New laws for long-term casual employees came into effect in September after a Fair Work Commission reviewed the terms in modern awards. It was also to correct any interaction issues with the changes to casual employment that came into effect through amendments to the Fair Work Act 2009 in March 2021.

Under the law, casual employees have the right to convert to permanent employment after 12 months of employment if they can demonstrate they have had a regular pattern of hours on an ongoing basis over the previous six months.

The Fair Work Ombudsman has warned Australian businesses to review their employment arrangements with casual employees or face fines of up to $66,000.

However, small business employers – defined as employers with less than 15 employees at any given time – are not required to offer eligible casual employees an opportunity to convert to permanent employment.

The only other exemption from the new law is when the employer understands they have “reasonable grounds” to not make the new offer. The Fair Work Ombudsman considers such grounds to include where the employer would have to make a significant adjustment to the employees work hours for them to be employed full-time or part time, or where the position is to be made redundant.

Under the new laws, businesses are required to write to an employee within 21 days after the employees 12-month anniversary to inform them of the conversion offer, or to advise the reasons why they are not making the offer. The employees then have 21 days to accept the offer, in writing, or the employer can assume the offer has been declined.

It’s acceptable for the casual employee to make a request to be converted to permanent employment, as long as they have been employed for at least 12 months, have worked a regular pattern of hours over the last six months and can continue to work these hours in a full-time or part-time capacity.

The Fair Work Ombudsman has also confirmed that employers cannot in any way reduce or change the employees’ hours or terminate their employment as a way of not having to offer the conversion of their casual employment.

The new casual conversion laws are part of the National Employment Standards which means if companies fail to make the offer to their eligible employees, they could face penalties in excess of $66,000 or $13,000 for individuals.

So, now is the time to ensure that you, as business owners, review current arrangements with casual employees and ensure they are updated accordingly.

This article was published in the 2021-22 Summer Issue of Financial Times.