Casuals: Conversion and payment of overtime

For the past quarter of a century, Australia has been experiencing a trend towards casualisation of the workforce.

Casual conversion clauses were inserted into many state and federal awards in the early 2000s. Yet, when the modern awards were made, some awards were made with casual conversion provisions (such as the Food, Beverage & Tobacco Manufacturing Award 2010), yet the General Retail Industry Award 2010 did not contain that clause.

Seven years after the making of the modern awards, the Fair Work Commission has reinserted the clause to the General Retail Industry Award, and more than 80 other awards, as part of the modern awards review held every four years. Casual workers will be given the right to convert to part-time or full-time employment, subject to certain criteria.

The Fair Work Commission provided a draft model conversion clause which will allow a casual worker to convert to part-time or full-time employment if:

• a qualifying period of 12 calendar months is met, that is, the employee is engaged regularly and systematically overt that time;
• the casual employee must have worked a pattern of hours on an ongoing basis over the 12 month period which could continue to be worked on a full-time or part-time basis without significant adjustment;
• the employer must provide all casual employees with a copy of the casual conversion clause within the first 12 months after their initial engagement.

The onus is on the employer to provide the employee with the clause during the employment period, so it may be that the clause is best provided at the start of employment in a letter of offer.

Employer refusal

Conversion from casual employment to part or full time employment may be refused by the employer if:
• it would require a significant adjustment to the casual employee’s hours of work to accommodate them in part-time or full-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 known or reasonably foreseeable.

So, an employer may refuse on several grounds, mainly on the basis that the job is not actually capable of being sustained over the longer term.

Failure to bring the clause to the employee’s attention, or to otherwise no conform to the award requirements could lead to a breach of the award being found, and consequent penalties awarded by a court.

Reasons for the decision

It was particularly noted by the commission that the applicability of the National Employment Standards depends upon whether the employer choses to engage and pay an employee as a casual. Employers, therefore, notionally have the power to deny the benefits of the National Employment Standards to anyone it employs.

“There is no constraint on the employer choosing to engage as casuals persons who equally might readily be engaged as permanent full-time or part-time employees under the terms of the modern award. The lack of any such constraint creates the potential to render the NES irrelevant to a significant proportion of the workforce,” the commission stated in its decision summary.

Although evidence showed employers have not generally exploited this ability, evidence also showed that some employers have indefinitely engaged a casual workforce that wanted to be permanently employed. Consequently, such workers find that the National Employment Standards do not apply to them.

The commission was, therefore, persuaded of the need for a casual conversion clause on the grounds that unrestricted uses of casual employment may operate to undermine the fairness and relevance of the safety net of modern awards and the national employment standards.

Overtime for casuals

Casual workers subject to the General Retail Industry Award will be eligible for conversion and payment overtime penalty rates. They are currently eligible for evening and weekend work penalty rates. An overtime penalty rate applies to employees who work in excess of the ordinary hours in a day or a week.  Under the General Retail Award overtime is calculated on a daily basis. Rostering is important to avoid Conversion and payment of overtime.

Again, this was a clause in many state awards that simply did not find its way into the retail award. The unions tried to reinstate the casual overtime provision, but failed before the Fair Work Commission in the aftermath of the modern award reviews. The Full Bench of the Fair Work Commission described it as inexplicable as to why casuals did not get overtime. While it was understandable given the award history, it was obvious that the reduction in penalty rates had to be offset by other benefits.