Unpacking the Fair Work Act's new casual conversion “right”

Earlier this week, the federal government unveiled the much-anticipated Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 in parliament.

One of the key areas of focus for the federal government was casual employment and the ability for casual workers to convert to permanent employment if certain conditions were met.

The explanatory memorandum to the newly unveiled bill suggests that a statutory obligation to offer conversion to permanent employment will “help employees engaged as casual employees who work regularly to become ongoing employees, if that is their preference”.

During an interview on Sky News on December 7, 2020, Attorney-General Christian Porter declared this would be a “very, very strong, right” for employees.

Unfortunately, this is not the case at all, and the Attorney-General’s comments seem to be completely at odds with the drafting of the bill itself.

The bill seeks to introduce this new casual conversion “right” by inserting a subsection 66B(1) into the Fair Work Act 2009 (Cth), which would state that an employer must offer a casual employee an opportunity to convert to permanent employment if:

The employee has been employed for 12 months; and
During at least the last six months of that period, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time employee or a part-time employee (as the case may be).

Already this provision is littered with qualifications.

Firstly, the employee must have completed at least 12 months of service. This means that the employee could, for example, be working permanent full-time hours for up to a year and still be characterised as a “casual employee” under the legislation.

Secondly, the employee must have worked “a regular pattern of hours on an ongoing basis”, something that is uniquely within the control of the employer and therefore easily subject to manipulation.

Thirdly, the employee must be able to continue to work these regular hours on an ongoing basis without “significant adjustment”. This could allow, for example, an employer to simply assert that workloads are expected to change at some point in the future and therefore a significant adjustment may be needed.

These qualifications are then compounded by an overarching exception in subsection 66C(1), which provides that an employer is not required to make the conversion offer if there are “reasonable grounds” not to do so. Subsection 66C(2) provides that “reasonable grounds” might include the following:

The employee’s position will cease to exist in the period of 12 months after the time of deciding not to make the offer;
The hours of work which the employee is required to perform will be significantly reduced in that period; and
There will be a significant change in the days or times that the employee is required to perform their work which cannot be accommodated within the days or times the employee is available to work during that period.

Once again, this would enable an employer to simply assert that at some point in the next 12 months, it expects there to be an increase or decrease in the amount of work available which will impact the days and times the employee would need to work. This type of speculative assertion would then allow the employer to rely on the “reasonable grounds” exception.

While the bill does provide a rigid process that employers must follow, this in practice becomes a mere ‘box-ticking’ exercise. For example, under the new subsections 66C(3) and (4), the employer would need to give notice to the employee if it decides not to make an offer and include the grounds upon which it has decided not to do so.

If an employer does decide to make an offer, section 66D(1) requires the employee to then give a written response to the offer within 21 days. If the employee does not do so, they are taken to have declined the offer by reason of subsection 66D(2).

Under section 66E, if the employee accepts an offer, the employer must, within 21 days, give written notice of the employee’s hours, whether the employment is permanent part-time or full-time and the date the change will take effect. It must also discuss these matters with the employee before giving the notice.

While subsection 66F(1) gives an employee a “residual right” to request casual conversion every six months in certain circumstances, it still suffers from the same qualifications and exception that attaches to the original conversion offer.

However, the biggest failing of the proposed conversion provisions is their lack of enforceability.

Under the bill, a new section 66M of the Fair Work Act would set out how disputes around conversion decisions are resolved.

Subsection 66M(3) provides that at first instance, the parties should try to resolve the dispute themselves. Subsection 66M(4) then provides that if this is unsuccessful, either party can refer the dispute to the Fair Work Commission (FWC). Subsection 66M(5) then provides that the FWC must deal with the dispute (including by mediation, conciliation, making a recommendation or expressing an opinion) and, if the parties agree, by arbitration.

What this means in practice, is that the FWC can only make a binding decision about an employer’s refusal to convert an employee to permanent employment if the employer agrees to have the matter heard by the commission.

This allows an employer to refuse a request for casual conversion and then refuse a request to have that decision examined by the FWC.

This means an employer can make arbitrary and capricious decisions about conversion, knowing that the decision cannot be reviewed by the industrial umpire.

While this may be consistent with some other dispute settlement terms in modern awards, it ultimately means that the so-called casual conversion “right” is not a right at all.

In any event, subsection 66M(2) provides that the dispute resolution process is subject to a fair work instrument, the employee’s contract of employment or another written agreement.

This means that disputes will ordinarily be dealt with in accordance with existing dispute resolution processes available under modern awards or enterprise agreements. It also means that an employer can essentially ‘contract out’ of the dispute resolution procedures if it wishes to do so.

Given these significant flaws, the new casual conversion provisions would leave most casual employees stuck in the exact same position they were in before the proposed amendments.

In fact, in conjunction with the failings of the new casual worker definition, it will actually leave casual employees in a much worse position than before.

Unless these provisions are significantly amended, workers and businesses around Australia may miss out on a vital opportunity to fix what is proving to be a particularly contentious area of law.