Controversial decision from the Fair Work Commission to change the casual workforce

Contractual Employment

By Maeve Doyle | Nexus Law Group Consulting Principal

As part of the four yearly review of modern awards, a Fair Work Commission Bench (FWC) has made a decision to insert a clause into modern awards to convert casual employment into part time or full time employment, after a qualification period.

This decision impacts on situations where casuals have worked for extended periods of time and in a regular or systematic fashion.

It does not impact where casuals work irregular hours and are not guaranteed any regular number of hours per week.

The Australian Council of Trade Unions (ACTU) made submissions in relation to three aspects of award provisions dealing with casual and part time employment.

Casual Conversion

The first concerned casual conversion. The ACTU sought a model casual conversion clause to be placed in 88 modern awards (which did not already contain such a clause), as well as in 17 modern awards which do currently contain such a clause.

The ACTU further sought that the existing casual conversion clauses in five other modern awards be altered so that casual employees meeting specified criteria would be deemed to have become permanent employees after an identified period.

Standard Engagement Period

The second aspect was a standard provision for modern awards to require a standard daily minimum engagement period of four hours for all casual and part-time employees.

No work-around for businesses

The third aspect was a model clause which prohibited employers from engaging and re-engaging casual employees to avoid award obligations, required consultation with casual and/or part-time employees about increasing their hours of work prior to engaging new employees, and required that casual employees upon engagement be informed of their classification and rate of pay.

The Bench stated that

We accept the proposition advanced by the ACTU that the unrestricted use of casual employment without the safeguard of a casual conversion clause may operate to undermine the fairness and relevance of the safety net… in order to ensure that the modern awards objective is met with respect to such persons – that is, to ensure that the safety net including its NES component remains fair and relevant to them – … we have concluded that it is necessary for modern awards to contain a casual conversion mechanism.”

The FWC did not accept that casual employment should be automatically converted or ‘deemed’ part time or full time after a qualification period.

The FWC has drafted a model provision to be inserted into Awards with the following features:

a qualifying period of 12 calendar months;

  • a qualifying criterion that the casual employee has over the qualifying period worked a pattern of hours on an ongoing basis which, without significant adjustment, could continue to be performed in accordance with the full-time or part-time employment provisions of the relevant award;
  • the employer must provide all casual employees (whether they become eligible for conversion or not) with a copy of the casual conversion clause within the first 12 months after their initial engagement; and
  • a conversion may be refused on the grounds that it would require a significant adjustment to the casual employee’s hours of work to accommodate them in full-time or part-time employment in accordance with the terms of the applicable modern award, or it is known or reasonably foreseeable that the casual employee’s position will cease to exist, or the employee’s hours of work will significantly change or be reduced within the next 12 months, or on other reasonable grounds based on facts which are known or reasonably foreseeable.

Further consultation will occur prior to the introduction of this clause into modern awards.

The FWC declined to change other aspects of modern awards in terms of the ACTUs submissions.

Employer bodies such as the ARA (Australian Retailers Association) AiG (Australian Industry Group) and the NSW Business Council have criticised the decision.

The decision will have variable effects in different industries. For example, the Social Community Home Care and Disability Services Industry Award provides that part time workers with less than 38 contracted hours can pick up additional hours of work and the employer can pay them at their normal rate of pay.  However, all time worked by part-time or casual employees in excess of 38 hours per week or 76 hours per fortnight has to be paid at overtime rates.  Clearly, part time workers and employers both benefit in these circumstances if part time workers are available to perform additional hours.

In contrast, the General Retail Industry Award provides that hours worked by part-time employees in excess of their agreed contracted hours must be paid at overtime rates. Here, the use of casual workers (with a 25% loading) to cover fluctuations in need is more cost effective for the employer than asking their part time workers to perform additional hours (with at least a 50% overtime payment).

Next steps for employers

This is a good time to review your workforce, the number of casuals employed and the way the casuals are utilised.

If the casual worker is working regular and systematic hours over a considerable period of time, consider offering these employees part time work with similar hours to those they are currently working.  If the employee chooses to remain a casual – ensure that you have this election in writing.

If you are engaging casual workers in a truly ad hoc fashion to cover fluctuations in need, including seasonal peaks, then it is probable that these employees should remain employed as casuals.

This decision does not resolve what continues to be a vexing question for many employers:  When will a long term casual be deemed to be a permanent employee (and entitled to the benefits of permanent employment)?  We will look at this issue in our next article.

If you would like to discuss this topic further, please feel free to get in touch with Maeve Doyle at [email protected] or telephone +61 (2) 9016 0141

 

This publication is © Nexus Law Group and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.