What you need to know about the Casual Conversion Clause

Monic Del Rosario

9 January 2019    |   

On 1 October 2018, the Fair Work Commission announced that a new casual conversion clause will be included in 80+ modern awards across Australia. What does it mean? Casual conversion is a right given to regular casual staff to request for full-time or part-time employment status, given certain prerequisites. In the awards, a ‘regular casual employee’ is: “A casual employee who has, in the preceding period of 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.” Businesses whose awards fall under mandate are required to advise their casual employees of this clause. This does not require employers to offer conversion to their eligible employees; rather, the clause entitles all eligible employees the right to request for conversion. Who can apply? The clause allows casual workers to apply for conversion if: They have  been working for the business for twelve (12) months; and Their work pattern is an ongoing number of hours over the past year, which can be continued without adjustment upon conversion to full-time or part-time. Employers must provide casual employees with a copy of the casual conversion clause within their first year of initial engagement with the business. Casual employees who are eligible to apply should request their employers in writing. Can applications be rejected? Yes, applications can be rejected. Reasonable grounds include: A significant adjustment of work hours for the employee in order to accommodate their full-time or part-time employment status; The employee worked for short periods and/or irregular shifts or hours; and The position of the casual employee will cease to exist in the foreseeable future. Rejection of applications can be done, given that both employee and employer have discussed the decision. Should employers not convert a casual employee, a written refusal must be provided, indicating the reasonable grounds of rejection. Read more: What is the Contingent Workforce and how can you leverage it in your business? What awards are covered? The introduction of the clause covers 80+ modern awards, including: Hospitality Industry (General) Award 2010; Food, Beverage and Tobacco Manufacturing Award 2010; Manufacturing and Associated Industries and Occupations Award 2010; Building & Construction General On-site Award 2010; Concrete Products Award 2010; Electrical, Electronic & Communications Contracting Award 2010; Graphic Arts, Printing and Publishing Award 2010; Plumbing and Fire Sprinklers Award 2010; Textile, Clothing, Footwear and Associated Industries Award 2010; and Vehicle Manufacturing, Repair, Services and Retail Award 2010 To check if your business is included, click here. What should your business do next? It’s important to keep in mind that Fair Work’s decision does not require businesses to convert casual employees in all cases where a casual employee makes a request for conversion to their employer.  For this reason, it’s important to understand the criteria for casual conversion and understand what your obligations are when employees meet these requirements. If you or your business falls under the new clause, here are the steps you can take to stay compliant: Check your modern award or enterprise agreement. Awards with existing clauses for casual conversion may have different requirements. Check your award for the exact rules in your industry. Create a casual conversion letter. You can also download a copy here. Notify your employees. Make sure you give your casual staff (employed as of 1 October 2018) a copy of the final letter. Record the outcome of the casual conversion offer. Whether they accept or reject the offer, keep copies of their written responses for future reference. If you are unsure how the casual conversion clause affects your business, call the Fair Work Infoline on 13 13 94 or visit www.fairwork.gov.au To make sure you stay updated with the latest news on awards, employment, and compliance, subscribe to our newsletter today.

On 1 October 2018, the Fair Work Commission announced that a new casual conversion clause will be included in 80+ modern awards across Australia.

What does it mean?

Casual conversion is a right given to regular casual staff to request for full-time or part-time employment status, given certain prerequisites. In the awards, a ‘regular casual employee’ is:

“A casual employee who has, in the preceding period of 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.”

Businesses whose awards fall under mandate are required to advise their casual employees of this clause. This does not require employers to offer conversion to their eligible employees; rather, the clause entitles all eligible employees the right to request for conversion.

Who can apply?

The clause allows casual workers to apply for conversion if:

  • They have  been working for the business for twelve (12) months; and
  • Their work pattern is an ongoing number of hours over the past year, which can be continued without adjustment upon conversion to full-time or part-time.

Employers must provide casual employees with a copy of the casual conversion clause within their first year of initial engagement with the business.

Casual employees who are eligible to apply should request their employers in writing.

Can applications be rejected?

Yes, applications can be rejected. Reasonable grounds include:

  • A significant adjustment of work hours for the employee in order to accommodate their full-time or part-time employment status;
  • The employee worked for short periods and/or irregular shifts or hours; and
  • The position of the casual employee will cease to exist in the foreseeable future.

Rejection of applications can be done, given that both employee and employer have discussed the decision. Should employers not convert a casual employee, a written refusal must be provided, indicating the reasonable grounds of rejection.

Read more: What is the Contingent Workforce and how can you leverage it in your business?

What awards are covered?

The introduction of the clause covers 80+ modern awards, including:

  • Hospitality Industry (General) Award 2010;
  • Food, Beverage and Tobacco Manufacturing Award 2010;
  • Manufacturing and Associated Industries and Occupations Award 2010;
  • Building & Construction General On-site Award 2010;
  • Concrete Products Award 2010;
  • Electrical, Electronic & Communications Contracting Award 2010;
  • Graphic Arts, Printing and Publishing Award 2010;
  • Plumbing and Fire Sprinklers Award 2010;
  • Textile, Clothing, Footwear and Associated Industries Award 2010; and
  • Vehicle Manufacturing, Repair, Services and Retail Award 2010

To check if your business is included, click here.

What should your business do next?

It’s important to keep in mind that Fair Work’s decision does not require businesses to convert casual employees in all cases where a casual employee makes a request for conversion to their employer.  For this reason, it’s important to understand the criteria for casual conversion and understand what your obligations are when employees meet these requirements.

If you or your business falls under the new clause, here are the steps you can take to stay compliant:

  1. Check your modern award or enterprise agreement. Awards with existing clauses for casual conversion may have different requirements. Check your award for the exact rules in your industry.
  2. Create a casual conversion letter. You can also download a copy here.
  3. Notify your employees. Make sure you give your casual staff (employed as of 1 October 2018) a copy of the final letter.
  4. Record the outcome of the casual conversion offer. Whether they accept or reject the offer, keep copies of their written responses for future reference.

If you are unsure how the casual conversion clause affects your business, call the Fair Work Infoline on 13 13 94 or visit www.fairwork.gov.au

To make sure you stay updated with the latest news on awards, employment, and compliance, subscribe to our newsletter today.

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Events & Media AU Industry Insights    |   

Greens MP introduces franchise wages bill

A new bill called the Fair Work Amendment (Recovery of Unpaid Amounts for Franchisee Employees) Bill 2015 was introduced to Parliament last week. The bill, sponsored by Melbourne Greens MP Adam Bandt, is a direct response to the recent 7-Eleven saga, in which the Fair Work Ombudsman has already found over $600,000 in underpaid wages and entitlements. The bill aims to prevent this by making the franchisor responsible for correcting underpayments if the franchisee is not able to pay staff correctly and on time. You can read the text of the bill here, as well as its explanatory memoranda. Nobody would argue that it’s fair how 7-Eleven staff were underpaid, but this bill skirts a fine line that all franchisors should be aware of. The bill is written in the typical legalese of the Fair Work Awards and the National Employment Standards, but the gist of it is: If a franchisee employer does not pay an employee by pay day, then the employee, or someone acting on their behalf, can give the franchisor a written demand for payment. The employee doesn’t need to do this immediately. They have 6 years from the pay day in which they can make this request. The franchisor has 14 days to pay the employee what they’ve requested. If the franchisor doesn’t pay the employee within the given 14 days, the employee (or a lawyer) can take the franchisor to court. So if the franchisor disagrees with the employee’s written request… it must go to court! The court must add interest to the amount already owed to the employee. This interest is calculated from the pay day (so at this point it’ll already be 14 days worth). In short, if this bill became law, every franchisor in Australia would have unknown liabilities on their books for the wages of everyone who’s ever worked at one of their franchises any time in the past 6 years. And they could get these written notices if a franchisee gets their payroll out an hour late. This bill could certainly set a precedent for even more responsibilities for head office over what franchisees are doing. We think this could significantly change the dynamics of franchise agreements and cause a lot of headaches. It’s important for franchises to be ready for this sort of thing. Whether mandated by law or common sense, as a franchisor you need to be sure that your franchisees aren’t doing dodgy things with payroll that are going to see your brand on the front page of the Australian.   About the author Jake Phillpot is a Director of Tanda, a specialist time and attendance company focusing on the interpretation of Australian Modern Awards and Enterprise Agreements. Tanda maintains templates of popular Modern Awards including Fast Food, Hospitality, Retail, and Restaurant. These templates include the Fair Work mandated minimum wages of all levels of staff, as well as rules for penalty rates, allowances, and overtime based on the times that staff worked. For more information, read a Franchise Case Study with Red Rooster or call Jake on 1300 859 117. You can also request an enterprise POA.

Awards & Rostering    |   

The Different Kinds of Award Interpreters

We often chat to people who have looked at a few different award interpretation tools on the market. Most are not really sure which award interpretation tool is right for their business.  In this post, we’re going to take a look at the different kinds of award interpreters out there to help you understand what is important when looking for a tool for you or your clients. Firstly, an Award Interpreter (read about Tanda’s Award Interpreter) is software that figures out how much staff should be getting paid based on their hours and times worked.  What award interpreter is right for you? There are four different kinds and the right one depends on how your staff get paid. Salary Costing Tools: Used to calculate payroll when all your staff are paid a fixed salary. Hourly Wage Calculators: Calculates when staff get paid a single hourly rate for all hours worked. Single Rate Calculators: Pays staff only single types of pay like weekday, Saturday and Sunday rates. However, it cannot handle any of the more common rate scenarios set out in Awards. Award Rule Engines: Does all of the above. In addition, they also calculate overtime, penalty rates, allowances, accruals and leave. “All my staff get paid a salary.” If you only employ salaried staff, a Salary Costing Tool is perfect for you. This is common in white collar workforces like accounting firms. In this case, you enter each employee’s yearly salary, set rules about how leave accrues and the tool does the rest. This is simple because staff are paid the same thing most pay runs. Most payroll systems (including MYOB and Xero) already include such a tool. If this is you, you’re in luck – you will not need an additional system for award interpretation! “My staff get paid the same hourly rate for all hours worked.” This might come up if you run a very small business with only a few staff. This is where nobody works on weekends, receives overtime or penalty rates. Generally, this means the business is only open for a few hours on days that it does open. If that’s you, you’re after an Hourly Wage Calculator. Warning: Be careful with this one. It’s easy to miss subtle wordings in Awards that require you to pay different rates at different times. Keep in mind that if any of your staff ever get more than one pay rate in a week, an hourly wage calculator won’t work as well anymore (even if it doesn’t regularly happen). Using an Hourly Wage Calculator, you enter the hourly rate for each employee. Each week you only enter the number of hours worked (you don’t worry about times). The tool multiplies the hourly rate by the number of hours to calculate total pay. Most payroll systems (including MYOB and Xero) already include such a tool, so if this is you, you’re also in luck – you won’t need an additional system for award interpretation! “I employ only one type of employee. They receive weekday and weekend rates only.” If you have staff that get paid hourly and receive different rates on weekdays, Saturdays, and Sundays, you might be able to use a Single Rate Calculator. However, be careful because this only works if you have a single employment type. An Employment Type refers to the way someone is employed. This includes full-time, part-time, casual or shiftworkers. If everyone you employ is the same employment type (e.g. everyone is Full Time) then this might work for you. When using a Single Rate Award Calculator, you enter the hourly rate that each employee gets during the week. You enter the multiplier for Saturday and Sunday shifts. Also, Public Holidays, if the calculator supports it. If an employee gets a base rate of $20 and your Saturday multiplier is 1.5 (Time and a Half), they receive $30 on Saturday’s. When you enter a timesheet the system pays staff at the appropriate rate based on the days worked only. Why do these only work for one employment type? If you you have a Full Time employee (base $20/hour), and a Casual employee (base $20/hour + 25% casual loading = $25/hour). This table shows how a Single Rate Award Calculator would calculate the cost of two shifts. Weekday Rate – Full Time Saturday Rate – Full Time Weekday Rate – Casual Saturday Rate – Casual 20 30 25 37.5 In most awards, you’re meant to apply the 1.5 multiplier and then the 25% casual loading! Here is how Fair Work’s Pay Rate Calculator says you should have paid: Base Rate – Full Time (1x) Saturday Rate – Full Time (1.5x) Base Rate – Casual (1.25x) Saturday Rate – Casual (1.75x) 20 30 25 35 Single Rate Award Calculator’s are great if you have staff on a single employment type as all their multipliers will be the same. However as soon as you have different kinds of staff, it stops working correctly. (It also doesn’t work if you have to pay overtime, penalty rates, deal with leave or accruals. It’s really just for simple weekend rates) Some payroll systems include Single Rate Calculators, but most likely you’ll need an external system. Most award interpretation tools on the market can be used for Single Rate Calculation. If that’s what you need, just pick whichever looks good and is well supported. However, if you have multiple employment types, or other more complex pay requirements (eg. Overtime, Allowances, Penalty Rates, RDOs, TOIL, or Leave costing), read on… “I employ more than one type of employee,” or “I have to pay overtime, penalty rates or allowances,” or “I have to manage RDO or TOIL accruals and leave” If any of these sound familiar, you’re after an Award Rule Engine. It’s called a rule engine because it’s based on different payroll rules that you configure, allowing you to pay staff at different rates across the week. However, it also covers different rates within the same day and for different employment types. Some Award Rule Engines also come with pre-built sets of rules called Templates. A template contains all of the rules necessary to pay under a particular Fair Work Award. A good template will include all of the base rates for different levels of staff (each employee will have a minimum wage and the template should include this). A really good template will automatically keep your payroll software up to date based on Fair Work Award updates. Here’s some other things to keep an eye out for when comparing Award Rule Engines. You should ask these questions before implementing a system so you don’t get burned 3 months down the track. Can I set different Saturday/Sunday multipliers for Full Time and Casual staff? When staff pay rates go up (each year when the Fair Work updates minimum rates), are these updated automatically? Are staff pay rates automatically updated in the linked payroll system? Does the engine understand the concept of Ordinary Hours? (Ordinary hours of work accrue superannuation and count towards overtime, while non-ordinary hours don’t. Systems that treat all time as ordinary can end up costing you a lot more in labour costs – and staff won’t complain if you get that wrong!) Can I configure different pay rates for junior staff? Does the system automatically update them on birthdays? How does the engine handle RDOs or TOIL accrual? Are you able to configure accrual for arbitrary leave types? Can the engine pay the correct allowances for split shifts? Can you configure how long a shift must be “split” before this kicks in? Can you configure automatic allowances (like Laundry Allowances) and manual ones (like Overtime Meal Allowances)? Just for specific employees? Based on the times or days that they work? Can I configure specific Public Holiday dates for each employee (important if you have  multiple sites with different Show Holidays or Regional Public Holidays). How is overtime calculated if an employee takes leave midway through the pay period? What if they take it on the last day? Can I calculate overtime based on an employee working outside their rostered hours? If a Template has been built based on an Award, can I change the ordinary span of hours based on agreement with the majority of my staff? Can I configure special provisions for shift workers? By the way… with Tanda’s Award Rule Engine, the answer to all those questions is yes! Hopefully, this post has helped clear some confusion around the types of tools that exist in the market and what you can use depending on how your workforce is set up. If you’ve got any further questions, feel free to email us on info@tanda.co

Awards & Rostering    |   

Penalty Rates Decision: Sunday and Public Holiday Penalty Rates to be cut

Fair Work Penalty Rates Decision Source: The Fair Work Commission The Fair Work Commission has today announced that Sunday and Public Holiday penalty rates are to be cut across Hospitality, Retail, and Fast Food Awards, while Saturday penalty rates are to remain the same. Changes to Sunday Penalty Rates Sunday penalty rates for full time and part time hospitality workers will be reduced from 175% to 150%, rates for casuals will remain the same at 175%. Level 1 Employees under the Fast Food Award will see a reduction in Sunday penalty rates from 150% to 125% for full-time and part-time employees. Casuals will have a reduction from 175% to 150%. No changes will be made to Sunday penalty rates for Level 2 and Level 3 Employees under the Award. Full time and part-time retail workers will have Sunday penalty rates reduced from 200% to 150%. Casual Sunday rates for retail will also be reduced from 200% to 175%. Changes to Public Holiday Penalty Rates Public holiday rates for full-time workers in hospitality will be reduced from 250% to 225%, with no change for casual Public Holiday penalty rates. Changes to Public Holiday rates will come into effect July 1, 2017. However, The Commission has stated that the immediate implementation of updated Sunday penalty rates would create undue financial distress for Sunday workers. As such transitional arrangements for Sunday penalty rate changes will be made in the coming months. The decision was handed down after more than eight months of deliberation, and comes after The Productivity Commission recommended bringing Sunday penalty rates into line with Saturday rates in 2015. This is the biggest Industrial Relations decision The Fair Work Commission has made in recent years. It is hoped that reducing penalty rates will bring  about more ‘positive employment effects’ for businesses, and will “lead to increased trading hours, an increase in the level and range of services offered on Sundays and Public Holidays and an increase in overall hours worked.” With the outcome of the decision expected to come into play later this year, it is crucial that business owners have the correct tools and processes in place to update changes to wage rates correctly, and better manage their labour costs to capitalise on the penalty rate reductions.

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About the author

Monic Del Rosario

Monic is Tanda's content curator. She uses her background in Development Studies to create materials that are both business-oriented and human-centric.

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We often chat to people who have looked at a few different award interpretation tools on the market. Most are not really sure which award interpretation tool is right for their business.  In this post, we’re going to take a look at the different kinds of award interpreters out there to help you understand what […]

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