Deadline looms for employers amid changes to casual conversion

Imminent obligations in the Fair Work Act 2009 (Cth) mean employers must act by 27 September 2021 to assess whether existing casual employees are eligible to convert to permanent employment.

What employers must do by 27 September 2021

With effect from 27 March 2021, changes were made to the Fair Work Act 2009 (Cth) (FW Act). ¹

These changes require employers (other than small business employers) to assess whether any of their existing casual employees are eligible to be offered the right to convert to permanent employment.

Employers must either:

• make a written offer to the employee to convert their casual employment to permanent employment, or
• write to the employee to explain why they will not be making an offer.

This notification must be provided either by no later than 27 September 2021 (if the casual employee commenced employment prior to 27 March 2021) or otherwise within 21 days of the casual employee's 12-month anniversary.

Employers do not have to make an offer to convert if:

• the employee does not fulfil the eligibility requirements, or
• they have reasonable grounds not to make an offer.

What are the eligibility requirements?

An employee fulfils the eligibility requirements if they:

• have been employed by the employer for 12 months,
• have worked a regular pattern of hours on an ongoing basis for at least the last 6 months, and
• could continue working these hours as a full-time or part-time employee without significant changes. ²

What are reasonable grounds for not making an offer?

Reasonable grounds must be based on facts that are either known by the employer or reasonably foreseeable.

Whilst no definition of "reasonable grounds" is provided in the FW Act, the legislation sets out a non-exhaustive list of examples of what will constitute reasonable grounds, including:

• the employee’s position will not exist in the next 12 months,
• the employee’s hours of work will significantly reduce in the next 12 months,
• the employee’s days or times of work will significantly change in the next 12 months and cannot be accommodated within the employee’s available days or times for work, or
• the employer would have to make a significant adjustment to the employee’s work hours for them to be employed full-time or part-time. ³

What should employers include in an offer to convert?

Employees have 21 days within which to respond to the offer and, if the employee accepts the offer, employers have a further 21 days in which to discuss and finalise the new employment arrangements. If the employee does not respond within 21 days, the employer can assume that they have declined the offer.

Employers making offers to convert should explain the entitlements enjoyed by permanent employees and that the employee will no longer be entitled to receive the casual loading upon conversion. Employers should also provide employees with an opportunity to ask questions or give suggestions and explain the process and timeline for accepting or declining the offer and the next steps.

If the employee accepts the offer, employers should outline when they will discuss the employee's new permanent employment status, their hours of work once conversion takes effect and the day on which the conversion is to take effect.

How should employers explain that they are not making an offer to convert?

If employers are not making an offer to convert, they must write to relevant employees explaining that they are either not eligible for conversion or that they are eligible but that the employer has reasonable grounds not to make an offer. Employers should explain the eligibility requirement that the employee does not fulfil or the reasonable grounds for not making an offer.

Employers should also send employees the Casual Employment Information Statement (CEIS) published by the Fair Work Ombudsman. The CEIS can be downloaded from the FWO website.

What does this mean for employers?

• Employers have until 27 September 2021 to determine if they have an obligation to offer casual conversion and to write to a casual employee who commenced employment prior to 27 March 2021 to advise the employee if they will be offered the right to convert to permanent employment.
• If an employer is making an offer to convert, they should explain in writing the entitlements enjoyed by permanent employees, that the employee will no longer be entitled to receive a casual loading upon conversion, the process and timeline for accepting or declining the offer and the next steps.
• If you haven't started assessing your obligation to offer casual conversion, start now! We can assist in determining an employee's eligibility and in preparing letters to employees offering conversion or notifying that conversion is not being offered.

¹ FW Act ss 66A to 66M.
² FW Act s 66B.
³ FW Act s 66C(2).