By Fay Calderone, Partner - Hall & Wilcox
New rights applying to casual employees came into effect on 1 October 2018 with the Fair Work Commission introducing a model casual conversion term into approximately 85 Awards (Model Terms).
The purpose of the Model Terms is to provide casual employees who have worked a regular pattern of hours for at least 12 months, without significant adjustment, the right to request their employment be converted to a permanent part-time or full-time arrangement - so what does this mean for employers?
Under the Model Terms, employers must:
- provide all casual employees with a copy of the applicable Model Term by 1 January 2019, or if they were employed after 1 October 2018, then within 12 month of their commencement (we note that some Awards differ so employers should review the Award which applies to their workplace to determine their obligations);
- respond, within 21 days, to any written request by a casual employee to convert to their employment to either full-time or part-time; and
- where a request is granted, ensure the conversion is recorded in writing and the change takes effect from the next pay cycle (unless otherwise agreed).
The Model Terms provide that employers can only refuse a request on reasonable grounds, such as where a significant adjustment to the casual employee’s hours of work would be required to accommodate them in full-time or part-time employment under the applicable modern award, or where it is reasonably foreseeable that the casual employee’s hours of work will significantly reduce, or position will cease to exist, within the next 12 months.
An employee has the right to challenge any refusal using the dispute resolution provisions in the relevant Award and an employer may be liable for penalties for any breach of their obligations.
What does this mean for your business?
While the changes seem daunting, practically speaking, many casual employees are incentivised by the 25% casual loading and may not be inclined to request a conversion. Nonetheless, employers need to be aware of their obligations under the Model Terms or risk being liable for significant penalties.
Regardless of whether your casual employees will request a conversion, employers with casual workers that have worked on a regular and systematic basis for an extended period of time, should take this opportunity to consider converting those workers to a permanent status.
There has been a recent influx of cases in which a ‘casual’ employee claims they are a permanent employee at common law and seek redress for unpaid annual leave and other entitlements. Earlier this year in the Federal Circuit Court case Apostolides v Mantina Earthmovers & Constructions Pty Ltd 1 a worker successfully argued that they were a permanent employee and the Court held they were entitled to 15 years of back-paid annual leave entitlements.
In the recent case WorkPac Pty Ltd v Skene 2 the Full Court of the Federal Court also found a ‘fly-in fly-out’ worker was not a casual employee for the purposes of the Fair Work Act 2009 (Cth) leaving WorkPac is liable for unpaid leave entitlements. The Full Court determined that casual employment arrangements are likely to have the following characteristics:
- no firm advance commitment as to the duration of the employment or the days or hours that will be worked;
- no firm advance commitment from the employer that the work offered will be ongoing or indefinite and no firm advance commitment from the employee that they will accept ongoing employment from the employer;
- informal, uncertain, intermittent or irregular engagements;
- payment by the hour;
- payment of a casual loading in lieu of entitlements to paid leave; and
- termination at short or on no notice.
In response to the WorkPac v Skene decision, WorkPac has commenced another case in the Federal Court seeking a declaration that employee Robert Rossato is a casual employee and should not be entitled to leave. The Construction, Forestry, Maritime, Mining and Energy Union as well as former WorkPac employee, Mr Skene, have applied to intervene in the proceedings to support Mr Rossato’s claim that he is a permanent employee.
Industrial Relations Minister, Kelly O’Dwyer has also applied to intervene, fearing that the decision in WorkPac v Skene is causing a flood of casual employees trying to ‘double-dip’ on casual loading and leave entitlements, which should be offset against each other in the circumstance that a worker is deemed to have been a permanent employee.
While the WorkPac v Skene decision remains unturned, employers should be wary that if some of the above characteristics are absent from your agreement with your casual employees, you should consider converting them to a permanent status or risk being liable for back payment of their leave and other entitlements.
What should you do?
In light of the recent changes, you should:
- familiarise yourself with your obligations under the Model Term within the applicable Modern Award or enterprise agreement which is relevant to your employees;
- provide all current casual employees with a copy of the applicable Model Term before 1 January 2019;
- provide all new casual employees, who have commenced from 1 October 2018 onwards, with a copy of the applicable Model Term within 12 months of their commencement (or as otherwise specified under the applicable Award);
- consider all written requests by casual employees to convert to permanent employment and respond within 21 days; and
- take this opportunity to reflect on your existing casual arrangements and consider whether it would be more appropriate to convert them to a permanent status so as to avoid any future liability to back-pay annual leave and other entitlements.
If you have any questions relating to this article, or if you would like advice on the new rights applying to casual employees, please contact the author of the article, Fay Calderone, Partner at Hall & Wilcox on +61 2 8267 2800 or by email, email@example.com
1 FCCA 279.
2 FCAFC 131.