the enterprise is organised or it would bring significant impacts to the operation of the enterprise.
- Accepting the request would mean the employer does not comply with recruitment or selection processes required by Commonwealth, State or Territory laws.
If employers deny a request, they aren’t required to provide detailed reasons.
Workers will be able to appeal a decision with the Fair Work Commission, who have new powers to resolve disputes.
Other changes to casual employment
From 26 August 2024, there will be new anti-avoidance provisions to prevent employers from dismissing or threatening to dismiss an employee to engage them as a casual, or from making misrepresentations to persuade a person to enter into a contract for casual employment.
Employers will also have to provide casuals with a Casual Employment Information Statement (CEIS) more often.
