Friday, 7 July 2017

Casual Conversion Clause to be introduced into all Modern Awards

What Is the Change?

On Wednesday 5 July 2017, the Fair Work Commission decided to insert a casual conversion clause into 85 modern awards that do not already contain one.

Under the proposed new clause, a casual employee will be able to convert to full-time or part-time employment if:

  1. The casual employee has been employed for 12 calendar months; and
  2. The employee has worked 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 provisions of the relevant award

Employers must provide all casual employees (whether they are eligible or not) with a copy of the relevant casual conversion clause within the first 12 months after they commence casual employment.

Refusing Casual Conversion Requests

Employers will be able to refuse a request for casual conversion if:

  • It would require a significant adjustment to employee’s hours of work would need to be made to accommodate them in full-time or part-time employment; or
  • It is known or reasonably foreseeable that the casual employee’s position will cease to exist; or
  • The casual employee’s hours of work will significantly change or be reduced within the next 12 months; or
  • On other reasonable grounds based on facts which are known or reasonably foreseeable

While the ability to refuse a request provides some comfort for employers, the Commission commented that a conversion request should only be able to be refused after consultation with the employee. Further to this the reasons for refusal should be communicated in writing within a reasonable period. If an employee does not accept the reasons for the refusal they can make use of the award’s dispute resolution procedure.

Other Changes

In addition to the casual conversion clause, the Commission proposed a number of amendments to specific modern awards, including:

  • To introduce a 2 hour daily minimum engagement period for casual employees into the 34 modern awards that currently do not have any minimum engagement period; and
  • To include a 3 hour minimum “floor” engagement in certain manufacturing awards;
  • To provide overtime payments for casual employees who work in excess of ordinary hours in a day or week in certain hospitality and retail awards;
  • To change part time employment provisions in certain hospitality awards to allow greater flexibility for employers

Why the Change?

Since 2014, several unions have been claiming that the Commission needs to address the issues of insecure work and casualisation in Australia’s workforce.

To address these issues, a number of unions made applications to vary casual provisions in modern awards, which were largely focused on the introduction of casual conversion clauses.

Additionally, the unions made common claims relating to a daily minimum engagement for casual and part time employees, a prohibition from engaging and re-engaging casual employees to avoid award obligations and a requirement to consult with casual/part time employees prior to engaging new employees.

While the Commission did not accept all of these claims, it accepted the unions’ arguments 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 of modern awards and the National Employment Standards.

What happens next?

Before these changes come into effect, the Commission is taking further submissions about the proposed changes. The changes are likely to be implemented in the coming months, after all submissions are received and considered by the Commission.

In the meantime, employers should consider the impact of the introduction of the casual conversion clause and the other proposed changes as there can be no doubt that these changes will have a significant impact on all businesses.


This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.

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