Introduction of casual conversion clause in all modern awards

Published 5 July 2017

In a 4 yearly review of modern awards, the Australian Council of Trade Unions (ACTU) sought for the Fair Work Commission (FWC) to introduce a similar casual conversion clause into all modern awards and alter 5 modern awards that already have a clause. The alteration would mean employees that met certain criteria would be deemed to be permanent employees once a certain period of time elapsed.

The FWC accepted that it was necessary to have a casual conversion clause in modern awards in order to meet the awards objectives. Specifically, the FWC “accept[ed] the proposition advanced by 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.”

While the FWC noted casual rates compensated for National Employment Standards entitlements, they did not account for the long term detrimental impacts associated with adults working consistently in a casual position. These include working while sick due to concerns that absences will affect future employment, poorer health and safety outcomes and a reduced career path.

Although the FWC found the majority of employers did not exploit their ability to engage casual staff where the NES entitlements did not apply, some employers did appear to employ individuals as casual workers indefinitely despite the employees seeking, or being interested in, a permanent position.

Draft conversion clause

Under the model conversion clause drafted by the FWC, an employee must have worked for 12 months with a pattern of hours that could be performed in full-time or part-time employment.

An employer may refuse a conversion if:

  • A significant adjustment is required to place them in full-time or part-time employment;
  • It is known or reasonably foreseeable the employee’s position will not exist within the next 12 months;
  • It is known or reasonably foreseeable a significant change or reduction in the employee’s hours will occur within the next 12 months; or
  • On other reasonable grounds based on facts which are known or reasonably foreseeable.

The Australian Industry Group and the Recruitment & Consulting Services Association Australia & New Zealand advanced arguments that the current requirement in some modern awards for employers to notify casual employers who can request to convert to a permanent position be removed. The FWC refused to do so, stating, “It cannot be assumed that casual employees will be able to ascertain these rights themselves”.

The FWC is taking further written submissions from interested parties regarding casual conversion clauses until 2 August 2017, after which time it will make a decision regarding the implementation of the clause.

Read the full decision here

This content is general in nature and provides a summary of the issues covered. It is not intended to be, nor should it be relied upon, as legal or professional advice for specific employment situations.

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