Legal

Navigating the new casual conversion process: Key changes ahead

July 26, 2024

Managing Director - Workplace & Legal

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The Closing Loopholes No. 2 legislation will change the statutory process by which casual employees can be converted to full-time or part-time employment.

Currently, after a casual employee has been employed for 12 months, employers are required to assess whether the employee should be converted to full-time or part-time employment. They must either make an offer of conversion or notify the employee in writing that they will not be offered conversion. There are also provisions that allow casual employees to ask their employer to convert them full-time or part-time employment if they meet certain criteria.

This regime will be replaced entirely. The 12-month assessment will no longer be required and employers will only have to consider conversion if an employee notifies them that they would like to convert.

The new provisions commence come into effect on the 26 August 2024, with a six-month transitional period for existing casual employees.

Let’s explore the process.

Employee conversion notifications

The new provisions allow casual employees to issue a written notice to their employer if they would like to convert to full-time or part-time employment.

They can do this if:

They have been employed for at least 6 months (or 12 months for small business employees); and
They believe that their employment relationship with the employer no longer meets the requirements of being a “casual employee”.

We explained the new requirements of being a casual employee in our recent article here.

In essence, this would mean that the employment relationship is no longer characterised by the absence of a firm advance commitment to continuing and indefinite work, taking into account the real substance, practical reality and true nature of the employment relationship.

An employee can only make a conversion notification once every six months.

The employer’s response

The employer must give the employee a written response within 21 days of receiving a notification.

Before giving a response, the employer must consult with the employee about the notification.

Accepting the notification

If the employer accepts the notification, the response must state:

That the employer accepts the notification;
Whether the employee is changing to full-time or part-time employment;
The employee’s hours of work after the change takes effect; and
The day the employee’s change to full-time or part-time employment takes effect.

The day the change takes effect must be the first day of the employee’s first full pay period that starts after the day the employer’s response is given, unless the employer and employee agree to another day.

The employer must discuss all of these details with the employee when they consult with them about the notification.

Not accepting the notification

An employer may not accept a notification on any of the following grounds:

Having regard to the employee’s employment relationship with the employer, the employee still meets the requirements of being a “casual employee”;
There are fair and reasonable operational grounds for not accepting the notification;
Accepting the notification would result in the employer not complying with a recruitment or selection process required by or under a law of the Commonwealth or a State or a Territory.

Fair and reasonable operational grounds for not accepting a notification include the following:

Substantial changes would be required to the way in which work in the employer’s enterprise is organised;
There would be significant impacts on the operation of the employer’s enterprise;
Substantial changes to the employee’s terms and conditions would be reasonably necessary to ensure the employer does not contravene a term of a fair work instrument that would apply to the employee as a full-time or part-time employee.

“Substantial changes” include changes that significantly affect the way the employee would need to work.

If the employer does not accept the notification their response must state:

that the employer does not accept the notification;
the grounds on which the employer does not accept the notification; and
the reasons for the employer’s decision.

Employees are not required to convert

Nothing in the casual conversion provisions requires an employee to change to full-time or part-time employment if they do not want to. Likewise, the provisions do not permit an employer to require an employee to convert.

Employers are not required to increase hours

Nothing in the casual conversion provisions requires an employer to increase the hours of work of an employee who gives a conversion notification.

Transitional arrangements for existing casual employees

From 26 August 2024 there will be a six month transitional period for employment relationships entered into before 26 August 2024. During this time the current conversion regime will continue to apply instead of the new provisions. This means that:

For any employees who reach 12 months of employment during the transitional period, the employer will need to conduct a 12 month assessment under the current regime and either make an offer of conversion or notify the employee in writing that they will not be offered conversion;
Employees can request conversion to full-time or part-time employment under the current regime if they meet the criteria.

After the six month transition period, the new conversion provisions will apply to employment relationships entered into before 26 August 2024.

However, existing employees of small business employers will not have access to the new conversion process until 26 August 2025 and can continue to make requests under the old regime until this time.

The Casual Employee Information Statement

There are new rules on giving employees the Casual Employee Information Statement.

An employer must give the Statement to each casual employee before, or as soon as practicable after, they start employment.

They must also give the Statement to each casual employee as soon practicable after they reach each of the following periods of employment:

6 months;
12 months; and
each subsequent period of 12 months that the employee is employed by the employer.

Small business employers only have to provide the Statement to a casual employee when they start employment and after they reach 12 months of employment.

Disputes

If there is a dispute between an employer and employee about casual conversion, they must first attempt to resolve the dispute through discussions at the workplace level.

If that doesn’t resolve the dispute, a party may refer the dispute to the Fair Work Commission.

The Commission must first deal with the dispute by means other than arbitration, unless there are exceptional circumstances. This includes approaches such as mediation, conciliation, making a recommendation or expressing an opinion.

If the dispute proceeds to arbitration the Commission may make any orders it considers appropriate, provided it is fair and reasonable to do so. This could include orders that the employee continue to be treated as a casual employee or that the employee be treated as a full-time or part-time employee.

Parental leave

Where an employee has converted to full-time or part-time employment under these provisions, any period of employment as a regular casual employee will count toward continuous service for the purpose of parental leave and related entitlements.

Workplace rights

The rights afforded to an employee under the casual conversion provisions are workplace rights for the purpose of the general protections provisions of the Fair Work Act 2009. This means that it is unlawful for an employer to take adverse action against an employee because of one or more of those rights.