The much-anticipated changes have been passed by Parliament. Of particular interest to small business owners is the changes in relation to casual employees.
But what are these changes?
- The introduction to the definition of ‘casual employee’ into the Fair Work Act 2009 (Cth) for the first time. This focuses on the offer and acceptance of the employment relationship rather than the current pattern of work.
- The National Employment Standards (NES) will also change so that it includes an entitlement for regular and systematic casual employees to request to be moved to full-time or part-time employment.
- The Court will be allowed to offset any casual loading paid to the employee against any claim for unpaid entitlements (e.g annual leave, personal leave) where an employee was properly characterized as a perm employee.
An exciting change for many small business owners that will be a welcome relief is the power of the Fair work Commission to dismiss frivolous and vexatious claims has been increased.
As a business, we encourage you to take this opportunity to review the way that you staff your business, and those casuals that are regular and systematic seek to start the casual conversion process. Below are out 5 steps to ensure compliance with casual conversion clauses.
ENSURING COMPLIANCE IN 5 STEPS
Under most modern awards, a “regular casual employee” can request to convert their employment if they have worked:
for a period of 6 or 12 months; and
- a pattern of hours on an ongoing basis, which the employee could continue to perform as a full-time employee or part-time employee (as applicable), without significant adjustment.
The casual employee must put their request to convert in writing.
STEP 1 – Provide new and existing award-covered employees with a copy of the casual conversion clause
Ensure you read the award that applies to your employees carefully. Some awards contain more onerous requirements on employers to notify casual employees of their right to request casual conversion at 6 or 12 months of ‘regular and systematic’ casual employment. This means you will need to be keeping a close eye on any casual employees that are reaching these milestones.
Once you have checked your award you can notify your employees regarding the casual conversion clause. You can use our Notification of Casual Conversion Clause. Also copy the applicable section from the Award and staple to the back of the letter.
You will need to provide the clause within 6 to 12 months of their employment commencing.
Shortly after the Notification of Casual Conversion Clause you will send a follow up letter that sets out the nature of a casual and that of a perm employee as well as the rates of pay for both. Also included is the Casual Conversion Election Form where the employees can advise if they wish to convert.
Employees have 4-weeks to consider if they would like their employment converted to permanent employment or remain as a casual.
STEP 2: Respond to any casual conversion requests
Respond to any requests to convert to permanent in writing within 21 days to accept or reject the employee’s request for conversion. You can only reject a request convert to permanent in accordance with the terms of the relevant award. Sometimes an award will include the ‘reasonable grounds’ on which you can refuse a request.
legally responding to requests for casual conversion
Your business must comply with the obligations contained in any casual conversion clause in a modern award, this includes:
- Providing new and existing casual employees with a copy of the casual conversion clause;
- Responding to any request to convert within 21 day’s;
- If you reject a request, complying with the requirements in the relevant award such as rejecting the request on ‘reasonable grounds’ or ‘not unreasonably refusing’ a request;
- If you agree to convert a casual to permanent employment, complying with the provisions of any part-time employment clause in the relevant award and providing the employee with set days, hours and patterns of work (and a new contract of employment).
How to legally refuse the request for casual conversion
It is important to note that the new clause does not mean you have to approve all requests. It is best to double check the relevant award but generally, the scenarios where you may refuse on reasonable grounds include but not limited to:
- The conversion would require a significant adjustment to the employee’s hours of work as a full-time or part-time employee;
- It is known, or reasonably foreseeable that the employee’s position will cease to exist within the next 12 months or the hours of work which the employee is required to perform will be significantly reduced in the next 12 months;
- The employee’s hours of work will significantly change or be reduced within the next 12 months.
STEP 3: Review your existing workforce
Review the use of casual employment in your business, particularly where the arrangement involves long-term, regular work patterns. We recommend that you consider doing a cost analysis between that of the cost of wages for casual employees compared to that of Perm employees.
The 25% loading is designed to compensate employees for not receiving some of the benefits of perm employees as well as for the insecurity of their employment. You may well find that the bottom-line figure is more favorable to employee permanent employees compared to casual.
- Ask us about our analysis sheet that we have created for you to easily see over 12-months the cost differences to help you form your decision.
- For those employees, consider offering conversion to permanent employment to protect your business ask us about our casual employment contracts/ agreements.
STEP 4: Update your employment contracts
Update your employment contracts and ensure you at least include provisions that make clear that the position of casual
- has no guaranteed hours of work;
- will usually work irregular hours;
- has no sick or annual leave entitlements
- They are not obligated to always be available; and
- can have their employment ended without notice, unless notice is required by a registered agreement, award, or employment contract.
We have casual employment contracts/ agreements available and highly recommend that if you have not done so in the last 12-24 months updated these then you do so.
STEP 5: Document and save the casual conversion process
“If it isn’t written down, then it didn’t happen”. ALWAYS protect yourself and the business by ensuring that you keep documentation about any changes to workplace relationships. Keep these documents for at least 7-years so that any retrospective claims can be defended with copies of the clear and documented process.