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Casual Employee Conversion – The Details

Casual employment serves many purposes within a workplace. For employees, it’s a good chance to work for a higher hourly rate (casual loading) and potentially work for a variety of employers concurrently. For employers, upshots include the fact that there is no requirement to accrue leave entitlements for casual employees, and that such employees can be stood down without notice of termination or a redundancy payout. There are, however, inherent downsides to being employed on a casual basis, particularly a lack of job security given there are no guarantees when it comes to hours being offered. What some casual employees may not be aware of, is that given certain circumstances they are well within their rights to become a permanent employee. This is known as “Casual Conversion”, and in this article we’ll explore what defines a casual employee, the process and eligibility criteria around casual conversion, and what happens if there are any disputes.

Casual Employee – Definition

Recent changes to workplace laws relating to casual employment have clearly defined what it means to be a casual employee. As of 27 March 2021, an employee is deemed casual if they are offered a job, the offer does not include a “firm advance commitment” regarding the indefinite continuation of employment on an agreed pattern of work, and they accept that offer and become an employee. A “Firm Advance Commitment” is essentially a commitment by the employer to their employee to provide them with an agreed pattern of work with predictable working periods, and shifts allocated in advance via a roster. Casual employees are not entitled to paid annual and personal leave in the same way part-time and full-time employees are, but they generally do receive 25% casual loading on top of what would be their normal wages.

Casual Conversion Process & Eligibility Criteria

Casual employees have the right to become a permanent employee in some circumstances, in either a part-time or full-time capacity. This process is known as “casual conversion” and depending on a few factors, employees can request a conversion, or an employer is required to offer it.

Requests for Casual Conversion: If an employee works for a small business (<15 employees), the employer does not have to offer casual conversion, but employees can make that request if they meet the following requirements:

• They have been employed by their current employer for at least 12 months
• They have worked a regular pattern of shifts/hours in the last 6 months on an ongoing basis
• Their regular hours of work could feasibly be maintained as a permanent member of staff
• They haven’t refused a casual conversion offer from their employer in the last 6 months
• The employer hasn’t told them in the last 6 months that they won’t offer casual conversion on reasonable grounds; and
• The employer hasn’t already refused a conversion request on reasonable grounds within the last 6 months

Requests must be made in writing to the employer, no earlier than 21 days after their 12-month work anniversary, and the employer must reply in writing within 21 days. If they are refusing the conversion request, they must consult with the employee first, and may only do so on reasonable grounds. In this event, the employee must wait at least another 6 months before making another request. Note that employees of businesses with 15 or more employees must wait until at least 27 September 2021 to make such a request (as well as satisfying the other criteria listed above). Employees of businesses with fewer than 15 employees need not wait until this date, so long as they are eligible.

Offers of Casual Conversion: Employers of 15 or more employees must offer their casual staff permanent employment if they have been employed there for a minimum of 12 months, worked a regular pattern of hours for the last 6 months on an ongoing basis, and their regular hours could continue as a permanent staff member without significant changes. Such an offer must be made before 27 September 2021, or within 21 days of an employee’s 12-month anniversary, whichever is later.

An offer does not have to be tabled if the employee in question is not eligible (per the criteria listed earlier), or if there are reasonable grounds not to make the offer. In either case, the employer must notify their worker in writing, upon which they have 21 days to respond. Employers are required to make an assessment on their employers in advance of 27 September to determine whether they should be offered casual conversion, and all employees who are assessed must be notified of the outcome in writing.

Casual Employee Conversion – Disputes

Given that there is some discretion involved in casual conversion, particularly where “reasonable grounds for refusal” are concerned, some situations may arise where there is a disagreement between an employer and employee. If an employee is covered by an award, or has an existing agreement or employment contract with a process for dealing with disputes, that process must be followed first. From there, employers and employees must attempt to resolve the issues internally before other parties are involved. In the event that a casual conversion dispute can’t be resolved in-house, help can be sought from the Fair Work Commission and/or the Federal Circuit Court in more serious circumstances.

How MP+ Can Help

Navigating the tricky waters of employment contracts and everything that goes with operating a business with staff is difficult. At McKinley Plowman, we have vast experience helping clients set up their structures and employment procedures in such a way that any casual conversions, disputes, onboarding, exiting, and other internal processes are as smooth and efficient as possible. To see how we could take your business to the next level, get in touch with our Business Improvement team via our website or call us on 08 9301 2200 (Joondalup) or on 08 9361 3300 (Victoria Park).

written by:

Nigel Plowman

Prior to forming McKinley Plowman, Nigel specialised in management consulting and international accounting, enjoying success in Australia and in the United Kingdom. His extensive experience in management consulting, international accounting and innovative tax structures has been a major driver in the success of McKinley Plowman as well as the many businesses he has steered towards new levels. Nigel is dedicated to fast-tracking his client goals with cutting edge tax and business strategies. He is a member of the CPAs and the Taxation Institute of Australia and enjoys developing tax strategies that work well here and around the world.