A Deep Dive into the New Casual Conversion Legislation

Today is Day 2 of our blog post series and we will explore these key aspects of the casual conversion legislation deeper, look at some examples as well as responding to a request. 

To recap from yesterday we looked at the key changes to casual employment, you can read about it here but basically here is a summary of the changes:

Key Changes in the Legislation

1. Redefinition of Casual Employment – The most significant change introduced by the Closing the Loopholes Act is the redefinition of what constitutes a casual employee. Under the new definition, an employee will be classified as casual if:

• There is no firm advance commitment to continuing and indefinite work.
• The employee is entitled to a casual loading or a specific casual pay rate.

This shift focuses on the actual working relationship rather than just the terms of the employment contract. Factors such as the regularity of work patterns and the practical realities of the employment relationship will now be considered.

2. Employee Choice Conversion Pathway – The legislation introduces a new pathway for casual employees to request conversion to permanent employment. Key aspects include:

• Eligibility: Casual employees can request conversion after 12 months of continuous service (or 6 months for small businesses), provided they have worked a regular pattern of hours.
• Notification Process: Employees must notify their employer in writing of their request for conversion.
• Employer Response: Employers must respond within 21 days, either accepting the request or providing written reasons for refusal.

3. Written Notice for Refusal – If an employer decides not to offer conversion, they must provide written notice stating the reasons for their decision. This requirement enhances transparency and ensures that employees understand their employment status.

Let’s start now by taking a look at how to determine whether a firm advance commitment exists.  To do this an employer should consider:

• the real, practical reality and true nature of the employment relationship
• can and do offer or not offer work to the employee
• can and does the employee accept or reject work
• if it is reasonably likely there will be future work available, the same work the employee usually performs, based on the nature of your business
• whether there are full-time or part-time employees performing the same kind of work, that the casual employee performs, in your business.
• the casual employee has a regular pattern of work even if it changes over time due to reasonable absences such as illness, injury or leave. 

There may be other factors that are considered and not all of these need to be satisfied nor will a single factor determine whether a person is considered a casual or not. 

When you are assessing whether there is a firm advance commitment, you can look at:

• the contract of employment, or
• the contract as well as any mutual understanding or expectation between the employer and employee that isn’t part of the contract. 

The mutual understanding or expectation can be worked out from how the contract is performed, or what the employer and employee do after entering into a contract.  Remember, it is now the actual working relationship, not just what the contracts might stipulate.

To illustrate the changes let’s look at two examples:

Example 1

Sarah, who has been working as a casual employee at a retail store since October 2022.  Sarah’s employment contract states that she is a casual employee and there is no commitment to ongoing work.  She has however, been working a consistent pattern of 30 hours per week, with a regular schedule of Thursday to Monday – the store owner sees no reason why the business will change its operating hours over the next 6 months.

Under the old definition, Sarah may still be considered a casual employee because her employment contract states that there is no firm commitment to ongoing work. However, under the new definition, Sarah’s regular work pattern and hours would likely qualify her as a permanent employee, even if her contract states otherwise.

Sarah can initiate the conversion process under the new pathway at the end of February 2025 as work before 26^th August is not taken into consideration. Her employer must respond within 21 days, either offering conversion or providing written reasons for refusal.

However, Sarah can request to change to part-time employment through the casual conversion pathway that is still available for eligible casuals employed before 26 August 2024.

Example 2

If we now, consider that Sarah had been hired to fulfill a seasonal busy period (such as a Christmas casual) at a pop-up retail shop.  Sarah gets offered shifts each week and she can choose to take them or not take them she is also paid 25% casual loading, all the other employees working in the retail pop up store are casual as well under the same conditions.  The store owner isn’t sure whether they will continue to operate there pop up store after the Christmas summer period. 

Sarah would be considered a casual because: there is no firm ongoing commitment, and she was paid a casual loading.

There are times when casuals can’t provide notice these include:

• where they are engaged in an ongoing dispute with their employer about changing to permanent employment under the employee choice pathway, or
• in the previous 6 months, their employer refused a previous notice, or they’ve resolved a dispute with their employer about employee choice under a relevant dispute resolution process.

So, in the example of Sarah, she wouldn’t be entitled to request conversion if in the previous 6 months her employer had:

• refused an offer for her to convert to permanent employment
• told her in writing that they won’t be making an offer of casual conversion, or
• refused a previous request for casual conversion.

Responding to a Request

Before responding in writing to a request for conversion an employer must consult with the employee.  It requires the employer to discuss what will change for the employee if they are no longer a casual if their offer was to be accepted.   They would need to cover if they would be full-time or part-time, what their hours of work would be, and when the change would take effect. A written response must happen within 21 days of the employee giving the notice, either accepting or not accepting the change. 

If an employer doesn’t accept the change, the written response must explain the reasons for the decision – this can include any of the following:

• the employee still meets the definition of a casual employee
• there are fair and reasonable operational grounds for not accepting the request, such as:
  • substantial changes would be required to the way work in the employer’s business is organised
  • accepting the change would mean the employer won’t comply with a recruitment or selection process required by law.
  • there would be significant impacts on the operation of the employer’s business, or
  • substantial changes to the employee’s employment conditions would be necessary to ensure the employer doesn’t break rules such as those that are covered in an award or an agreement apply to the employee.

It is important for employers to also be aware that casual employees are still covered by certain protections at work.  An employer can’t take certain actions to avoid their obligations or an employee’s rights to change to permanent employment. This could include:

• reducing or varying an employee’s hours of work
• changing an employee’s pattern of work, or
• terminating an employee’s employment.

Casual employees are also protected against adverse action by an employer. Adverse action cannot be taken by an employer because an employee exercises a workplace right, this includes their right to:

• notify their employer that they believe they no longer meet the definition of a casual employee
• receive a written response from their employer in relation to their notice
• participate in a dispute about changing to permanent employment.

These new changes are significant and whilst it does rely on the employee to make the request, there still poses a lot of responsibility back to the employer.  Tomorrow we will discuss the implications on employers and provide some actions to take to help ensure your compliance with these new changes.