In a first of its kind decision, the Federal Court of Australia recently upheld the rights of a casual employee to insist that his employer convert his employment to a full-time basis under an enterprise agreement.
Special Counsel, Damon King discusses the reasons for the decision and, importantly, its relevance to the model casual conversion clause presently being developed by the Fair Work Commission pursuant to the Award Modernisation process.
Relevant facts
Mr Tomvald, in his casual position as a freight handler with Toll Transport, had been regularly working well in excess of 38 hours per week for a number of years. When he approached Toll seeking to convert his position to a permanent full-time position, Toll offered him permanent part-time employment for 30 hours a week.
Mr Tomvald subsequently commenced proceedings against Toll alleging it had breached the terms of the applicable enterprise agreement and had thereby contravened a civil penalty provision in the Fair Work Act 2009 (Cth).
Enterprise agreement casual conversion clause
Mr Tomvald’s claim was based on his alleged right to convert from casual to permanent employment on a “like for like” basis which he argued was full-time employment. In that regard, Mr Tomvald relied on the following clause contained in Toll’s enterprise agreement [emphasis added]:
… where a casual Transport Worker has been directly employed by Toll or engaged through a labour hire company to perform work for Toll on a regular and systematic basis for more than 6 months, the Transport Worker may elect to become a permanent Transport Worker, on a like for like basis, within the specific business unit at which the Transport Worker is engaged, in accordance with the Award.
Reasons for decision
Justice Flick held that the phrase “like for like” in the above clause was to be understood as requiring a comparison between the nature and extent of the work previously performed by a casual employee with that of a permanent employee performing much the same work.1
Significantly, the court noted that the phrase has to be applied to the facts and circumstances of each individual employee and the workplace in which work is performed. The casual conversion right is not to be governed by the employment which the employer is prepared to offer.
Further, the right is not solely a right to convert to a permanent position – it is also a right to convert to a permanent position on a “like for like” basis.
Decision
Justice Flick found Mr Tomvald did have a right to convert from casual employment to permanent full-time work and that Toll wrongfully denied that right in breach of section 50 of the Fair Work Act. Section 50 prohibits contravention of terms of an enterprise agreement. Such contraventions can attract liability for a civil penalty, up to $63,000 per breach in the case of corporate employers and up to $12,600 for individual employers or individuals ‘involved in’ contraventions.
In addition to ordering Toll to pay civil penalties of $42,500 to Mr Tomvald, the parties were directed to reach an agreement as to how much Mr Tomvald should be compensated for loss of earnings and entitlements.
Model award casual conversion clause
In a decision published in July 2017 ([2017] FWCFB 3541), the Full Bench of the Fair Work Commission published its intention to develop a model casual employment conversion clause along the lines set out below (please note the award modernisation process in that regard is still ongoing at the date of publication of this article in January 2018).
Right to request casual conversion
(a) A person engaged by a particular employer as a regular casual employee may request that their employment be converted to full-time or part-time employment.
(b) A regular casual employee is a casual employee who has over a calendar period of at least 12 months worked a pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to perform as a full-time employee or part-time employee under the provisions of this award.
(c) A regular casual employee who has worked an average of 38 or more hours a week in the period of 12 months’ casual employment may request to have their employment converted to full-time employment.
(d) A regular casual employee who has worked at the rate of an average of less than 38 hours a week in the period of 12 months casual employment may request to have their employment converted to part-time employment consistent with the pattern of hours previously worked.
(e) Any request under this subclause must be in writing and provided to the employer.
(f) Where a regular casual employee seeks to convert to full-time or part-time employment, the employer may agree to or refuse the request, but the request may only be refused on reasonable grounds and after there has been consultation with the employee.
(g) Reasonable grounds for refusal include that:
(i) it would require a significant adjustment to the casual employee’s hours of work in order for the employee to be engaged as a full-time or part-time employee in accordance with the provisions of this award – that is, the casual employee is not truly a regular casual as defined in paragraph (b);
(ii) it is known or reasonably foreseeable that the regular casual employee’s position will cease to exist within the next 12 months;
(iii) it is known or reasonably foreseeable that the hours of work which the regular casual employee is required to perform will be significantly reduced in the next 12 months; or
(iv) it is known or reasonably foreseeable that there will be a significant change in the days and/or times at which the employee’s hours of work are required to be performed in the next 12 months which cannot be accommodated within the days and/or hours during which the employee is available to work.
(h) Where the employer refuses a regular casual employee’s request to convert, the employer must provide the casual employee with the employer’s reasons for refusal in writing within 21 days of the request being made. If the employee does not accept the employer’s refusal, this will constitute a dispute that will be dealt with under the dispute resolution procedure in [the dispute resolution provisions of the award]. Under that procedure, the employee or the employer may refer the matter to the Fair Work Commission if the dispute cannot be resolved at the workplace level.
(i) Where it is agreed that a casual employee will have their employment converted to full-time or part-time employment as provided for in this clause, the employer and employee must discuss and record in writing:
(i) the form of employment to which the employee will convert – that is, full-time or part-time employment; and
(ii) if it is agreed that the employee will become a part-time employee, the matters referred to in [the provisions of the Award dealing with part-time employment].
(j) The date from which the conversion will take effect is the commencement of the next pay cycle following such agreement being reached unless otherwise agreed.
(k) Once a casual employee has converted to full-time or part-time employment, the employee may only revert to casual employment with the written agreement of the employer.
(l) A casual employee must not be engaged and/or re-engaged (which includes a refusal to re-engage), or have his or her hours reduced or varied, in order to avoid any right or obligation under this clause.
(m) Nothing in this clause obliges a regular casual employee to convert to full-time or part-time employment, nor permits an employer to require a regular casual employee to so convert.
(n) Nothing in this clause requires an employer to increase the hours of a regular casual employee seeking conversion to full-time or part-time employment.
(o) An employer must provide a casual employee, whether a regular casual employee or not, with a copy of the provisions of this subclause within the first 12 months of the employee’s first engagement to perform work.
(p) A casual employee’s right to convert is not affected if the employer fails to comply with the notice requirements in paragraph (o).
Unlike the enterprise agreement clause in Tomvald, the proposed model award clause will allow an employer, acting reasonably, to refuse a casual employee’s “right to convert” on a number of discrete grounds. Otherwise, the clause will effectively provide for “like for like” employment on a permanent basis as in the Tomvald decision.
Key learnings
Casual conversion outcomes will largely depend on the individual circumstances of each case, including the provisions of the applicable industrial instrument.
While some awards already provide for rights of casual conversion in certain circumstances, a model clause for broader application is (as at January 2018) yet to be finalised. Employers should keep up to date with developments to ensure that they are aware (as they occur) of changes to the award safety net applicable in their workplaces.
One feature of the model clause to which employers will have to adapt - assuming it finds its way into a final clause - is the disclosure obligation currently described in paragraph (o) of the existing draft. We anticipate that the practicalities will be similar to those applicable to the giving of the Fair Work Information Statement (FWIS) to new employees, as is currently required by the National Employment Standards (NES). It is possible that the FWIS itself will be modified to include some reference to casual conversion rights, potentially streamlining compliance with the disclosure process.
We would also expect the final clause to include a transitional disclosure obligation applicable to workers engaged casually at the time the clause becomes law, but doubt that prior casual service up to that point will count toward the 12 month service based threshold provided for in the current draft.
In any case, failure to make the disclosure will amount to a breach of the award resulting in exposure to liability for civil penalties the same as those applicable to breaches of the NES or an enterprise agreement (as described above).
Further, failure by an employer to carefully consider and make the right decision in respect of a casual employee’s request to convert to permanent employment may result in liability for both civil penalties and back pay.
This follows on from our previous article on this topic, which you can read here.
For expert advice on casual conversion rights in your industrial environment, please contact HogoodGanim Lawyers Industrial and Employment Law team.
1. Tomvald v Toll Transport Pty Ltd [2017] FCA 1208, [92].