JULY 2017 IR NEWS

Member Update July 2017

Conversion of Long term Casual Employees to Fulltime or Part Time

The Fair Work Commission's (“FWC”) has been undertaking its four-yearly review of awards and one issue that is likely to occur and may have an impact on employers in some industries such as ours, includes giving long term casual employees the opportunity to apply to convert to part time or full time employment in some circumstances. This is likely to apply to onlyaward-covered casual employees after an initial 12-month qualifying period. Employers who currently have casual employees who they have employed for 12 months on a regular and systematic basis will be affected after the decision is approved.

The purpose of this Update is to give employers the opportunity to be prepared and to plan as ongoing casuals are regular feature of this industry.

This does not apply to employees on Enterprise Agreements.

The FWC will introduce a "casual conversion" model clause in modern awards to set out the criteria and process under which conversion to employment can occur. The inclusion of the clause in awards will fundamentally change the way employers use casual employment to resource their business.

Some awards have had a conversion clause since 2010 but, the precise terms of this model clause are yet to be confirmed. The clause is expected to include the following provisions:

1)A qualifying period of 12 months over a calendar year. This may mean casual employees who have been engaged by an employer for more than 12months will be able to seek conversion as soon as the award applying to their employment is varied to include the clause. However, this issue will likely to be clarified by the FWC.

2)A criterion that the casual employee has worked a pattern of hours on an ongoing basis over the 12 months’ period, which could continue to be performed in line with full-time or part-time employment provisions.

3)An obligation on employers to provide all casual employees (whether eligible to convert or not) with a copy of the casual conversion clause within the first 12 months after their initial engagement. This is likely to apply to existing casual employees who have worked on a regular and systematic basis for the past 12 months.

Can an Employer reject an application for conversion?

Yes. While casual employees will be able to elect to convert to fulltime and part time employment, employers may still refuse the conversion, after consultation with the employee, on the following grounds:

a)conversion would require significant adjustment to the casual employee's hours of work to accommodate them in either full-time or part-time employment

b)it is reasonably foreseeable that the casual employee's employment will cease to exist

c)the employee's hours of work will significantly change or, is likely to be reduced within the 12-month period following the proposed conversion, or

d)on other reasonable grounds based on facts that are known or reasonably foreseeable.

Separate and more specific changes will also be made to casual and part-time provisions in some awards, including the:

a)Pastoral Award 2010

b)Wine Industry Award 2010

c)Horticulture Award 2010

Impact of this decision

Employers will need to invite a ongoing casual employee at the approriate time if he or she wishes to convert to fulltime or part time employment. This will occur when the employee is about to complete 12 months of on-going work with an expectation of ongoing employment beyond twelve months.

Whilst this may add to the employer’s work load I suspect that most (if not all) casual employees who will be invited to convert to part time or full time will reject the invitation because they will prefer the 25% casual loading to paid leave..

Pros and Cons

The options include what category of employment will best suit your business when engaging a new employee who you consider you can provide on going and systematic rostering. If you think you can provide 152 hours over four consectutive weeks you should consider employing on a fulltime basis.

If you can engage an employee on an ongoing basis of less than 152 hours over four consecutive weeks basis you should consider engaging on a part time basis.

If you can not provide on going work but need labour for seasonal work or one off projects (not ongoing) you should consider engaging on a casual basis.

Small employers (less than 15 employees) are generally exempt from unfair dismissal laws for the first twelve months of employment. Larger employers (15 employees or more) are exempt from unfair dismissal laws for the first six months.

Overtime applies to fulltime and casual employees when they work more than 152 hours over four consecutive weeks. Overtime applies to part time employees who work more than than agreed hours and days.

Part time and casual employees must be engaged or paid for a minimum of three hours for each shift (please note not per day). This provision does not apply to fulltime employees.

The cost of annual leave, personal carers leave and, public holidays not worked is about 18% for fulltime and part time employees but, casuals receive 25% instead of paid leave and public holidays.

Suggestion:

If you expect the employee(s) to work with an expectation of ongoing work and to be rostered on a regular and systematic manner you should engage on a fulltime or part time basis on probation and not engage that employee on a casual basis. You can engage an employee on a fulltime or part time basis with less overheads (18% for paid leave instead of 25% casual loading).

What do you need to do now?

Nothing other than be prepared. This update is to alert you to the likelihood of this change so that you can be prepared. However, until this decision is approved the finer details will be subject to change.

In preparation for the conversion clause coming into effect, employers should:

  • Consider whether to discuss this likely change with casual employees who you have employed on an ongoing basis for the past 12 months or, who are likely to complete 12 months in the near future.
  • Think carefully about the purpose for which casual employees are engaged (to meet short-term or long-term demands) and plan accordingly.
  • Notify casual employees about their rights to elect to convert within their first 12 months of engagement and implement procedures to deal with requests to convert to permanent employment.
  • Exercise care when dealing with requests to convert, including when consulting with the employee on this issue. An employer cannot simply dismiss a request to convert, and will need to be able to justify any decision to reject a conversion.

We will prepare another update when the decision is approved.

Please do not hesitate to contact me if you require clarification.

Chas Cini