One of the main ways unions in Australia have been able to limit casual work has been by inserting casual conversion clauses in awards and enterprise agreements. Under such clauses, casual employees obtain the right to request a permanent position after a certain period of service with their employer, usually 6-12 months.
In July of this year, a Full Bench of the Fair Work Commission (FWC) determined that modern awards should contain a provision enabling casual employees to elect to convert to full-time or part-time status, but with significant restrictions on this right.
In this article, we consider the implications of the FWC’s decision and how it will impact casual conversion provisions in enterprise agreements in Victorian Government employment.
The FWC casual conversion decision
As part of the modern awards review process, the Australian Council of Trade Unions (ACTU) sought to have a model casual conversion clause inserted in the 88 awards which did not have one – and the variation of casual conversion clauses in 17 awards that did have them.
The FWC Full Bench accepted the ACTU’s argument that the unrestricted use of casual employment can operate to undermine the effectiveness of the safety net provided by modern awards and the National Employment Standards under the Fair Work Act 2009 (Cth) (FW Act).
Evidence presented to the FWC indicated that some employers engage persons who want permanent employment as long-term casuals. The Full Bench therefore concluded that it is fair and reasonable for those employees to have access to a mechanism for converting the casual employment to an appropriate form of permanent employment.
Under the model casual conversion clause proposed by the FWC, a casual employee can request conversion once they have:
been employed for at least 12 calendar months; and
over that period, have worked a pattern of hours on an ongoing basis which could continue to be performed on a part-time or full-time basis (without significant adjustment).
However, an employer may refuse a casual employee’s request to convert to full-time or part-time on the grounds that:
a significant adjustment to the casual employee’s hours would be required to accommodate the request;
it is known or reasonably foreseeable that the casual employee’s position will cease to exist;
the employee’s working hours will significantly change or be reduced within the next 12 months; or
on other reasonable grounds.
The employer must also provide all casual employees with information about casual conversion within 12 months of their engagement commencing.
The FWC invited submissions from interested parties on the proposed model casual conversion clause by 2 August 2017.
Proceedings relating to the insertion of casual conversion clauses in the affected modern awards, including transitional arrangements, are presently ongoing before various FWC members.
How will the decision impact Victorian Government employment?
Once finalised by the FWC, the application of the new casual conversion provisions will depend on whether a modern award applies to the particular employment. For many Victorian public sector employees, an enterprise agreement (rather than a modern award) determines their terms and conditions of employment.
Employees in numerous Victorian Government departments are covered by the Victorian Public Service Enterprise Agreement 2016 (VPS Agreement). The VPS Agreement does not have a provision for casual conversion. Instead, it includes a general commitment to promote ‘ongoing forms of employment over casual and fixed term arrangements wherever possible’. In addition, the VPS Agreement commits the employer:
The State Government Agencies Award 2010 is one of the awards included in the ACTU’s claim and the FWC’s casual conversion decision. This Award applies to State public sector employers (other than departments and administrative offices) which are incorporated bodies established under State law.
However, many Victorian statutory authorities, for example Film Victoria, Victorian Workcover Authority, Parks Victoria and Greyhound Racing Victoria, have their own enterprise agreement. Of that sample of four agreements, only the Greyhound Racing Victoria agreement includes a casual conversion clause.
In summary, the FWC’s casual conversion decision will have only limited direct application to Victorian Government employees. However, now that casual conversion has been established as an award standard, it is likely to form the basis of union claims in future enterprise bargaining rounds across the Victorian public sector.
Determining the extent of obligations imposed by casual conversion clauses
Evidence to the recent Victorian Inquiry into the Labour Hire Industry and Insecure Work indicated that casual conversion clauses have proved to be of limited effect in the labour hire context (where workers are overwhelmingly engaged as casuals). The Inquiry heard that many labour hire workers do not request conversion even where they have the right to do so, possibly because they prefer to retain their casual loading.
Some employees do seek to invoke casual conversion rights however, and there have been two recent decisions exploring the extent of obligations imposed by casual conversion clauses in enterprise agreements.
In Wedgwood v Charles Sturt University T/A Charles Sturt University, the applicable agreement clause provided that a casual employee could apply for conversion to a continuing or fixed-term position after 12 months’ service, where their average weekly hours equated to at least 70% of those of a full-time employee, and their performance had been satisfactory (among other conditions). The University would then determine whether to allow conversion.
In dispute proceedings instigated by an administrative staff member whose application for conversion to continuing employment had been met only with an offer of fixed-term employment, Commissioner Johns of the FWC found that the casual conversion clause in the agreement ‘mandates nothing’. The clause did not provide an employee with a right of conversion to their preferred form of engagement. It simply left the question of conversion as a matter for the University to decide.
By contrast, in Tomvald v Toll Transport Pty Ltd, an employee succeeded in proceedings alleging his employer had breached the FW Act by failing to comply with an enterprise agreement provision allowing casual employees to elect to convert to permanent employment after six months of regular and systematic engagement, ‘on a like for like basis’. The employee, a freight handler, had been employed for almost ten years and regularly worked hours similar to a full-time employee. After seeking conversion to full-time employment in accordance with the agreement, he was only offered a permanent part-time position at 30 hours per week.
Justice Flick of the Federal Court determined that the agreement provided a right to convert to full-time permanent employment at 38 hours per week, and the part-time offer made to the employee fell short of that entitlement. The employer had breached not only the agreement, and therefore section 50 of the FW Act, but also other provisions of the legislation relating to the misrepresentation of workplace rights and allowing employees access to their employment records. Justice Flick imposed civil penalties totalling $42,500 on Toll for these breaches, and awarded the employee $42,940 in compensation (plus 12.5% superannuation).
These decisions highlight that the wording of the applicable casual conversion clause in an award or enterprise agreement is critical in determining the reach of the obligations it imposes upon an employer. Further, employers may have to defend their actions based on these clauses in various forums including dispute proceedings in the FWC and award/agreement breach claims in the courts.
 4-Yearly Review of Modern Awards – Casual Employment and Part-Time Employment  FWCFB 3541 (5 July 2017).
 VPS Agreement, clause 14.2.
 Greyhound Racing Victoria Stewards and Associated Employees Enterprise Agreement 2016, clause 8.5.
 Victorian Inquiry into Labour Hire and Insecure Work: Final Report, 31 August 2016, pages 95-96.
  FWC 5617 (27 October 2017).
  FCA 1208 (12 October 2017).
This publication is introductory in nature. Its content is current at the date of publication. It does not constitute legal advice and should not be relied upon as such. You should always obtain legal advice based on your specific circumstances before taking any action relating to matters covered by this publication. Some information may have been obtained from external sources, and we cannot guarantee the accuracy or currency of any such information.