Casual employees’ right to be converted to permanent employment – cost implications for employers

The recent decision in WorkPac Pty Ltd v Rossato saw the Federal Court decide that a casually employed worker was actually a permanent employee.

This is particularly concerning for small to medium employers, because if the court finds a casual employee to be permanently employed, employers can be required to pay entitlements such as sick leave and annual leave on top of the casual loading already paid – retrospectively (unlimited). That means employers could be paying twice.

Award requirement to offer permanent employment to casuals

Quite separate to a finding by a court of employee permanency is an additional obligation under modern awards that requires employers to offer a permanent role to eligible casual employees after 12 months employment.

Under many awards, casual employees can request conversion to permanent employment.

What are your options with converting casual employees to permanent employees?

Do employers have to offer a permanent role to all casual employees who make such a request?

Although the answers can vary across industries, generally, under the awards, regular casual employees have the right to request conversion to permanent employment after working a regular pattern of hours for 12 months, without significant adjustment.

Whilst casual employees are employed on an as-needed basis, it’s not uncommon for these shifts to end up forming a regular pattern. When this occurs, a casual employee can become entitled to request conversion to permanent employment.

What are your obligations when a casual employee requests permanent employment?

Under many awards you can only refuse the request for conversion to permanent employment on “reasonable grounds”.

A conversion to permanent employment can be refused where part-time or full-time employment would require a significant adjustment to the employee’s current hours. Other grounds for refusal include where it is known or reasonably foreseeable that:

  • The employee’s position will no longer exist within 12 months; or
  • The employee’s hours will be significantly reduced within 12 months; or
  • There will be a significant change in the days and/or times of the employee’s hours of work within 12 months which cannot be accommodated by the employee.

As part of the process, employers are required to consult with the requesting employee.

If the employee is unhappy with the refusal to convert their casual employment to permanent employment, they can refer the matter to the Fair Work Commission.  Alternately, they can commence proceedings for breach of the enterprise agreement, with even more serious consequences for an employer.

Ignoring the obligation to casual employees can have significant repercussions

This issue can’t be avoided by simply hoping employees do not request conversion to permanent employment. Many awards also require the employer to provide a copy of the relevant clause in the award to casual employees within their first 12 months of employment.

If employers fail to follow the process, not only do they potentially find themselves faced with a subsequent claim for entitlements such as annual leave (even though the employee has also been paid the casual loading throughout), the employer may have to pay a significant civil penalty of up to $66,000.

Are you prepared to deal with requests for conversion to permanent employment?

Hicksons Partner, Warwick Ryan, assists local businesses to avoid employee issues before they become problems and respond when matters escalate. Warwick is available to provide guidance to Coast employers and can often quickly resolve emerging problems.

Post by Hicksons Partner, Warwick Ryan, and Solicitor, Jacqueline Waterhouse

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