Employers of casual employees, are you compliant? Compliance deadline approaching fast

A deadline for employers of casual employees is approaching fast! 

Employers of casual employees have until 27 September 2021 to ensure that they have complied with amendments to the Fair Work Act (FWA) introduced in March 2021, and have offered conversion to permanent employment to eligible casual employees who were employed prior to 27 March 2021. 

What do employers need to do before 27 September 2021?

Who is eligible for casual conversion?

For a casual employee to be eligible for casual conversion, an employer needs to consider whether they have:

• been employed for 12 months or more; and
• worked regular and systematic hours for the past six months, that can be worked as permanent employment on an ongoing basis without significant adjustment.

If so, the casual employee is (under section 66B of the FWA) to be offered conversion to permanent employment in writing from the employer, unless an exclusion applies.

For casual employees employed prior to 27 March 2021, this offer needs to be made by 27 September 2021.

Otherwise, for casual employees employed after 27 March 2021, this needs to be done within 21 days of the casual employee reaching their 12-month anniversary.

It is important to note that an employer cannot reduce or vary a casual employee’s hours of work or terminate a casual employee to avoid the casual conversion rules¹. Rules, which are now a part of the National Employment Standards. 

What are the exclusions?

Employers are not required to make an offer of casual conversion if there are reasonable grounds not to make the offer. Those grounds must be based on facts that are known or reasonably foreseeable at the time the employer decides not to offer conversion.

Section 66C of the FWA provides this non-exhaustive list of reasonable business grounds:

• during the 12 months following a decision not to offer conversion:

1. the casual employee's position will cease to exist; 
2. the employee’s hours of work will be significantly reduced;
3. there will be a significant change in either or both of the employee’s working days or times, which cannot be accommodated within the days or times the casual employee is available to work; or

• making the offer would not comply with a recruitment or selection process required by or under a law of the Commonwealth or a state or a territory.

If an employer decides not to make an offer of conversion, this must be communicated in writing to the casual employee with the reason(s) for not making the offer and referring to section 66B of the FWA. 

For casual employees employed prior to 27 March 2021, this must be done by 27 September 2021.

Otherwise, for casual employees employed after 27 March 2021, it must be done within 21 days after the casual employee reaching their 12-month anniversary. 

What about small business?

Small business employers, that is employers with less than 15 employees (headcount, not full time equivalent and including employees of associated entities) do not need to proactively manage casual conversion and make an offer of conversion to eligible casual employees. 

However, small business employers are required to respond to any requests for conversion from eligible casual employees within 21 days of receiving a written request for casual conversion.

The same reasonable business grounds apply to an employer rejecting an employee request for conversion. Again, if the employer rejects the request, they must give reasons in writing. 

Reasons for not offering, or declining a request for, conversion

If conversion is not to be offered, or, a request for conversion is to be declined, careful attention needs to be paid to the written reasons given, keeping in mind that:

• the conversion rules are contained within the National Employment Standards;
• in the worst cases, contravention of the NES can attract liability for civil penalties;
• disputes about conversion can be referred to the Fair Work Commission or to the Federal Circuit Court;
• in many conversion disputes, your written statement of reasons for refusing to offer, or declining, conversion, is likely to be closely scrutinised as exhibit A in the proceeding.

What needs to be in an offer of conversion? Is optional extra content allowed?

Except in very limited respects, the FWA does not prescribe the content of an offer of conversion. Employers do need to specify in writing whether they are offering full-time or part-time employment and, if part-time, the hours/days offered. The offer should be based on the hours the casual employee usually works. There is no obligation to offer additional hours.

The offer must be an offer of permanent ongoing employment. An offer of fixed term, specific task or seasonal employment is not a valid offer of conversion². 

The offer of conversion should, otherwise, deal with all of the terms and conditions of the ongoing employment, particularly in relation to the way in which, if at all, remuneration will be affected by acceptance of the offer. For example, will the effect of conversion be to reduce the employee’s hourly rate of pay by any casual loading paid pre-conversion? In most cases this is going to be the obvious trade-off, following acceptance of an offer of conversion, for a converted employee becoming entitled to the benefits associated with permanent employment, such as, paid annual and personal leave, notice of termination and redundancy pay.

There are some unanswered questions. For example, is an offer to convert able to legitimately include new or revised terms and conditions of employment, apart from permanency, such as:

• post-employment restraints against competition with the employer;
• a mandatory requirement to vaccinate for the flu or COVID-19; or
• a requirement that the employee submit to workplace surveillance, biometric scanning or other measures implemented by the employer with privacy implications?

Further, can additional terms and conditions of employment be proposed in an employer’s response to a request to convert?

In our view, this is permissible, but none of these propositions are dealt with in the legislation and they are untested. An employer who presses too aggressively in relation to matters over and above the basic conversion proposition runs the risk of third party intervention by the Fair Work Commission or the Federal Circuit Court. The conversion provisions, while directly impacting the contract of employment between the parties, have very little to say about the contract itself. But fundamentally, the parties are being statutorily required to agree to certain things. It would be somewhat perverse if, in doing so, their ability to agree other or additional things as part of the exercise was precluded.

Keep in mind that an employer can decline a conversion opportunity on reasonable business grounds. These might include an employee’s refusal to agree to reasonable additional conditions of employment.

Section 66K of the FWA states that, once conversion has occurred, the employment is taken to be permanent for the purposes of all underlying industrial arrangements, including the employee’s contract of employment. This could produce some undesirable contractual outcomes, if insufficient attention is paid to the other terms and conditions of the ongoing employment.

What if my casual employee rejects or doesn’t respond to an offer of conversion

A casual employee then has 21 days to accept an offer of conversion made by an employer. If they fail to respond in writing, they are taken to have rejected the offer.

If an employee has been offered conversion and rejects (or doesn’t respond) to the offer, employers are not obliged to make further offers of conversion. 

However, the casual employee may make an application to the employer in the future for conversion (at least six months after the rejection) that must be considered by the employer and a response provided, in writing within 21 days. 

Notice of conversion

Once an offer of conversion, or request to convert, has been accepted, the employer is required within the following 21 days to give the employee written notice about the following matters:

• whether the conversion is to full-time or part-time employment;
• the hours of work after the conversion takes effect; and
• the day the conversion is effective. Unless the parties agree otherwise, this must be the employee’s first full pay period that starts after the day the notice is given.

However, before the notice is given, the employer is required to discuss those matters with the employee. This should be relatively straightforward if, in the process, the employee has been given a comprehensive statement of the relevant detail as part of the employer’s offer to convert (or as a statement of the employer’s conditions for accepting a request to convert).

Where an employer agrees to grant an employee request for conversion, the notice of conversion can be combined with notice of acceptance.

When do employers need to provide the Casual Employment Information Statement (CEIS)?

Employers need to make sure all casual employees have been provided with the casual employment information statement, available from the Fair Work Ombudsman website (in addition to the existing Fair Work Information Statement).

All new casual employees are to be provided with the CEIS either before commencement of employment or as soon as possible after commencement of employment.

Small business employers were required to provide this information statement to their existing casual employees as soon as possible after 27 March 2021.

For existing casuals, as at 27 March 2021, employers (other than small business employers) need to provide this statement as soon as possible after 27 September 2021. This can be done:

• in person;
• by mail;
• by email, including emailing a link from the Fair Work Ombudsman website; or
• placing a link to the statement on the employer’s intranet.

Employers can provide the information statement by other means. However, employers need to keep a record of the statement being provided to casual employees to show compliance (and avoid an allegation of breaching the National Employment Standards).

Employers should note that they need to give casual employees the version of the information statement that is in place when the obligation to provide it arises. The statement is regularly updated on the Ombudsman’s website and does change from time to time. So check it. We generally recommend that the statement be provided electronically via a link to the CEIS on the FWO website, currently available here.

What happens if an employer gets it wrong?

As previously mentioned, the CEIS and casual conversion provisions form part of the National Employment Standards. Civil penalties can be imposed for employers that do not comply with the requirements. These penalties can be up to $66,600 for a corporate entity and $13,320 for individuals involved in a breach.

Employers should also be mindful of the general protection (adverse action) provisions that prevent an employer from treating an employee less favourably because they have exercised or chosen not to exercise a right to casual conversion. Civil penalties can also be imposed if an employer is found to have breached the general protection provisions. 

Additionally, employers need to be aware that there is an ability, in most circumstances, for either party to refer to the Fair Work Commission disputes relating to casual conversion. This includes, where an employee is dissatisfied with a decision to not offer conversion or if the hours offered on conversion do not align to the hours worked as a casual employee.

Unless the parties agree for the FWC to arbitrate the dispute, its functions are limited to mediation, conciliation, making a recommendation or expressing an opinion. Further, the FWC’s role in resolution of such disputes is subject to other industrial arrangements applicable to the parties for dispute resolution, for example, under an applicable enterprise agreement or the terms of the applicable contract of employment.

Some disputes can also be referred by employees for resolution in the small claims jurisdiction of the Federal Circuit Court or a state or territory magistrates’ court (or Local Court in the NT). In proceedings of that kind the court is empowered to make coercive orders, for example:

• requiring the employer to consider making an offer, or employee request, to convert; or
• preventing the employer from relying upon a particular ground as one for declining to offer, or accepting a request for conversion.

As an employer of casual employees what do I need to do now? 

1. If you have not already done so, provide or make arrangements to provide a copy of the casual employment information statement to your casual employees.
2. Review your existing casual employees to determine whether they are eligible for conversion.
3. Consider whether conversion can be offered to eligible casual employees.
4. Make an offer of conversion or advise the reasons a conversion offer cannot be made.
5. Implement processes to ensure you can respond within 21 days to a casual employee making a request for conversion or becoming eligible for conversion.
6. Keep good records of all of this in order to prove, if ever you have to prove, compliance with the new requirements.

We predict that the sticking points will include the identification and documentation of proper grounds for refusing conversion, and the documentation of conversion arrangements having regard to the interplay between the contract of employment and the new statutory requirements.

Get in touch with our Workplace and Employment team if you have any questions or problems.

Footnotes 

¹ See section 66(L) Fair Work Act

² See section 66A(2) Fair Work Act