In this week’s blog we look at the current rules around casual conversion with reference to a recent employment law case. We note that the rules regarding casual conversion are subject to change with the introduction of part two of the Closing Loopholes Bill which is set for legislative debate early in 2024. 

What is Casual Conversion?

Casual Conversion is the process of converting casual employees into either permanent part-time or full-time employees. All casual employees covered by the Fair Work Act 2009 (Cth) have a right to casual conversion if they meet the eligibility criteria. 

Who is eligible for Casual Conversion?

To be eligible for Casual Conversion, a casual employee needs to have been employed for at least 12 months, work an ongoing, regular pattern of hours for at least the last six months and be able to continue working this pattern of hours as a part-time or full-time employee without significant adjustment.

This eligibility requirement was the subject of a recent case we have reviewed down below. 

There are currently two main ways in which a casual employee can be converted into a part-time or full-time employee under these provisions. These are: 

  1. From an offer made by their employer; or 
  2. On a request from the employee. 

1) Employer Offer of casual conversion 

Once a casual employee has been employed for 12 months, the employer must offer the employee the ability to convert to permanent employment within 21 days of the employee reaching their 12 month anniversary date. This will only apply for businesses who employ 15 or more employees, as small businesses are exempt from having to make offers of casual conversion. 

An employer can decide not to make an offer of casual conversion if the employee does not meet the eligibility requirements or if the employer has reasonable business grounds for not making an offer. If an employer elects to not make an offer of casual conversion, they must also write to the employee within 21 days of their 12 month anniversary informing them that they are not offering them casual conversion and the reason they are not making the offer of casual conversion. 

Reasonable business grounds may include:

  • the employee’s position will cease to exist in 12 months; 
  • the hours the employee works will be significantly reduced; 
  • there will be a significant change to either the days or times they are required to work; or 
  • making an offer would not comply with a recruitment or selection process required by or under the laws of the Commonwealth or a State or Territory. 

2) Employee Requests of Casual Conversion

Eligible casual employees can make a request for casual conversion regardless of how many employees their employer has. Casual employees of businesses with more than 15 employees will need to wait until 21 days after their 12 month anniversary before making a request for casual conversion.  Employees of small businesses (14 or less employees) can make a request for casual conversion on or at any time after their 12 month anniversary. 

Employees will not be eligible to make a request for casual conversion if, in the last 6 months: 

  • they have refused an offer from their employer for casual conversion; 
  • their employer has given them written notice that they will not be offering casual conversion; or 
  • their employer has provided a response to them rejecting a request for casual conversion. 

How is the closing Loopholes bill changing casual conversion?

The proposed amendments slated to be introduced in the Closing Loopholes Bill early next year will give employees a new pathway to converting from casual employment to permanent employment through the “employee choice” process. This process will be entirely employee driven and will be accessible to employees after 6 or 12 months depending on the size of the employer’s business.

Under the proposed new process, if a casual employee believes that their working arrangements have changed and they no longer meet the definition of a ‘casual employee’ as that term will be defined in the new legislative amendments they can seek to be reclassified as a permanent employee.

The existing casual conversion process detailed above will be removed. 

Recent Case 

Application by Natalie Klukowski dispute re: right to request casual conversion 

In this week’s case, Deputy President Bell (DP Bell) was required to deal with a request made under section 66M of the Fair Work Act 2009 (Cth) to deal with a dispute between an employee and her employer regarding casual conversion.  

In this matter Ms Klukowski sought to have her casual employment converted into permanent employment after she had reached 12 months of service with the business. The dispute arose as the employer refused this request on the grounds that Ms Klukowski had not been employed by the employer for 12 months, as the employing entity had changed in August 2023 due to a business sale. 

The question for DP Bell to determine was whether the employee’s service with the previous employing entity would count towards the 12 month employment requirement in section 66F of the Fair Work Act 2009 (Cth) to make a request for casual conversion. 

The Decision 

In finding that Ms Klukowski’s period of service with the previous employing entity did not count towards the 12-month minimum period (and she was therefore unable to bring a request for casual conversion), DP Bell differentiated “being employed by the employer” from “service” or “continuous service” as those terms are defined in the Fair Work Act 2009 (Cth)

The Deputy President emphasised that this terminology had been used in the Fair Work Act 2009 (Cth) prior to the introduction of casual conversion and if the legislative intent was to cover prior service (as other sections do such as those dealing with Parental Leave and Unfair Dismissal) then different wording would have been used. 

[14] It follows that, for a casual conversion request under s 66F, the requirement that an employee has been employed by the employer for a period of at least 12 months beginning the day the employment started is a reference to employment with the same employer, without reference to service with a prior employee counting to that 12 month period. 

Lessons for Employers

This case and the proposed amendments to the Casual Conversion provisions of the Fair Work Act 2009 (Cth) serve as an important reminder to review your business’ policies and procedures regarding Casual Conversion to ensure they are up to date and meet all of your obligations as an employer. 

Need further help? 

If you require any assistance in understanding how casual conversion works, responding to an employee’s request for casual conversion or how these future changes will impact your business please contact EI Legal at: