Casuals have recently been given the right to convert to permanent employment, in a major shakeup by the Federal Government.
Under the law, Australian employers need to assess if a casual is eligible to become permanent once they’ve been employed for exactly 12 months.
If the employee has had regular hours for the last 6 months, they’re likely to be eligible to become permanent, unless there are reasonable grounds not to. You’ll need to send an offer in writing to become permanent within 3 weeks.
The Hidden Complexity
We combed through the changes to see what Australian businesses needed to do to comply with the law.
It sounds simple, but in reality, it’s really not.
We found three big issues for businesses trying to follow the casual conversion law.
- You need to make a decision about what regular hours are, because the law doesn’t say what they actually are
- You need to know the reasonable grounds you can use to refuse casual conversion
- You need to keep the offer you send them to become permanent for 7 years
Importantly, small businesses in Australia, with 15 or fewer employees don’t need to proactively offer conversion. In small businesses, casual employees have to request conversion.
So, a relatively simple issue could end up taking you hours of paperwork and calculation to complete.
It’s likely that the Fair Work Ombudsman will also audit records for casual conversion.
If you already know you need to offer your casual a conversion, try Tanda’s letter template
The biggest issue we found was confusion over what exactly regular hours are. The law doesn’t explicitly say, but there are some good guidelines to follow.
Firstly, you’ll need to locate their prior 6 months of timesheets, and analyse their worked hours for consistent themes.
Importantly, consistent patterns don’t just relate to specific times each week. Even if different shifts are worked each week, it considers total hours per week and total hours per day
If you can see a pattern in weekly, daily, or specific hours on specific days, and it has existed for 6 months, the casual could be eligible to become a permanent employee.
Having said that, things could change. Charles Power is the Editor of the Portner Press Employment Law Handbook and a Partner with Holding Redlich. Mr Power warns that the casual conversion laws are so new that the rules around regular work patterns haven’t been tested in Australia’s courts yet.
“There is no case law determining what ‘regular pattern of hours’ of work means. However, there is case law defining ‘regular and systematic employment’ for the purposes of determining the right of the casual to access entitlements. That case law suggests that regular casual employment need only be frequent or constant employment. It doesn’t need to be uniform and can be unpredictable.”
For Tanda’s complete guide on consistent hours, click here.
The next issue is record keeping – throughout the process you need to keep track of the employee’s hours of work, any offer to convert to permanent employment, and whether the employee accepts or rejects that offer.
Mr Power says it’s important to hold onto these records in case you’re audited by the ombudsman, or face any legal action. “You must keep employee records for 7 years. You can face legal proceedings under the Fair Work Act if you contravene this requirement”.
Reasonable Grounds to Refuse Conversion
Australian employers can have “reasonable grounds” not to offer permanent employment. Each individual circumstance will be different, and future precedents could be established in court.
There are some existing operational reasons a casual can be refused permanent employment. If their position will cease to exist in the next 12 months, or their total hours of work will significantly reduce, or their patterns of work will significantly change, it’s possible to refuse their request to transition to a permanent position.
If you’re interested in more detail about the rules around casual conversion, check out this comprehensive guide on casual conversion, written by Tanda’s Head of Product Compliance Andrew Stirling.
If you’re using Tanda, the casual conversion dashboard is a great way to identify consistent work hours. It offers a visual view of an employee’s hours that can make patterns easier to identify.
If you’re already using Tanda, it will record your employee’s hours when they clock-in, and you can also record the conversion offer in Tanda when it’s sent out, so there’s no need to worry about keeping a mountain of paperwork.