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The Casual Path To Permanency - An Employment Odyssey

How recent changes to employment law provisions will affect long term casuals, and those that employ them.

On July 5, the Fair Work Commission (FWC) handed down their decision as part of their four-yearly review of modern awards. Of particular note, was the introduction of a ‘casual conversion’ provision in modern awards that do not currently have such a provision in place, including the retail, restaurant, banking, aged-care, and agriculture industry awards.

The Commission backed the Australian Council of Trade Unions’ (ACTU) submission to introduce the provision, by which casual employees may elect to convert to full-time or part-time employment, subject to specified criteria and restrictions.

The introduction of the ‘casual conversion’ mechanism is set to affect more than 2.53 million casuals, which make up approximately 20.8% of the Australian workforce.

The ‘casual conversion’

In order for a casual employee to request a “conversion”, the employee must have worked during a 12-month period, “a pattern of hours on an ongoing basis which, without significant adjustment, could continue to be performed in accordance with the full-time or part-time employments provisions of the relevant award.”

An employer can refuse a request for a conversion on certain grounds. For example, a conversion may be refused on the grounds that it would require a significant adjustment to the casual employee’s hours of work to accommodate them in full-time or part-time employment, or the position will either cease to exist and/or the hours will significantly change during the next 12 months.

The model casual conversion provision has been drafted for 85 modern awards, and is currently open for further submissions, which will be considered by the FWC next month.

Implications for the employee

Notionally, the casual loading compensates casuals for the financial benefits of the National Employment Standard (NES) entitlements – including annual leave, personal leave, termination notice - which are not applicable to casuals. However, there are evident detriments attached to casual employment, including lack of a career path, diminished access to training, poorer health and safety outcomes and the inability to obtain loans from lenders.

The FWC accepted the proposition advanced by the ACTU that the unrestricted use of casual employment without the safeguard of a casual conversion clause may operate to undermine the fairness and relevance of the safety net.

The ACTU stated that the FWC decision is a step towards remedying what it claimed was “the epidemic of casualisation” – where employers allegedly exploit the casual position in order to reduce costs, drive down wages and secure a disproportionate degree of discretionary power over their employees.

Implications for the employer

Employers have condemned the ACTU’s campaign, warning the change would jeopardize tens of thousands of jobs and punish some workers.

The decision, may be a threat to certain industries, particularly small independent retailers. Flexibility afforded by casual positions are essential to the industry, and it is reliant on casual employees to adapt to unpredictable shifts in business and changes in customer flow. If small retailers are forced to convert casuals to permanent employment, they will have to carry them through quiet periods, which will significantly increase costs.

It is likely, however that some employers will not be immediately affected by the decision, where enterprise agreements may govern their workplace.

The decision may assist in a shift towards a more flexible permanent position outlook – as employers are now pushing for changes in the flexibility of part-time positions given the introduction of these conversion mechanisms. The key will be to make part time employment more flexible and attractive for employers, rather than discouraging casual employment.

If you would like to discuss how the new provisions may affect your business, contact Aneeka Munshey on 03 8673 5555 or amunshey@rbflinders.com.au.

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About the author

Aneeka Munshey
Senior Associate

Aneeka's core focus is in commercial law, litigation and dispute resolution, employment law and franchising.

Working closely with start-ups and SMEs, Aneeka has a holistic approach to solving the legal issues faced by her clients, including commercial disputes, employment/workplace issues, restructures, intellectual property protection, family law and estates. She also proactively ident...

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