How can a casual employee convert to permanent employment?

From 26 August 2024, a new pathway for casual employees to convert to permanent employment status will be in operation.

If an employee has been employed for six months (or 12 months in a small business), they can choose to change their employment status to permanent, if they believe that they no longer meet the definition of ‘casual employee’.

This process is explained in last month’s article.

What makes the new pathway different from the current casual conversion rules?

The new pathway is different from the current casual conversion rules because the new pathway requires the employee to give the notification.

Under the current casual conversion rules, the employer must give the employee a written offer to convert to permanent employment within 21 days after the employee’s 12-month anniversary. Small business employers do not need to give the employee a written offer to convert. An eligible casual employee who works for a small business employer can request to convert to permanent employment at any time on or after their 12-month anniversary.

Does the new employee choice pathway apply to all casuals?

For casuals that start employment before 26 August 2024, the existing requirement for employers to notify casuals of their right to request casual conversion will continue to operate for six months, or 12 months for an employee of a small business employer.

This is to ensure that existing casual employees still have an ability under the FW Act to request conversion to full-time or part-time employment, until they can access the new employee choice pathway.

Example:

Mary starts work as a casual retail shop assistant on 1 February 2024 for a small business employer and she regularly works on Fridays and Saturdays. Because her employment started before 26 August 2024, the current casual conversion rules will apply to her employment for 12 months.

When Mary reaches her one-year work anniversary on 1 February 2025, she can request to convert to permanent employment. If Mary makes this request, her employer must respond within 21 days to tell her whether her request has been accepted or not. Mary’s employer needs to have reasonable business grounds if they are going to refuse her request. If Mary’s employer refuses her request, they must consult with Mary and explain their reasons in their written response.

On 26 August 2025, Mary will have access to the new employee choice pathway and can give her employer a notification if she believes she no longer meets the definition of a casual employee.

A recent case

The Federal Circuit Court found that a “significant variation” in a teacher’s regular work pattern shortly before she reached her one-year work anniversary meant that she was not entitled to change from casual to permanent employment.

In April 2022, the employee started work on a casual basis, teaching a training and assessment course.

In October 2022, the employee told her employer that she was having difficulty marking assessments on time and that she would “prefer to be paid at a contract/ongoing rate” that covered “all the weeks” she was working, as opposed to a “higher casual rate”.

The employer said that it “could look at offering a contract” but this would be in 2023 and would depend on budgets. A month later, the employee emailed the employer with a payroll enquiry and also noted her interest in converting from casual to “ongoing”.

The Court heard that the employee taught three classes in 2022 totalling 12 hours per week, but that from 31 March 2023 (three weeks before her one-year work anniversary), she was allocated two classes which reduced her hours to six per week.

The employee claimed that she continued to undertake “assessment work” associated with the two classes and that she met the casual conversion requirements under section 66B of the Fair Work Act 2009 (Cth) (FW Act).

The judge accepted that the teacher had been employed for more than 12 months, however, she did not work a “regular pattern of hours” as required under the FW Act in the six months prior to her work anniversary.

In this case, the judge said that the employee’s work hours “changed significantly” on 31 March; she dropped down from working three days to two days and her overall hours were halved.

The judge ruled that “this is a significant variation to the [employee’s] hours of work” and concluded that the employer was not required to offer casual conversion, and that the employee had no entitlement to apply for conversion under section 66F due to the lack of regular and ongoing hours.

Key lesson

This case demonstrates that a significant change in an employee’s working hours will be considered reasonable business grounds to refuse a casual conversion request. If there was a minor change to her working hours, such as swapping days for example, then there is a strong possibility that the judge would have ruled in her favour.

In deciding whether to accept or refuse an employee’s request to convert, the employer should consider whether:

• the employee has worked a regular pattern of hours on an ongoing basis for at least the last 6 months, and
• whether the employee could continue working as a full-time or part-time employee without any significant changes.

The business will also need to consider whether they have any reasonable business grounds to refuse the conversion.

Reasonable business grounds must be based on facts that are known or reasonably foreseeable. For example, some reasonable business grounds for deciding to reject a request can include:

• that the employee’s position will not exist in the next 12 months.
• that the employee’s hours of work will significantly reduce in the next 12 months.
• the employer will not be able to provide hours of work that will suit the employee’s availability.